Holding

Mysore Paper Mills Ltd. is a government company and an instrumentality of the State within the meaning of Article 12, and the transfer order was not vitiated by malafides.

Summary

Mysore Paper Mills Ltd., a government company incorporated under the Companies Act, transferred a senior employee to Calcutta. The employee challenged the transfer as being vitiated by malafides and argued that the company was not a "State" within Article 12, thus the writ petition was not maintainable. The High Court referred the question of the company's status to a Full Bench, which examined the shareholding, control, functions, and statutory provisions governing the company. Relying on Section 617 of the Companies Act, the fact that over 97% of its share capital is owned by the Karnataka Government, and the pervasive governmental control over its management, the Court held that the company is a government company and an instrumentality of the State within the meaning of Article 12. Consequently, the transfer order was not found to be vitiated by malafides, and the appeals against the Single Judge’s order were dismissed.

Issues considered

The question whether Mysore Paper Mills Ltd. qualifies as a "State" or "other authority" under Article 12 of the Constitution of India.
Whether the transfer order of the employee was vitiated by malafides or arbitrary and illegal.

Legislation cited

Companies Act, 1956s. 617, s. 619
Industrial Disputes Acts. 1947

Subjects

Article 12State as other authoritygovernment companyinstrumentality of the Statetransfer ordermalafidespublic dutycorporate veil

Judgment

THE MYSORE PAPER MILLS LTD. A
v.
THE MYSORE PAPER MILLS OFFICERS'
ASSOCIATION AND ANR.

J JANUARY 8, 2002

(G.B. PATTANAIK AND DORAISWAMY RAJU, JJ.)
B

Constitution of India

Article 12-State/Other authority-Meaning of-An Organisation may C
be identified as an agent or instrumentality of the State/Other authority
depending upon combination of one or more of relevant factors as to the
essentiality and overwhelming nature of such factors in identifoing the real
source of governing power-The State/Other authority, so defined, has a
specific purpose and that is under Part III of the Constitution and not for D
making it a Government or Department of the Government itself.
Respondent, an employee of the appellant-company, has challenged his
transfer as vitiated by malafides and illegality. Single Judge of the High Court
granted stay of the transfer order. In the appeals filed by the appellant-
Company before the Division Bench of the High Court, the two grounds of E
challenge were that the appellant-Company is not a 'State' and the Order of
transfer was in accordance with the Contract of Service and i;ecessitated on
account of exigencies etc. In certain earlier decisions by the Division Bench
of the High Court, the appellant-Company was held to be not "State" within
the meaning of Article 12. The Division Bench, therefore, referred the matter
to a Full Bench for consideration of the main issue as to whether the appellant- F
Company was a State within the meaning of Article 12 of the Constitution.
The Full Bench came to the conclusion that the appellant-Company was an
authority and instrumentality or agency of the State, so as to attract Article
12 of the Constitution oflndia. However, appeals against the order of Single
Judge, were allowed on the ground that impugned order of transfer was not
vitiated by malcfides or by any extraneous considerations and that the G
respondents have no legal right to challenge the said order of transfer on
administrative grounds. Hence these appeals.
Dismissing the appeals, the Court
HELD : I. Appellant-Company is a Government Company as envisaged H
37
38 SUPREME COURT REPORTS [2002] I S.C.R.

A in Section 617 attracting Section 619 of the Companies Act. More than 97% c::::
of the Share Capital has been constituted by the State Government and the
financial institutions controlled by and belonging to the Government of India. .
c
It has been entrusted with important public duties obligating to undertake,
permit and sponsor rural development and for social and economic welfare of
the people of rural areas by undertaking programmes to assist and promote
B activities for the growth of national economy. The State Government has deep
and pervasive control of the appellant-Company and its day to day
administration and consequently it is an instrumentality and agency of the
State Government. [48-H; 49-A-C)

