V.K. Gupta, J.
1. In the course of hearing of this writ application, Justice D.P. Kundu was of the view that the Respondent Westinghouse Saxby Farmer Ltd. Is "other Authority" as contemplated by Article 12 of the Constitution of India, but Justice S.B. Sinha. In the case of Japan Kr. Banerjee & Ors. v. State of West Bengal & Ors. reported in 1995(2) CLJ 415 had taken a contrary view, thus necessitating Justice D.P. Kundu, based on the aforesaid difference of opinion between the two learned Judges of this court, to make a reference to the larger Bench for resolving this controversy. It is in this background that this writ application has come up for hearing before the Division Bench to decide the question whether the respondent Wesllnghouse Saxby Farmers Ltd. is "other Authority" or "State" under Article 12 of the Constitution of India.
2. The respondent Company was incorporated in 1923 and has been a manufacturer of brakes, signalling equipments and other related Items. In 1969 the Government of West Bengal purchased 51% shares in the said Company. Thereafter the Government of West Bengal advanced loans to the Company which were later on converted into equity shares. As at present it is the admitted case of the parties that the Government of West Bengal holds 81.75% shares in the said Company and that remaining 12.15% shares are held by Westinghouse Saxby Farmer Ltd., a Company incorporated in England. It is also undisputed that the Government's representatives in the Board of Directors of the Company are nominated by the Governor of West Bengal, but the management of the Company is being carried on according to the Memorandum of Association and the Articles of Association of the Company as per the terms of the Companies Act, 1956. The Company receives loans from the Government from time to time but does not receive any subsidies.
3. It is also the admitted case of the parlies that the Company is not involved in any Governmental function nor in any such manufacturing or trading activity which is monopolistic in character or which has any overriding Government consideration or effect attached to it. The parties agree that the nature of the manufacturing activity carried on by the Company, viz. the production of brakes, signalling equipments and other related items is such which is common to many other manufacturers in the private sectors. For Instance, the parties agree that Escorts Limited, Recon Engineering Company, ELBEE, Simens India Ltd., Crompton Greaves Limited etc. are some of the leading manufacturers in the country who also deal with the same items and who are competitors of the respondent-Company. Actually it is the common case of the parties that as compared to these manufacturers who are gtants in their fields, respondent Company is but a minor player.
4. S. B. Sinha, J. (as he then was), in the case of Tapan Kr. Banerjee v. State of West Bengal reported in 1995 (2) CLJ 415 while dealing with the question as to whether the respondent-Company is a "State" or "other Authority" as contemplated by Article 12 of the Constitution held in the negative. The following observations in that Judgment are apposite for our purposes.
"There cannot be any doubt that for the purpose of coming to conclusion as to whether a company is a 'State' or not, there cannot be any straight jacket formula. The Company had been doing its own business. Of course the State of West Bengal also provides for substantial giant in its budget. It is not denied that the Company is a Government company under the provisions of the Companies Act but the entire capital of the Company is not owned by the State Government. The Company does not enjoy any monopoly in the field of Its trading business. Its trading activities are not of great public Importance partaking the character of the State functions."
5. The learned Judge in Tapan Kumar Banerjce's case was examining various leading judgments of the Supreme Court on the question and after a critical analysis of the ratio laid down in these Judgments came to a definite conclusion that the respondent-Company does not enjoy any monopoly status in the field of its trading or manufacturing activity and since it competes with other Companies in the said field, it cannot be held to be either "State" or "other Authority" as contemplated by Article 12 of the Constitution. It is also the view of the learned Judge that trading activities of the respondent are not of any great public Importance partaking the character of any State function.
6. Justice D.P. Kundu however did not seem to be in agreement with the aforesaid view of S.B. Sinha, J and accordingly desired that the question be referred to a larger Bench for a resolution of the difference in opinion between the two learned Judge of this court.
7. In Ramana Day Ram Shetty v. The International Airport Authority of India and others their Lordships of the
Supreme Court while for the first time dwelling in details on this question observed as under :--
"Now, it is obvious that the Government which represents the executive authority of the State, may act through the instrumentality or agency of natural persons or it may employ the instrumentality or agency of Juridical persons to carry out its functions. In the early days, when the Government had limited functions, it could operate effectively through natural persons constituting its civil service and they were found adequate to discharge Government functions, which were of traditional vintage. But as the tasks of the Government multiplied with the advent of the welfare State, it began to be Increasingly felt that the framework of civil service was not sufficient to handle the new tasks which were often of specialised and highly technical character. 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 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."
8. At another place in the same Judgment Their Lordships held as under :--
"It was in pursuance of the policy envisaged in this and subsequent resolutions on Industrial Policy that corporations were created by Government for setting up and management of public enterprises and carrying out other public functions. Ordinarily these functions could have been carried out by Government departmentally through its service personnel, but the Instrumentality or agency of the corporations was resorted to in these cases having regard to the nature of the task to be performed. The corporations acting as instrumentality or agency of Government would obviously be subject to the same limitations in the field of Constitutional and administrative law as Government itself, though in the eye of the law, they would be distinct and Independent legal entitles. If Government acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that Government acting through the instrumentality or agency of corporations should equally be subject to the same limitations. But the question is how to determine whether a corporation is acting as Instrumentality or agency of Government. It is a question not entirely free from difficulty.
