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"State" under article 12 (Zee Telefilms vs. BCCI Critical analysis), Essays (university) of Constitutional Law

Constitutional Law (Article 12)

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2018/2019

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Name: Aanandini Kishor Thakare
Roll no.: 1
Unit: 2 (Applicability of the FRs and the State)
Judgement: Zee Telefilms Ltd. And Ors. Vs. Union of India (UOI) and Ors.
ā€˜Other Authorities’
Part III of our constitution grants certain fundamental rights, such as the right to
equality, right to life and liberty, right to freedom etc. that are justiciable in nature. Some of
these rights are available to ā€˜all persons’ and others only to the citizens of India. These rights
are granted to protect people from arbitrary state action and put certain checks on the power
of the state and exist so citizens may have an opportunity to develop and to preserve human
dignity. They are enforceable against the state via Article 32, which states that any individual
whose fundamental right has been violated may move directly to the Supreme court which is
seen as the guarantor of these rights. Most of these rights can only be claimed against the
ā€˜State’, it then becomes extremely important to determine exactly what state means. For this
purpose, Article 12 defines the term, and it includes in its definition the ā€œGovernment 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.ā€1 As we can see, the first few authorities mentioned in Article 12 are quite clear, but
local authorities and other arthurites are a bit ambiguous and need unpacking. Next, we shall
look at how this has been done.
While the term ā€˜local authorities’ was defined by the General Clauses Act of 1987, but ā€œother
authoritiesā€ has been interpreted on a case to case basis. There have been several tests laid
down in this regard, they are- The Control test, The Public Functions test, and The Statutory
Powers test. In the Control test, we look at who the actor is. Thus, the fact to be determined is
whether the body is in any way under the control of the government. In cases where a govt
gives away rights to a private company, or buys shares in a private company, or in any way
controls the actions of or acts indirectly through any body, this test would hold it to be state.
This is because even though the body is private, it is the govt acting through them. This is
useful when it comes to preventing the govt from avoiding its constitutional duties merely by
setting up corporates or companies or transferring rights to them. Whereas, in the Public
Functions test, the nature of the functions performed by the body, whether private or public,
is considered. Here, control of the govt or statutory power would be of no consequence. If the
functions performed by the body in question are of a public nature, they will automatically be
subject to fundamental rights and be held as ā€˜state’. Lastly, we have the Statutory Power test,
where we take into consideration whether the body in question was created under a statute or
if it has statutory authority to create laws or give directions having the force of law and
necessarily affect third parties.
In the past, the Supreme Court has adopted several variants of the tests mentioned above to
determine if a body would fall under the term ā€˜other authorities.’ We can trace this evolution
by looking at the following cases-
(i) Rajasthan Electricity board vs. Mohan Lal (1967) In this case which was decided by a
five judge bench, it was held that the Rajasthan State Electricity Board could be held to be
state and the reasoning was that the body must either be created by a statute or must be
controlled by the government.2
Next, we have (ii) Sukhdev Singh vs. Bhagat Ram (1975) Here the nature of corporations
such as Life Insurance Corporation (LIC), Oil and Natural Gas Corporation (ONGC), and
1 Constitution of India art. 12
2 1967 SCR (3) 377 Rajasthan Electricity board vs. Mohan Lal (1967)
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Name: Aanandini Kishor Thakare Roll no.: 1 Unit: 2 (Applicability of the FRs and the State) Judgement: Zee Telefilms Ltd. And Ors. Vs. Union of India (UOI) and Ors.

ā€˜Other Authorities’

Part III of our constitution grants certain fundamental rights, such as the right to equality, right to life and liberty, right to freedom etc. that are justiciable in nature. Some of these rights are available to ā€˜all persons’ and others only to the citizens of India. These rights are granted to protect people from arbitrary state action and put certain checks on the power of the state and exist so citizens may have an opportunity to develop and to preserve human dignity. They are enforceable against the state via Article 32, which states that any individual whose fundamental right has been violated may move directly to the Supreme court which is seen as the guarantor of these rights. Most of these rights can only be claimed against the ā€˜State’, it then becomes extremely important to determine exactly what state means. For this purpose, Article 12 defines the term, and it includes in its definition the ā€œGovernment 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.ā€ 1 As we can see, the first few authorities mentioned in Article 12 are quite clear, but local authorities and other arthurites are a bit ambiguous and need unpacking. Next, we shall look at how this has been done.

While the term ā€˜local authorities’ was defined by the General Clauses Act of 1987, but ā€œother authoritiesā€ has been interpreted on a case to case basis. There have been several tests laid down in this regard, they are- The Control test, The Public Functions test, and The Statutory Powers test. In the Control test, we look at who the actor is. Thus, the fact to be determined is whether the body is in any way under the control of the government. In cases where a govt gives away rights to a private company, or buys shares in a private company, or in any way controls the actions of or acts indirectly through any body, this test would hold it to be state. This is because even though the body is private, it is the govt acting through them. This is useful when it comes to preventing the govt from avoiding its constitutional duties merely by setting up corporates or companies or transferring rights to them. Whereas, in the Public Functions test, the nature of the functions performed by the body, whether private or public, is considered. Here, control of the govt or statutory power would be of no consequence. If the functions performed by the body in question are of a public nature, they will automatically be subject to fundamental rights and be held as ā€˜state’. Lastly, we have the Statutory Power test, where we take into consideration whether the body in question was created under a statute or if it has statutory authority to create laws or give directions having the force of law and necessarily affect third parties.