c within1.2.theAppellant-Company being other authority is consequently State
meaning of Article 12 of the Constitution of India. The said
definition has a specific purpose that is under part III of the Constitution, and
not for making it a Government or Department of the Government. This is
the inevitable consequence of the other authorities being entities with
independent status distinct from the State and this fact alone does not militate
D against such entities or institutions being agency or instrumentalities to come
under the net of Article 12 of the Constitution. The concept of instrumentality
or agency of the Government is not to be confined to entities created under or
which owes its origin to any particular statute or order but would really depend
upon a combination of one or more of relevant factors depending upon the
essentiality and overwhelming nature of such factors in identifying the real
E
source of governing power, if need be, by piercing the corporate veil of the
entity concerned. [48-E-F-G)

Steel Authority of India Ltd. & Ors. v. National Water front Workers &
Ors., [2001 I 7 sec 1, followed.
F
VST Industries Ltd v. VST Industries Workers' Union & Anr., [20011 1
sec 298, held in applicable.

Praga Tools Corporation v. C.A. !manual & Ors., (1969) 1 Sec 585; ~

Andi Mukta S.S.M. V.S.S. J.M.S. Trust v. V.R. Rudani, (1989) 2 691; Tekraj
G Vasandi@ K.L. Basandhi v. Union of India & Ors., (1988) 1 SCC 236; Ajay
Hasia & Ors. v. Khalid Mujib Sehravardi & Ors., [1981) 1SCC722; Ramana
Daysram Shetty v. International Airport Authority of India, (1979) 3 SCC 489
and Chander Mohan Khanna v. NCERT, [1991) 4 SCC 578, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 5247-5248 of
H 1998.
~'
MYSORE PAPER MILLS LTD. 1•. MYSORE PAPER MILLS OFFICERS' ASSOC. [RAJU, J.] 39
From the Judgment and Order dated 12.8.98 of the Kamataka High Court A
in W.A. Nos. 1242-43of1998.
"' L. Nageswara Rao, Ranjit Kumar, K.C. Sudarshan, M.A. Chinnesamy,
} Jayanth Muthraj, E.M.S. Anam and Fazlin Anam for the appearing parties.
J The Judgment of the Court was delivered by B
RAJU, J. The above ::ippeals have been filed by the Mysore Paper Mills
Ltd. (hereinafter referred to as the "Appellant-Company"), against the judgment
ofa Full Bench of the High Court ofKamataka dated 12.8.98 in W.A. Nos.1242-
1243 of 1998, insofar as it was held therein that the appellant-company is
"State" within the meaning of Article 12 of the Constitution of India, though, c
their appeals against the order of the Single Judge came to be allowed on the
ground that impugned order of transfer against the 2nd respondent was not
shown to be vitiated by malafides or by any extraneous considerations and
that the respondents have no legal right to challenge the said order of transfer
made on administrative grounds, when plea of alleged malafides and
D
vindictiveness has not been substantiated.

The second respondent, said to be a Post-Graduate in Chemistry joined
the services of the appellant-company on 10.8.91 as Management Trainees
and after successive career prospects came to be promoted as senior
Superintendent (D.M. Plant) which came to be redesignated as Assistant E
manager (D.M. Plant) on 7.9.91. By a memorandum bearing reference No.FPN
j
TRF/97/384 dated 27.11.97 he was transferred to the regional office Calcutta.
The said order came to be challenged as vitiated by malafides and illegality
and one made with a view to victimize and prevent him from functioning as
an Executive Member of the M.P.M. Officers' Association. Certain allegations
to support such a claim were also made, and it is not necessary to advert to F
all those details, in view of certain subsequent developments and tum of
events. In the Writ Petition filed by the respondents, a learned Single Judge
of the High Court by an order dated 4.3.98 granted stay of the order of
-< transfer dated 27.11.97 confirming thereby the ex-parte interim order of stay
earlier granted on 24.2.98 and rejecting the application of the appellant company G
for vacating the same. Before the Division Bench, at the time of initial hearing
of the appeals the two grounds of challenge urged were:

(i) The Writ Petitions filed were not maintainable against the appellant-
company, since it is not a 'State or other authority' within the meaning of
Article 12 of the Constitution of India and (ii) the order of transfer was quite H
1
'
40 SUPREME COURT REPORTS (2002] I S.C.R.