This Judgment went on to further say as under :--
"So also the existence of deep and pervasive State control may afford an Indication that the Corporation is a State agency or Instrumentality. It may also be a relevant factor to consider whether the corporation enjoys monopoly status which is State conferred or State protected. There can be little doubt that State conferred or State protected monopoly status would be highly relevant in assessing the aggregate weight of the corporations' ties to the State. Vide the observations of Dougles, J., in Caterine Jackson v. Metropolitan Edison Co., (1974) 419 US 345 : 42 L Ed 2d 477".
9. Ultimately, being very close to the point involved in our case, it was held as under :--
"There is also another factor which may be regarded as having a bearing on this issue and it is whether the operation of the corporation is an important public function. It has been held in the United States in a number of cases that the concept of private action must yield to a conception of State action where public functions are being performed. Vide Arthur S. Mlllar :
"The Constitutional Law of the 'Security State" (10 Stenford Law Review 620 at p. 664). It was pointed out by Dougles, J., in E.S. Evans v. Charles E. Newton (1996) 382 US 296 : 15 L Ed 2d 373 that "when private Individuals or groups are endowed by the State with powers or functions governmental in nature, they become State." Of course, with the growth of the welfare State, it is very difficult to define what functions are Government and what are not, because, as pointed out by Villmer, L.J., in Prizer v. Ministry of Health (1964) 1 Ch 614. there has been, since mid-Victorian times, "a revolution in political thought and a totally different conception prevails today as to what is and what is not within the functions of Government." Dougles, J. also observed to the same effect in New York v. United States (1945) 326 US 572 : 'A State's project is as much a legitimate governmental activity whether it is traditional, or akin to private enterprise, or conducted for profit". Cf. Heluering v. Gerhardt, (1937) 304 US 405, 426, 427. A State may deem it as essential to Its economy that it owns and operate a railroad, a mill, or an irrigation system as it does to own and operate bridges, street lights, or a sewage disposal plant. What might have been viewed in an earlier day as an improvident or even dangerous extension of state activities may today be deemed indispensable. It may be noted that besides the so-called traditional functions, the modern State operates a multitude of public enterprises and discharges a host of other public functions. If the function 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. This is precisely what was pointed out by Mathew, J., in Sukhdev v. Bhagatram (supra) where the learned Judge said
that 'institutions engaged in matters of high public functions are by virtue of the nature of the functions performed by Government agencies. Activities which are too fundamental to the society are by definition too Important not to be considered Government functions."
10. Agreeing with the aforesaid view, Their Lordships in Son Prakash Rekhi v. Union of India and another
observed as under :--
"The conclusion is impeccable that. If the corporate body is but an 'instrumentality or agency' of Government, then Part III will trammel its operations. It is a case of quasi-Governmental beings, not of non-State entitles. We have no hesitation to hold that where the chemistry of the corporate body answers the test of 'State' above outlined it comes within the definition in Article 12. In our constitutional scheme where the commanding heights belong to the public sector of the national economy, to grant absolution to Government companies and their ilk from Part III may be perilous. The court cannot connive at a process which eventually makes fundamental rights as rare as "roses in December, ice in June", as Lord Byron lamented in English Bards and Scottish Reviewers. Articles 12 uses the expression "other authorities" and its connotation has to be clarified. On this facet also the Airport Authority case. supplies a solution."
11. In Ajay Hasta v. Khaltd Mujib Sehravardi and Others, there Lordships of the Supreme Court were of the view as expressed hereinbelow :--
"11. We may point out that it is Immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The Inquiry has to be not how the jurisdlc person is born but why it has been brought into existence. The corporation may be statutory corporation created by a statute or it may be a Government company or a company formed under the Companies Act. 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute. Whatever be its genetlcal origin, it would be an "authority" within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of Instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally 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."
"12. It is also necessary to add that merely because a juristic entity may be an "authority" and therefore "State" within the meaning of Article 12. It may not be elevated to the position of "State" for the purpose of Articles 209, 310 and 311 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 India is not limited in Its application only to Part III and by virtue of Article 36, to Part IV, it does not extend to the other provisions of he Constitution and hence a jurisdiction entily which may be "State" for the purpose Parts III and IV would not be so for the purpose of Part XIV or any other provision of the Constitution. That is why the decision of this court in S.L. Aggwarwal v. Hindustan Steel Ltd.
and other cases involving the applicability of Article 311 have no relevance to the Issue before us."
12. From what we see with the aforesaid propositions of Law, we find that S.B. Sinha, J. took a correct view that the respondent was not either "State" or "other Authority" as contemplated by Article 12 of the Constitution and therefore decided the question accordingly.
13. We find ourselves in agreement with the view expressed by S.B. SInha, J and hold that the respondent Company is not "State" or "other Authority" within the purview of Article 12 of the Constitution and hold accordingly.
14. Undoubtedly the respondent-Company is not engaged in any such activity which may be called as Governmental in character, nor is it involved in any trading or manufacturing activity which can be termed as monopolistic in nature. Even otherwise we find that the vital element of pervasive control of the Government is not totally applicable in the case of the respondent Company. This apart, from what we have observed earlier, we say that the respondent Company is engaged in such manufacturing activity as is of general, common commercial character, same being carried on by other pure private commercial organisations. We therefore hold that D.P. Kundu, J. was not correct in his view that the respondent Company is "State" or "other authority" as contemplated by Article 12 of the Constitution.
In view of our finding on the aforesaid question we hold that the writ application is non-maintainable and accordingly dismiss the same, but without any order as to costs.
P. K. Sen, J.
15. Petition dismissed