This article was written by Siddharth Bansal of Guru Gobind Singh Indraprastha University.

Before commencing with the concerned central idea behind instrumentality of state it is crucial to understand how state acquired various instruments as its functionaries and executrices. It is evident from the ancient time that “state of nature” was the only natural form having Goodman, hardship, honesty, brotherhood and humanity as benchmarks of daily routine works in the absolute absence of any form of government. With the emergence of acquiring private property, a greedy seed replenished between men having giving rise to conflicts between haves and haves not. Marx proclaimed in his various theories how at that time the world was crying aloud to bring some sort of governance in order to resolve the conflicts and establish uniform reforms throughout. As a result of citizenship, a “State” came into a picture having certain stages to work with holding the power to look upon the crisis and problems and then to provide apt solutions in order to maintain the lawful balance worldwide.

This is how a state came into a picture and since that time it is evolving furthermore. The rate of success of a state depends upon the working of various stages or the instruments concerned in order to maintain peace and conflict free situations abided by lawful processions.

As we lead to discuss the instrumentality, we need to understand the instruments first from state perspective. Within the pursuit of instrumentality the first word comes to mind is Constitution. A constitution is a single state document enacted within a unit of state, superior to and constraining all other laws enacted within that unit of state, approved by an affirmative vote of the affected population that creates and constrains state authority, activities, and responsibilities, often in general terms suited to refinement by statute and regulation. A statute is a state document that enumerates a policy to be perused and enforced by the state, and can elaborate a framework or procedure for such pursuit and enforcement.


An instrument of state policy is any portion, or the entirely, of a constitution, legal code and constituent statutes, regulatory code, court precedent, form, order, ruling, directive, decision, or any other document enumerating a policy enforced or adhered to by the state, action to be taken by the state, or elaborating, a framework or procedure for such action or enforcement, provided that contracts between non state parties are not considered instruments of state.

Instrumentality of state policy that are not constitutions, statutes, regulations, or court precedents or rulings, are enacted internal to a branch of statute, fully constrained by applicable constitutions, statutes, regulations, and court rulings, to refine procedures for mission fulfillment. “Law” appearing without a syntactic article refers to the policy described by the complete set of standing instruments of state policy. When a particular instrument of state policy has already been introduced and is specifically at issue, refers to the policy described by any portion of that complete set. An action or condition is lawful if it is not forbidden by any applicable instrument of state policy. An action or condition is unlawful if it is forbidden by an applicable instrument of state policy.

The above stated points reflect nature of state and its instruments and how instrumentality is prevailing at present. One of the most important dimensions to discuss in the light of state and its constitution is “Article 12”.

According to Article 12 of the Constitution of India, the term “state” can be used to denote the union and state governments, the parliament state legislatures and all local or other authorities within the territory of India or under the control of the Indian government. Over a period of time, the Supreme Court has expanded the ambit of ‘state’ to include corporations such as LIC and ONGC since they perform tasks “very close to governmental or sovereign functions.” In fact, the term ‘state’ also accommodates any authority that’ created by the constitution of India and has the power to make laws. It need not perform governmental or sovereign functions. understanding the meaning of ‘state’ under article 12 executive and legislature of union and states include union and state government along with parliament and state legislatures. The president of India

 and governors of states can also be referred as ‘state’ as they are a part of executive. The term ‘government’ also includes any department of government or any institution under its control. The income tax department and the international institute for population sciences could be cited as examples. Although there is no specific mention of judiciary in article 12, legal experts are of the opinion that the judiciary should be included in the definition of state. According to one school of thought, the Supreme Court has the power to make rules, appoint its staff and decide its service conditions. Hence, it performs the role of a state.

From the above it is seen that the intention of the constitution framers incorporating this article was to treat such authority which has been created by law and which has got certain powers to make laws to make rules and regulations to be included in the term ‘other authorities” as found presently in article 12. a statutory corporation, with regulations framed by such corporation pursuant to statutory powers was considered a state, and the public duty was limited to those which were created by

The decision of the constitution bench of this court in Rajasthan Electricity Board v. Mohan Lal and Ors is illustrative of this. The question there was whether the electricity board-which was a corporation constituted under a statute primarily for the purpose of carrying on commercial activities could come within the definition of state in article 12.

By 1975 Mathew, J. in Sukhdev Singh and Ors. V. Bhagatram Sardar singh raghuvanshi and Ors, noted that the concept of “state” in article 12 had undergone ‘drastic changes in recent years. The question in that case was whether the oil and natural gas commission, the industrial finance corporation and the life insurance corporation each of which were public corporations set up by statutes were authorities and therefore within the definition of state in article 12. Mathew J in his concurring judgment went further and propounded a view which presaged the subsequent development sin the law. He said: “A state is an abstract entity. It can only act through the instrumentality or agency of natural or judicial persons. Therefore, there is nothing strange in the notion of the state acting through a corporation and making it an agency or instrumentality of the state”


For identifying such an agency or instrumentality he propounded four indicators:

  • “A finding of the state financial support plus an unusual degree of control over the management and policies might lead one to characterize an operation as state action.”
  • “Another factor which might be considered is whether the operation is an important public function.”
  • “The combination of state aid and the furnishing of an important public service may result in a conclusion that the operation should be classified as a state agency. If a given function is of such public importance and so closely related to governmental functions as to be classed as a government agency, then even the presence or absence of state financial aid might be irrelevant in making a finding of state action. If the function does not fall within such a description then mere addition of state money would not influence the conclusion.”
  • “The ultimate question which is relevant for our purpose is whether such a corporation is an agency or instrumentality of the government for carrying on a business for the benefit of the public. In other words, the question is, for whose benefit was the corporation carrying on the business?”

Sabhajit Tewary vs Union of India was decided by the same Bench on the same day Sukhdev Singh(supra). The contentions of the employee was the CSIR is an agency of the central government on the basis of the CSIR Rules which, it was argued, showed that the Government controlled the functioning of CSIR in all its aspect. The submission was somewhat cursorily negatives by this court on the ground that all this.

Another important case to get analyzed is Ramana Dayaram Shetty vs. The International Airport Authority of India and ors. The question there was upon whether an instrumentality of state-authority called for tenders for a job- if could accept a tender not conforming to conditions in notice. On January 3rd, 1977 a notice inviting tenders for putting up IInd class restaurants and two snack bars at the International Airport Bombay was issued by the first respondent who is a corporate body established under the International Airport Authority Act 43 of 1971. Stressed up[on the idea of texts supported by various jurists that every action of the executive government must be informed with reason and should be free from arbitrariness. The government cannot be permitted to say that it will give jobs, or enter into a contract, or issue quotas or licenses in favor of those who has grey hair, belongs to a particular political party, or of a particular religion. The bench agreed by one of the judgments of Mathew J. Punnan Thomas v. State of Kerala where it was held that “a government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.” The power and discretion of the government in awarding jobs, granting licenses, quotas, etc. must be in conformity with the rational, relevant and non-discriminatory standards or norms, and if the government departs any time its action is liable to be stuck down unless it is proved that the action of government is based on some valid principle which is not irrational, unreasonable and discriminatory.

Aforesaid perspective it is rightly to be said that the concerned article is an attempt made to understand the judicial development in this regard, so as to reach at most precise conclusions as to the scope of under article 12 in the changed socio, economic and political conditions in India.

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