A in accordance with the tenns and conditions of contract of service as well as
Officers Service Rules and necessitated on account of the exigencies of work
and the interests of business of the appellant-company and therefore not
vitiated due to any malajides or other extraneous considerations, as alleged.

B
Since, in certain earlier decisions of the Division Bench, the appellant-company
was held to be not "State" within the meaning of Article 12 and it was
considered to require reconsideration in the light of certain decisions of this
c
Court, the matter was referred to a Full Bench for consideration.

Before the Full Bench, the following questions were taken up for
consideration:
c (!)Whether the Mysore Paper Mills which is a company incorporated
under the Companies Act, 1956, and which is a Government Company
as defined in Section 617 of the Companies Act falls within the
meaning of the word "State'', as defined in Article 12 of the Constitution
of India?
D (2) Whether the action taken by the appellant-company transferring
the 2nd respondent to Calcutta under the memo bearing No. FPA/
TRF/384 dated 27.11.97 is vitiated by rnalafides and whether it is
arbitrary and illegal?

E On a review and consideration of the case law on the subject, the Full
Bench, in the judgment under challenge, noticed the various tests laid down
by this Court and proceeding to consider the status of the appellant-company
in the light of those tests and adverting as well to the memorandum of ·'·
Association and Articles of Association of the appellant-company and the
day-to-day administration of its affairs, held as hereunder:
F
"(a) That the appellant-company is a governmental company as per
Section 617 of the Companies Act, 1956.

(b) The declared objects of the company viz., I, IA, 3, 4, 4A, 5, 5A
and 5B establish that the company has been entrusted with an important
G function of public interest closely related to governmental functions
and it enjoys monopoly status, which is state conferred.

(c) The functions entrusted to the appellant-company go to show that
the government operates behind a corporate veil carrying out
governmental functions of vital importance and therefore, there is no
H difficulty in identifying the appellant-company to be 'State" within the
MYSORE PAPER MILLS LTD. 1•. MYSORE PAPER MILLS OFFICERS' ASSOC. [RAJU, J.] 4J
meaning of Article 12 of the Constitution of India. A
(d) The summarized balance sheets for the years 1993-94, 1994-95, and
1995-96 disclosed that more than 97% of the share capital has been
contributed by the State of Karnataka and the financial institutions
controlled and belonging to Government of India.
B
(e) The business of the company which has to be managed by the
Board of Directors (Article 114 of the Articles of Association) shall
have the Chairman of the Board and Managing Director (Article 119)
and four Directors of whom one will be the Chainnan will be nominated
by the Government of Karnataka who shall not retire by rotation or
be removed from office except under the orders of the Government of C
Karnataka (Article 94). The Directors to whom the Management is
entrusted shall not be more than 12 or less than 9, inclusive of the
Government nominees and nominees of the Financial Institutions
noticed under Article 94A and not only such nominees of Financial
Institutions hold office so long as moneys remain owed to those D
institutions or those institutions hold debentures in the company as
a result of direct subscription or private placement, but the Board also
has no powers to remove them during such period.

(f) The appellant-company is found to be under the control of the
Government ofKarnataka sometimes directly and sometimes through E
the machinery of Karnataka State Bureau of Public Enterprises in
respect of matters entrusted to it: as disclosed from the book published
by the Department of Personnel and Administration Reforms of the
Government of Karnataka.

(g) Apart from the Directors who are nominees of the government and F
the Financial Institutions controlled by the Central Government even
the elected Directors were also to be nominated by the Government
of Karnataka and one cannot become a Director of the appellant-
company without the concurrence or nomination by the Government.
G
(h) Appointment of several officers, playing vital role in the day-to-
day administration of the company can be done only with the prior
permission or approval of the Government of Karnataka. The General
Manager also may be appointed on such terms and remunerations as
may be fixed, only subject to the approval of the Government of
Karnataka. H
42 SUPREME COURT REPORTS (2002] 1 S.C.R.

