(Emphasis added)
11. Often, there is confusion when the concept of sovereign functions is extended to include all welfare activities. However, the court must be very conscious whilst taking a decision as regards the said issue, and must take into consideration the nature of the body's powers and the manner in which they are exercised. What functions have been approved to be sovereign are, the defence of the country, the raising of armed forces, making peace or waging war, foreign affairs, the power to acquire and retain territory etc. and the same are not amenable to the jurisdiction of ordinary civil courts. (Vide: N. Nagendra Rao & Co. v. State of A.P., 1995(1) R.R.R 378 : AIR 1994 Supreme Court 2663; and Chief Conservator of Forests & Anr. v. Jagannath Maruti Kondhare etc., 1996(2) S.C.T 164 : AIR 1996 Supreme Court 2898). In Bangalore Water Supply & Sewerage Board v. A. Rajappa & Ors., AIR 1978 Supreme Court 548, this Court dealt with the terms "Regal" and "Sovereign" functions, and held that such terms are used to define the term "Governmental" functions, despite the fact that there are difficulties that arise while giving such a meaning to the said terms, for the reason that the Government has now entered largely the field of industry. Therefore, only those services, which are governed by separate rules and constitutional provisions such as Articles 310 and 311, should strictly speaking, be excluded from the sphere of industry by necessary implication. Every Governmental function need not be sovereign. State activities are multifarious. Therefore, a scheme or a project, sponsoring trading activities may well be among the State's essential functions, which contribute towards its welfare activities aimed at the benefit of its subjects, and such activities can also be undertaken by private persons, corporates and companies. Thus, considering the wide ramifications, sovereign functions should be restricted to those functions, which are primarily inalienable, and which can be performed by the State alone. Such functions may include legislative functions, the administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon etc. Therefore, mere dealing in a subject by the State, or the monopoly of the State in a particular field, would not render an enterprise sovereign in nature. (Vide: Agricultural Produce Market Committee v. Ashok Harikuni & Anr. etc., 2000(4) S.C.T. 674 : AIR 2000 Supreme Court 3116; State of U.P. v. Jai Bir Singh, 2005(3) S.C.T. 143 : (2005) 5 SCC 1; Assam Small Scale Ind. Dev Corporation Ltd. & Ors. v. M/s. J.D. Pharmaceuticals & Anr., AIR 2006 Supreme Court 131; and M.D., H.S.I.D.C. & Ors. v. M/s. Hari Om Enterprises & Anr., AIR 2009 Supreme Court 218). 12. A public authority is a body which has public or statutory duties to perform, and which performs such duties and carries out its transactions for the benefit of the public, and not for private profit. Article 298 of the Constitution provides that the executive power of the Union and the State extends to the carrying on of any business or trade. A public authority is not restricted to the Government and the legislature alone, and it includes within its ambit, various other instrumentalities of State action. The law may bestow upon such organization, the power of eminent domain. The State in this context, may be granted tax exemption, or given monopolistic status for certain purposes. The State being an abstract entity, can only act through an instrumentality or an agency of natural or juridical persons. The concept of an instrumentality or agency of the Government is not limited to a corporation created by a statute, but is equally applicable to a company, or to a society. In a given case, the court must decide, whether such a company or society is an instrumentality or agency of the Government, so as to determine whether the same falls within the meaning of expression 'authority', as mentioned in Article 12 of the Constitution, upon consideration of all relevant factors. In light of the aforementioned discussion, it is evident that it is rather difficult to provide an exhaustive definition of the term "authorities", which would fall within the ambit of Article 12 of the Constitution. This is precisely why, only an inclusive definition is possible. It is in order to keep pace with the broad approach adopted with respect to the doctrine of equality enshrined in Articles 14 and 16 of the Constitution, that whenever possible courts have tried to curb the arbitrary exercise of power against individuals by centres of power, and therefore, there has been a corresponding expansion of the judicial definition of the term State, as mentioned in Article 12 of the Constitution. In light of the changing socio-economic policies of this country, and the variety of methods by which Government functions are usually performed, the court must examine, whether an inference can be drawn to the effect that such an authority is infact an instrumentality of the State under Article 12 of the Constitution. It may not be easy for the court, in such a case, to determine which duties form a part of private action, and which form a part of State action, for the reason that the conduct of the private authority, may have become so entwined with Governmental policies, or so impregnated with Governmental character, so as to become subject to the constitutional limitations that are placed upon State action. Therefore, the court must determine whether the aggregate of all relevant factors once considered, would compel a conclusion as regards the body being bestowed with State responsibilities. 13. When we discuss 'pervasive control', the term 'control' is taken to mean check, restraint or influence. Control is intended to regulate, and to hold in check, or to restrain from action. The word 'regulate', would mean to control or to adjust by rule, or to subject to governing principles. (Vide: State of Mysore v. Allum Karibasauppa & Ors., AIR 1974 Supreme Court 1863; U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association & Ors. etc.etc., AIR 2004 Supreme Court 3697; M/s. Zee Telefilms Ltd., (supra); and Union of India (UOI) & Ors. v. Asian Food Industries, AIR 2007 Supreme Court 750). 14. In K. Ramanathan v. State of Tamil Nadu & Anr., AIR 1985 Supreme Court 660, this court held as under:
Category of shareholders |
%age of equity holding |
IBP Co. Ltd. |
61.80% |
Financial Institutions & Bank |
21.69% |
Public |
14.29% |
Employees |
0.85% |
Foreign National |
0.44% |
Corporate Bodies |
0.86% |
U.P. State Government |
0.02% |
Directors and their relatives |
0.85% |
Category of shareholders | %age of equity holding |
Balmer Lawrie Investment Ltd. | 61.80% |
Mutual Fund and UTI | 5.08% |
Financial Institution and Banks | 12.85% |
Foreign National | 2.97% |
UP State Government | 0.05% |
Private/Corporate Bodies | 6.14% |
Indian Public | 11.10% |
Directors and their relatives | 0.01% |
Category of shareholders | %age of equity holding |
Balmer Lawrie Investment Ltd. | 61.80% |
Mutual Fund and UTI | 5.08% |
Financial Institution and Banks | 12.85% |
Foreign National | 2.97% |
UP State Government | 0.05% |
Private/Corporate Bodies | 6.14% |
Indian Public | 11.10% |
Directors and their relatives | 0.01% |