Source: Allahabad High Court 

Why in News?  

Recently, the Allahabad High Court in the matter of Prem Chand v. State of UP & Ors., has held that Kshetriya Gandhi Ashram, Meerut is not 'State' under Article 12 of the Constitution of India, 1950 (COI) as there is no statute regulating the functions of the Ashram or empower State to control its affairs. 

What was the Background of Prem Chand v. State of UP & Ors. Case?  

• In this case, the petitioner was employed as a Supervisor in the Kshetriya Shri Gandhi Ashram, Garh Road, Meerut and transferred to Shri Gandhi Ashram, Khadi Bhandar, Baraut, District Baghpat by an order passed by the Secretary, Kshetriya Shri Gandhi Ashram, Meerut.  
• The petitioner says that he was also the elected Secretary of the Kshetriya Shri Gandhi Ashram Employees Union, Meerut. 
• The petitioner moved a complaint dated 8th September 2023 before the Branch Manager of the Union Bank and the Canara Bank, where accounts of the Kshetriya Shri Gandhi Ashram, Meerut are maintained, about execution of a forged sale deed on behalf of the Kshetriya Shri Gandhi Ashram, Meerut in favour of one Ranuka Ashiyana Private Limited, besides misuse of funds by the Kshetriya Shri Gandhi Ashram, Meerut. 
• An inquiry was conducted into the complaint and operation of the Bank Accounts of the Kshetriya Shri Gandhi Ashram, Meerut was stopped. 
• The petitioner was threatened by the Secretary of the Kshetriya Shri Gandhi Ashram, Meerut, to withdraw his complaint, upon pain of facing dire consequences. 
• The Secretary of the Kshetriya Shri Gandhi Ashram, Meerut passed the dated 16th September 2023, dismissing the petitioner from service, without holding any inquiry.  
• By another order dated 25th September 2023, the petitioner has been asked to handover possession of the house allotted to him as an employee of the Kshetriya Shri Gandhi Ashram, Meerut.  
• Thereafter, a writ petition was filed by the petitioner before the Allahabad High Court.  
• Counsel for respondent raised a preliminary objection as to the maintainability of the petition. It was argued that the Kshetriya Shri Gandhi Ashram, being a registered society is not an instrumentality of the State. 
• The High Court dismissed the petition.  

What were the Court’s Observations?  

• Justice J.J. Munir observed that Shri Gandhi Ashram, parent body of Kshetriya Shri Gandhi Ashram, Meerut is not state within Article 12 of the COI as the state had no statutory control over its functioning and no writ is maintainable against the Ashram. 
• The Court relied on the judgment given in the case of Suresh Ram v. State of U.P (2005) in which the Allahabad High Court laid down 6 factors to be considered while deciding whether a cooperative society is a 'State' under Article 12 of the COI. The factors are: 
  • One thing is clear that if the entire share capital of the corporation is held by the Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. 
  • Where the financial assistance of the State is so much as to meet almost the entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.  
  • It may also be a relevant factor whether the corporation enjoys monopoly status which is State-conferred or State-protected.  
  • The existence of deep and pervasive State control may afford an indication that the corporation is a state agency or instrumentality.  
  • 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. 
  • 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. 

What is State under Article 12 of the COI?  

Meaning of State: 

• Article 12 lays down that unless the context otherwise requires, the State includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. 
• The definition of State is inclusive and provides that State includes the following:  
  1. Government and Parliament of India i.e., the Executive and Legislature of the Union. 
  2. Government and Legislature of each State i.e., the Executive and Legislature of the various States of India. 
  3. All local or other authorities within the territory of India, or under the control of the Government of India. 

Government and Parliament of India 

• The term State includes the Government of India i.e., Union executive and the Parliament of India.  
• This term stands to include a Department of Government or any institution under the control of a Department of Government e.g. the Income Tax Department.  
• The President while acting in his official capacity must be included in the term and be regarded as State.  

Government and Legislature of Each State 

• The term State includes the Government of each State that is the State Executive and legislature of each State that is the State legislatures.  
• It includes Union Territories as well.  

Local or Other Authorities Within the Territory of India 

• The expression local authorities is defined in Section 3(31) of the General Clause Act, 1897 as local Authority shall mean a municipal committee, district board, body of commissioner or other authority legally entitled to or entrusted by the Government within the control or management of a municipal or local fund. 
• The expression local authorities usually refer to authorities such as municipalities, District Boards, Panchayats, mining settlement boards, etc. Anybody functioning under the state; owned; controlled and managed by the State and carrying out a public function is a local authority and comes within the definition of the state. 
• The term other authorities have nowhere been defined. Therefore, its interpretation has caused a good deal of difficulty, and judicial opinion has undergone changes over time. 
• The Supreme Court in the case of Union of India v. R.C. Jain (1981) laid down the test for determining which bodies would be considered as a local authority under the definition of State enshrined under Article 12 of the COI.  The Court held that if an authority: 
  • Has a separate legal existence 
  • Functions in a defined area 
  • Has the power to raise funds on its own 
  • Enjoys autonomy i.e., self-rule 
  • Is entrusted by statute with functions which are usually entrusted to municipalities, then such authorities would come under ‘local authorities’ and hence would be State under Article 12 of the COI.  

Whether a Body falls Under Article 12 or Not: 

• In R.D Shetty v. Airport Authority of India (1979) Justice P.N Bhagwati gave 5 Point test. This is a test to determine whether a body is an agency or instrumentality of the State and goes as follows – 
  • Financial resources of the State, where the State is the chief funding source i.e. the entire share capital is held by the government. 
  • Deep and pervasive control of the State. 
  • The functional character being Governmental in its essence, meaning thereby that its functions have public importance or are of a governmental character. 
  • A department of Government transferred to a corporation. 
  • Enjoys monopoly status which State conferred or is protected by it. 
• This was elucidated with the statement that the test is only illustrative and not conclusive in its nature and is to be approached with great care and caution. 

Whether State includes Judiciary:  

• Article 12 of the COI does not specifically define judiciary and a great number of dissenting opinions exist on the same matter. 
• Bringing judiciary entirely under Article 12 causes a great deal of confusion as it comes with an attached inference that the very guardian of our fundamental rights is himself capable of infringing them. 
• However, in Rupa Ashok Hurra v. Ashok Hurra (2002), the Supreme Court reaffirmed and ruled that no judicial proceeding could be said to violate any of the Fundamental rights and that it is a settled position of law that superior courts of justice did not fall within the ambit of State or other authorities under Article 12.  

Case Laws 

• University of Madras v. Shanta Bai (1950), the Madras High Court evolved the principle of ‘ejusdem generis’ i.e., of the like nature. It means that only those authorities are covered under the expression ‘other authorities’ which perform governmental or sovereign functions. Further, it cannot include persons, natural or juristic, for example, Unaided universities. 
• Ujjammabai v. the State of UP (1961), the Supreme Court rejected the above restrictive scope and held that the ‘ejusdem generis’ rule could not be resorted to in interpreting other authorities. The bodies named under Article 12 have no common genus running through them and they cannot be placed in one single category on any rational basis.