A (i) For any investment or expenditure above 25 lakhs the approval of
Government ofKarnataka is required. Any revision of Pay Scales and
allowances of employees and officers also have to be done only with
the approval of the KSBPE. Recruitments to posts carrying Pay Scales
above Rs.4700 can only be with the permission of the Government and
reservation policies under Article 16(4) of the Constitution are also
B applicable to recruitments by the company. Deputation to Govt. and
vice-versa are also permitted. All foreign tours of officers have to be
approved by the Government.

(j) All loans taken by the appellant-company are guaranteed by the •
c Government of Kamataka.

(k) The <;:ompany Secretary of the appellant-company has in his
communication annexure "GGG" declared that the same is an
undertaking under the control of the Government of Karnataka."

On the basis of the above facts found and several other documents
D produced reflecting the conditions and terms subject to which the affairs of
the company were found actually carried on (noticed in para 12 of the judgment
of the High Court) the full Bench came to the inevitable conclusion that the
entir~ company is run as part or an enterprise of the State Government and
that everyone of the schemes of the company are also to be approved by the
E Government. Total financial control of the company by the Government has
also been found. The fact that the State Government has notified the premises
of the company at Bhadravathi as "public premises" under the provisions of
the Karnataka public premises (Eviction of Unauthorized Occupants) Act
1974, and appointment of fiv.e of its officers as competent officers for the
purpose of the Act, has been also taken due note and consideration to come
F to the ultimate conclusion that the company is an authority and instrumentality
or agency of the State, so as to attract Article 12 of the Constitution of India.

Heard, the learned senior counsel, appearing on either side who tried
to reiterate the very stand taken before the High Court relying upon one or ...
the other of the decisions noticed by the High Court and some subsequent
G decisions, to which a reference will be made hereinafter. We have carefully
considered the submissions on either side in the light of the principles laid "
-·
down by this Court and the factual details found on the basis of the materials
placed at the time of hearing before the High Court.Except taking exception
to the finding that the company's business in the manufacture of news
H printing papers no monopoly of State is enjoyed and that the said assumption
MYSORE PAPER MILLS LTD. 1•. MYSORE PAPER MILLS OFFICERS' ASSOC. [RAJU, J.] 43
was wrong, none of the other factual findings were ever shown to be incorrect A
or unwarranted and without basis. Even this grievance is sought to be made
on the basis of national level factual assumption and not by producing any
material to disprove the statement recorded in the judgment that no other
company than the appellant is allowed to produce newsprint in State of
Kamataka, which alone being relevant for the purpose.
B
In Praga Tools Corporation v. C.A. /manual & Ors., [1969] I SCC 585,
this court declared that the person or authority on whom the statutory duty
is imposed need not be a public official or an official body and further held
that a mandamus can be issued to a society to compel it to carry out the terms
of the statute to which it owe its Constitution as well as to companies or C
corporations to carry out their duties enjoined by the statutes, authorising
their undertakings. In Andi Mukta S.S.M V.S.S. J.M.S. Trust v. V.R. Rudani,
[1989] 2 sec 691], this court held that the words "any person or authority"
used in Article 12 of the Constitution of India are not to be confined to only
statutory authorities and instrumentalities of the State and that they may
cover any other person or body performing public duties and the form of the D
body concerned is not very much relevant. The nature of duty imposed on
the body to be adjudged in the light of positive obligation owed by the
person or authority to the affected party, would be determinative of the
question of issue of a writ of mandamus to compel its performance. While
dealing with the Institute of Constitutional and Parliamentary Studies, registered E
under the Societies Registration Act, 1860, this Court in Tekraj Vasandi@
K.l. Basandhi v. Union ofIndia & Ors., [1988] I SCC 236, observed that there
cannot be any strait-jacket formula for adjudging whether any person or
authority answers the description of 'State' within the meaning of Article 12,
and it would be necessary to look into the Constitution of the body, the
purpose for which it has been constituted, the manner of its functioning F
including the mode of its funding and the broad features which have been
found by this Court to be relevant for such purpose though it is not necessary
that all those tests should be satisfied in every case to arrive at a conclusion
either way.