In the past, the Supreme Court has adopted several variants of the tests mentioned above to determine if a body would fall under the term ā€˜other authorities.’ We can trace this evolution by looking at the following cases- (i) Rajasthan Electricity board vs. Mohan Lal (1967) In this case which was decided by a five judge bench, it was held that the Rajasthan State Electricity Board could be held to be state and the reasoning was that the body must either be created by a statute or must be controlled by the government. 2 Next, we have (ii) Sukhdev Singh vs. Bhagat Ram (1975) Here the nature of corporations such as Life Insurance Corporation (LIC), Oil and Natural Gas Corporation (ONGC), and 1 Constitution of India art. 12 2 1967 SCR (3) 377 Rajasthan Electricity board vs. Mohan Lal (1967)

Industrial Finance Corporation could be said to be state. The five-judge bench here held that if a statutory corporation or body is an instrumentality of the government or if it had the power to issue binding directions having the force of law, it would be held to be state. This we can see somewhat adheres to the statutory powers test. 3 (iii) The case of RD Shetty vs. International Airport Authority of India (1979) , decided by a three-judge bench, laid down some guidelines for identifying a body as ā€˜other authority’, these are as follows –

ā€œ(1) 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.

(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 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.

(5) If the functions of the corporation 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 corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government.ā€ 4 These guidelines include feathers of both the control and functions test and look at different characteristics of the body in determining if it is state or not. (iv) Next in the case of Ajay Hasia vs. Khalid Mujib (1981) we see that the court upholds the principals laid down in RD Shetty and deems the Regional Engineering College to be state due to the deep and pervasive control of the government over the society. We see a mixture of the Control test and the Public Functions test being used in this case. 5 (v) In the Pradeep Kumar Biswas case, however, a seven-judge bench held that the principles laid down in Ajay Hasia were not rigid so that if a body falls within any one of them it would be state within article 12, rather the facts in each case would have to be considered to determine if the body is financially, functionally and administratively dominated by or in the control of the government. And that such control must be deep and pervasive and not merely regulatory in nature. Thus, we can see that the court in deciding this case has adopted the control test, and somewhat does away with the functions test. 6

In this case, i.e. Zee Telefilms vs. Union of India, a writ petition under article 32 is brought by Zee telefilms against BCCI, claiming that an order passed by them cancelling a contract of broadcasting rights was violative of Article 14. However, the first question that arises is Can BCCI be held to be a state under Art 12 of the constitution? In deciding this matter, the

3 1975 3 SCR 619 Sukhdev Singh vs. Bhagat Ram (1975)

4 1979 SCR (3)1014 RD Shetty vs International Airports Authority 5 1981 SCR (2)79 Ajay Hasia vs. Khalid Mujib (1981) 6 [2002]3SCR100 Pradeep Kumar Biswas and Ors. Vs. Indian Institute of Chemical Biology

and Ors.

happen if tomorrow the state ā€˜chose to leave’ the performance of a function such as say the supply of water to a private party, and this private party chooses not to supply water to people of a certain denomination? Would in such a situation we again hold that such a body could not be state? Here, there is a need to define exactly what ā€˜state functions’ are independent of whether the govt is authorising some private body to perform them or not. 10 Further it can also be argued that by labelling the board to be a state, (and consequently other such sport federations) would be that there would be a greater amount of accountability and the actions of such bodies would be subject to reviewability. This would necessarily lead to better sports administration in India 11 and would also perhaps there would be more transparency in actions such as selection of players for the Indian team and more youths would be given the chance to be a part of this team, due to the applicability of the right to equality. The court should have perhaps given greater weightage to the functions performed by the body and the monopoly enjoyed by it rather than solely focus on the control aspect. The result of PK Biswas and Zee Telefilms has been that the authorities against which a writ under art 32 is possible has been considerable narrowed down, and that several facets regarding the functions of a body are not considered. There is a need to widen these criteria and go back to the wider ambit of Ajay Hasia where control and functions test were applied together to determine if a body was state or not. Else, all future cases following the precedent laid down by this case and by PK Biswas will look at bodies through a very narrow lens. The only aspect that would be looked at would be if the body is in control of the state, this may lead to many bodies conducting state functions being overlooked and could possibly lead to unfair exploitation of or deprivation of opportunities to individuals. Thus, a I conclude by saying that the term ā€˜other authorities’ needs to be interpreted more broadly and more than just the administrative, financial and functional dependence of the body upon the state must be considered. The functions of the body are as important as who controls it.

10 Gautam Bhatia, 'What Is The State – V: Zee Telefilms, The Death Of The Functional Approach, And An Alternative' ( Indian Constitutional Law and Philosophy , 2019) <https:// indconlawphil.wordpress.com/2014/08/19/what-is-the-state-v-zee-telefilms-the-death-of-the- functional-approach-and-an-alternative/> accessed 20 April 2019. 11 Kian Ganz, 'BCCI Vs Cricket Association Of Bihar & Ors: Game Changer For Sports Administration In India?' ( Legallyindia.com , 2019) <https://www.legallyindia.com/home/bcci- vs-cricket-association-of-bihar-ors-game-changer-for-sports-administration-in- india-20150218-5620> accessed 20 April 2019.