In Ajay Hasia & Ors. v. Khalid Mujib Sehravardi & Ors., (1981] I SCC G
~ 722, this Court while approving the tests laid down in Ramana Dayaram
Shetty v. International Airport Authority of India, (1979] 3 SCC 489 as to
when a corporation can be said to be an instrumentality or agency of
Government observed as hereunder:

"9. The tests for determining as to when a corporation can be said to H
44 SUPREME COURT REPORTS [2002] l S.C.R.

A be an instrumentality or agency of government may now be culled out
from the judgment in the International Airport Authority case. These
tests are not conclusive or clinching, but they are merely indicative
indicia which have to be used with care and caution, because while
stressing the necessity of a wide meaning to be placed on the
expression "other authorities", it must be realized that it should not
B be 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. We may summarise the relevant tests gathered from the
decision in the Internal Airport Authority case as follows:
c (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.
(SCC p. 507, para 14)

D (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. (SCC p. 508, para 15)

(3) It may also be a relevant factor ....... whether the corporation enjoys
E monopoly status which is State conferred or State protected.
(SCC p. 508, para 15)

(4) Existence of deep and pervasive State control may afford an
indication that the corporation is a State agency or instrumentality.
(SCC p. 508, para 15)
F
(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. (SCC p. 509, para 16)

G (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. (SCC p. 510, para 18)

If on a consideration of these relevant factors it is found that the
H corporation is an instrumentality or agency of government, it would, as
MYSORE PAPER MILLS LTD. v. MYSORE PAPER MILLS OFFICERS' ASSOC. (RAJU, J.] 45
pointed out in the International Airport Authority case, be an 'authority' and, A
therefore, 'State' within the meaning of the expression in Article 12."

In Chander Mohan Khanna v. NCERT, [1991] 4 SCC 578, this Court
while observing that there are only general principles but not exhaustive tests
to determine whether a body is an instrumentality or agency of the Government
and those which are not, emphasized that the powers, functions, finances and B
control of the Government are some of the indicating factors to answer such
questions. The combination of State aid coupled with an unusual degree of
control over the management and policies of the body and rendering of an
• important public service were considered vital to point out that the body is
"State''. Due caution was also administered that the wide enlargement of the C
meaning must be tempered by wise limitation and mere State control, however
vast and pervasive is not by itself determinative and the financial contribution
by the State is also not conclusive. In VST Industries Ltd. v. VST Industries
Workers' Union & Anr., [2001] 1 SCC 298, this Court was only concerned with
the question as to whether, a canteen run in the factory of the company
concerned pursuant to an obligation cast under Section 46 of the Industrial D
Disputes Act, can be said to constitute a person or authority to attract judicial
review under Article 226 of the Constitution of India in respect of its action/
activities and the answer was that the company concerned therein
manufacturing and selling cigarettes or running the canteen for the welfare
of workmen was not performing any public activity, function or duty so as
to render it amenable to Article 226 of the Constitution of India. This, in our E
view, does not in any manner help to support the stand of the appellant
before us.

Instead of multiplying reference to several authorities of decided cases,
it would be useful to advert to a latest decision of this Court rendered by a F
Constitution Bench in Steel Authority of India Ltd. & Ors. v. National Union
Waterfront Workers & Ors., [2001] 7 SCC I, wherein while dealing with a claim,
whether all Central Government undertakings which fall within the meaning
of "other authorities" in Article 12 of the Constitution of India are agents or
instrumentalities of the State functioning under the "authority" of the Central
Government to constitute such Government to be the "appropriate G
Government" for purposes of Section 2(1)(a) of the Contract Labour (Regulation
and Abolition) Act, 1970 and Section 2(a) of the Industrial Disputes Act, 1947,
this Court adverted to the relevant decisions and after an analytical
consideration of the principles therein obse'rved as follows:

"31. In interpreting the said phrase, support is sought to be drawn by H
46 SUPREME COURT REPORTS [2002] 1 S.C.R.

A the learned counsel for the contract labour from the cases laying
down the principles as to under what circumstances a government
company or undertaking will fall within the meaning of "State or other
authorities" in Article 12 of the Constitution. We shall preface our
.\
~
discussion of those cases by indicating that for purposes of
enforcement of fundamental rights guaranteed in Part III of the
B Constitution the question whether a government company or
undertaking is "State" within the meaning of Article 12 is germane. It
is important to notice that in these cases the pertinent question is
appropriateness of the Government which is the appropriate •
Government within the meaning of the CLRA Act; whether the Central
c or the State Government is the appropriate Government in regard to ..,,
the industry carried on by the Central/State Government company or
any undertaking and not whether such Central/State Government
company or undertaking comes within the meaning of Article 12. The
word "State" is defined in Article 12 which is quoted in the footnote.

D 32. In Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi this
Court, in the context whether service regulations framed by statutory ~

corporations have the force oflaw, by majority, held that the statutory
corporations like ONGC, IFFCO, LIC established under different statutes
fell under "other authorities" and were, therefore, "State" within the
meaning of that term in Article 12 of the Constitution. The Court took
E into consideration the following factors, (a) they were owned, managed
and could also be dissolved by the Central Government; (b) they were
completely under the control of the Central Government; and (c) they
were performing public or statutory duties for the benefit of the public
_.,
and not for private profit; and concluded that they were in effect
acting as the agencies of the Central Government and the service
F
regulations made by them had the force of law, which would be
enforced by the Court by declaring that the dismissal of an employee
of the corporation in violation of the regulations, was void.

33. In Ramana Dayaram Shetty v. International Airport of India a
three-Judge Bench of this Court laid down that corporations created
G
by the Government for setting up and management of public enterprises ;....
and carrying out public functions, act as instrumentalities of the
Government; they would be subject to the same limitations in the field
of constitutional and administrative laws as the Government itself,
though in the eye of the law they would be distinct and independent
H legal entities. There. this Court was enforcing the mandate of Article
MYSORE PAPER MILLS LTD.'" MYSORE PAPER MILLS OFFICERS' ASSOC. (RAJU, J.) 47
14 of the Constitution against the respondent-Central yovemment A
J. corporation.

34. Managing Director, U.P. Warehousing Corpn. v. Vijay Narayan
Vajpayee dealt with a case of dismissal of the re~pondent employee
of the appellant Corporation in violation of th1; principles of natural
justice. There also the Court held the Corporation to be an B
instrumentality of the State and extended protection of Articles 14 and
16 of the Constitution to the employee taking the view that when the
Government is bound to observe the equality clause in the matter of
employment the corporations set up and owned by the Government
are equally bound by the same discipline.
c
35. In Ajay Hasia v. Khalid Mujib Sehravardi the question decided
by a Constitution Bench of this Court was: whether Jammu and
Kashmir Regional Engineering College, Srinagar, registered as a society
under the Jammu and Kashmir Registration of Societies Act, 1898, was
"State" within the meaning of Article 12 of the Constitution so as to D
be amenable to writ jurisdiction of the High Court. Having examined
the memorandum of association and the Rules of the Society, the
Court decided that the control of the State and the Central Government
was deep and pervasive and the Society was a mere projection of the
State and the Central Government and it was, therefore, an
instrumentality or agency of the State and the Central Government E
and as such an authority-State within the meaning of Article 12.

36. The principle laid down in the aforementioned cases that if the
,. Government acting through its officers was subject to certain
constitutional limitations, a fortiori the Government acting through the
instrumentality or agency of a corporation should equally be subject F
to the same limitations, was approved by the Constitution Bench and
it was pointed out that otherwise it would lead to considerable erosion
of the efficiency of the fundamental rights, for in that event the
Government would be enabled to override the fundamental rights by
adopting the stratagem of carrying out its function through the G
instrumentality or agency of a corporation while retaining control over
it. That principle has been consistently followed and reiterated in all
subsequent cases see Delhi Transport Corpn. v. D. TC. Mazdoor
Congress; Som Prakash Rekhi v. Union of India; Manmohan Singh
Jaitla v. Commr., Union Territory of Chandigarh; P.K. Ramachandra
Iyer v. Union of India; A.L. Katra v. Project and Equipment Corpn. H
48 SUPREME COURT REPORTS [2002] 1 S.C.R.

A of India Ltd, Central Inland Water Transport Corpn. Ltd. v. Brojo
Nath Ganguly; C. V. Raman v. Bank of India; Lucknow Development
Authority v. MK. Gupta; Star Enterprises v. City and Industrial
Development Corpn. of Maharashtra Ltd, LIC of India v. Consumer
Education & Research Centre and G.B. Mahajan v. Jalgaon
Municipal Council. We do not propose to burden this judgment by
B adding to the list and referring to each case separately.

37. We wish to clear the air that the principle, while discharging public
functions and duties the government companies/corporations/societies
which are instrumentalities or agencies of the Government must be
subjected to the same limitations in the field of public law-
c constitutional or administrative law-as the Government itself, does not
lead to the inference that they become agents of the Centre/State
Government for all purposes so as to bind such Government for all
their acts, liabilities and obligations under various Central and/or
State Acts or under private law."
D A careful consideration of the principles of law noticed supra and the
factual details not only found illustrated from the memorandum as well as
Articles of Association of the appellant but enumerated from the day-to-day
running of the business and administration of the company leave no room for
any doubt as to the identity of the appellant-company being "other authority"
E and consequently "the State" within the meaning of Article 12 of the
Constitution of India. The said definition has a specific purpose and that is
part III of the Constitution, and not for making it a Government or department
of the Government itself. This is the inevitable consequence of the "other
authorities" being entities with independent status distinct from the state and
F this fact alone does not militate against such entities or institutions being
agencies or instrumentalities to come under the net of Article 12 of the
Constitution. The concept of instrumentality or agency of the Government is
not to be confined to entities created under or which owes its origin to any
particular statute or order but would really depend upon a combination of one
or more ofrelevant factors, depending upon the essentiality and overwhelming
G nature of such factors in identifying the real source of governing power, if
need be, by piercing the corporate veil of the entity concerned.

The indisputable fact that the appellant-company is a Government
company as envisaged in Section 617 attracting Section 619 of the Companies
Act, that more than 97% of the share capital has been contributed by the
H State Government and the financial institutions controlled and belonging to
MYSORE PAPER MILLS LTD. 1•. MYSORE PAPER MILLS OFFICERS' ASSOC. (RAJU, J.] 49

the Government of India on the security and undertaking of the State A
Government, that the amendments introduced to the Memorandum of
Association in the year 1994 introducing Articles SA and SB, entrusts the
appellant-company with important public duties obligating to undertake, permit,
sponsor rural development and for social and economic welfare of the people
in rural areas by undertaking programmes to assist and promote activities for B
the growth of national economy which are akin and related to the public
duties of the State, that out of 12 directors S are Government and departmental
persons, besides other elected directors also are to be with the concurrence
and nomination of the Government and the various other form of supervision
and control, as enumerated supra, will go to show that the State Government
has deep and pervasive control of the appellant company and its day-to-day C
administration, and consequently confirm the position that the appellant-
company is nothing but an instrumentality and agency of the State Government
and the physical form of company is merely a cloak or cover for the Government.
Despite best and serious efforts made on behalf of the appellant, the decision
under challenge has not been shown to suffer any infirmity whatsoever to call
for interference in our hands. D
The appeals, therefore, fail and shall stand dismissed. No costs.

S.K.S. Appeals dismissed.

}

.•