IN THE HIGH COURT OF ORISSA AT CUTTACK

W.P.(C ) No.16688 of 2017

CNR No. ODHC010422602017

In the matter of an application under Article-226 &

227 of the Constitution of India

………………

Priyabrata Swain

….

Petitioner

-versus-

State of Odisha & Others

…. Opposite Parties

For Petitioner : M/s. L. Samantaray,Sr.Adv.

with Mr. S. S. Tripathy, Adv.

For Opp. Parties :M/s. K.M.H. Niamati, Adv.

(for O.P. No.1)

Mr. B. Mohapatra, Adv.

(for O.P. Nos.3 & 4), Adv.

PRESENT:

THE HONBLE MR.JUSTICE BIRAJA PRASANNA SATAPATHY

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Date of Hearing: 12.08.2026 & Date of Judgment:23.09.2026

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Biraja Prasanna Satapathy, J.

1. This matter is taken up through Hybrid Mode.

2. Heard learned counsel appearing for the parties.

3. The present Writ Petition has been filed inter alia

with the following prayer:

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Under the circumstances stated above, the

Petitioner therefore prays that the Hon’ble Court be

pleased to admit the writ application, issue notice to

the opposite parties and after hearing from

advocates of the parties, issue an appropriate writ in

nature of certiorari or any other suitable writ

quashing the impugned order of termination vide

Annexure-1 and further issue a writ in nature of

Mandamus directing the opposite to reinstate the

Petitioner in his post. And allow him to continue

against his previous post.

And the Petitioner as in duty bound shall ever

pray.

4. Since the Writ Petition has been filed inter alia

challenging the impugned order of termination issued

by Opp. Party Nos.3 & 4, terminating the Petitioner

from his services on account of non-performance,

learned Counsel appearing for Opp. Party No.1 as well

as Opp. Party Nos.3 & 4 raised preliminary objection

with regard to maintainability of the Writ Petition

against the Opp. Parties, more particularly, against

Opp. Party Nos.3 & 4.

5. Learned counsel appearing for Opp. Pary Nos.3 &

4 contended that since Opp. Party Nos.3 is a Private

Limited Company, registered under the provisions of

the Companies Act, no Writ can be issued by this Court

under Article 226 of the Constitution of India. It is also

contended that Opp. Party Nos.3 & 4 being a Company

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registered under the Companies Act, it cannot be held

as a State within the meaning of Article 12 of the

Constitution of India. Accordingly, preliminary

objection was raised with regard to maintainability of

the Writ Petition against Opp. Party Nos.3 & 4.

6. Even though Mr. L. Samantaray, learned Sr.

Counsel appearing for the Petitioner along with Mr.

S.S. Tripathy, learned counsel contended that the Writ

is very much maintainable, but this Court taking into

account the fact that Petitioner while continuing under

Opp Party Nos.3 & 4, was terminated vide order issued

under Anenxure-1 and Opp. Party Nos.3 & 4 as found

from the cause title as well as the documents enclosed

to the Writ Petition, is a Private Limited Company, this

Court thought it proper to decide the question of

maintainability of the Writ Petition against Opp. Party

Nos.3 & 4 at the first instance and heard the

respective counsels at length on the question of

maintainability.

7. Learned Sr. Counsel appearing for the Petitioner

on the question of maintainability contended that even

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though Petitioner is an employee under Opp. Party

Nos.3 & 4, but since Opp. Party No.3 is a Company

with Bank of Baroda-Opp. Party No.1 having 44%

share and Andhra Bank-Opp. Party No.2 with 30%

share and is under the direct control of Opp. Party

Nos.1 & 2, Opp. Party No.3 is a State within the

meaning of Article 12 of the Constitution of India and

amenable to the writ jurisdiction of the Court. In

support of such submission, reliance was placed to the

documents annexed under Annexure-9 to the Writ

Petition.

7.1. It is contended that since Opp. Party Nos.1 & 2

are having majority share in Opp. Party No.3-Company

and Opp. Party Nos.1 & 2 have pervasive control over

the management of Opp. Party No.3, Opp. Party No.3

can very well be held as a State within the meaning of

Article 12 of the Constitution of India. Not only that,

since Opp. Party No.3, is discharging public duty in

providing insurance coverage to general public, it is

amenable to the Writ jurisdiction of this Court under

Article 226 of the Constitution of India. In support of

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his submission, learned Sr. Counsel relied on the

following decisions:

1. Ajay Hasia V. Khalid Kujib Sehravardi,

(1981) 1 SCC 722

2. Andi Mukta Sadguru Shree Muktajee

Vandas Swami Suvarna Jayanti Mahotsav

Smarak Trust Vs. V.R. Rudani, (1982 ) 2

SCC 691

3. Biman Krishna Bose V. United India

Insurance Co;. Ltd.,(2001) 6 SCC 477

4. Balmer Lawrie & Co. Ltd. V. Partha

Sarathi Sen Roy, (2013) 8 SCC 345

5. Ravi Khokhar Vs. Union of India &

Others, 2026 SCC Online SC 372

6. Pradipta Chadnra Singh V. Reliance

General Insurance Company Limited,

Mumbai & Others, 2014, SCC OnLine Ori

2107

7.2. In the case of Ajay Hasia, Hon’ble Apex Court in

paragraph 9 & 11 of the said decision has held as follows:

9. The tests for determining as to when a corporation

can be said to be an instrumentality or agency of

Government may now be culled out from the judgment in

the International Airport Authority case [(1979) 3 SCC

489] . These tests are not conclusive or clinching, but

they are merely indicative indicia which have to be used

with care and caution, because while stressing the

necessity of a wide meaning to be placed on the

expression “other authorities”, it must be realised that it

should not be stretched so far as to bring in every

autonomous body which has some nexus with the

Government within the sweep of the expression. A wide

enlargement of the meaning must be tempered by a

wise limitation. We may summarise the relevant tests

gathered from the decision in the International Airport

Authority case [(1979) 3 SCC 489] as follows:

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“(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. (SCC p. 507,

para 14)

(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. (SCC p. 508, para 15)

(3) It may also be a relevant factor ... whether the

corporation enjoys monopoly status which is State

conferred or State protected. (SCC p. 508, para 15)

(4) Existence of deep and pervasive State control may

afford an indication that the corporation is a State

agency or instrumentality. (SCC p. 508, para 15)

(5) 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. (SCC p. 509, para 16)

(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.” (SCC p. 510,

para 18)

If on a consideration of these relevant factors it is found

that the corporation is an instrumentality or agency of

Government, it would, as pointed out in the International

Airport Authority case [(1979) 3 SCC 489] , be an

“authority” and, therefore, ‘State’ within the meaning of

the expression in Article 12.

xxx xxx xxx

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 as to how

the juristic person is born but why it has been brought

into existence. The corporation may be a 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 genetical origin, it would

be an “authority” within the meaning of Article 12 if it is

an instrumentality or agency of the Government and

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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.

7.3. In the case of Andi Mukta Sadguru Shree Muktajee Vandas

Swami Suvarna Jayanti Mahotsave Smarak Trust , Hon’ble Apex

Court in paragraph 16 to 20 of the said decision has held as follows:

16. The law relating to mandamus has made the

most spectacular advance. It may be recalled that

the remedy by prerogative writs in England started

with very limited scope and suffered from many

procedural disadvantages. To overcome the

difficulties, Lord Gardiner (the Lord Chancellor) in

pursuance of Section 3(1)(e) of the Law Commission

Act, 1965, requested the Law Commission “to review

the existing remedies for the judicial control of

administrative acts and omissions with a view to

evolving a simpler and more effective procedure”.

The Law Commission made their report in March

1976 (Law Commission Report No. 73). It was

implemented by Rules of Court (Order 53) in 1977

and given statutory force in 1981 by Section 31 of

the Supreme Court Act, 1981. It combined all the

former remedies into one proceeding called Judicial

Review. Lord Denning explains the scope of this

“judicial review”:

“At one stroke the courts could grant whatever relief

was appropriate. Not only certiorari and mandamus,

but also declaration and injunction. Even damages.

The procedure was much more simple and

expeditious. Just a summons instead of a writ. No

formal pleadings. The evidence was given by

affidavit. As a rule no cross-examination, no

discovery, and so forth. But there were important

safeguards. In particular, in order to qualify, the

applicant had to get the leave of a judge.

The statute is phrased in flexible terms. It gives

scope for development. It uses the words “having

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regard to”. Those words are very indefinite. The

result is that the courts are not bound hand and foot

by the previous law. They are to “have regard to” it.

So the previous law as to who are — and who are

not — public authorities, is not absolutely binding.

Nor is the previous law as to the matters in respect

of which relief may be granted. This means that the

judges can develop the public law as they think

best. That they have done and are doing.” [ See The

Closing Chapter by Rt. Hon. Lord Denning, p. 122]

17. There, however, the prerogative writ of

mandamus is confined only to public authorities to

compel performance of public duty. The “public

authority” for them means everybody which is

created by statute — and whose powers and duties

are defined by statute. So government departments,

local authorities, police authorities, and statutory

undertakings and corporations, are all “public

authorities”. But there is no such limitation for our

High Courts to issue the writ “in the nature of

mandamus”. Article 226 confers wide powers on the

High Courts to issue writs in the nature of

prerogative writs. This is a striking departure from

the English law. Under Article 226, writs can be

issued to “any person or authority”. It can be issued

“for the enforcement of any of the fundamental

rights and for any other purpose”.

18. Article 226 reads:

“226. Power of High Courts to issue certain writs.—

(1) Notwithstanding anything in Article 32, every

High Court shall have power, throughout the

territories in relation to which it exercises

jurisdiction, to issue to any person or authority

including in appropriate cases, any Government,

within those territories directions, orders or writs,

including writs in the nature of habeas corpus,

mandamus, prohibition, quo warranto and certiorari,

or any of them, for the enforcement of any of the

rights conferred by Part III and for any other

purpose.

19. The scope of this article has been explained by

Subba Rao, J., in Dwarkanath v. ITO [(1965) 3 SCR

536] : (SCR pp. 540-41)

“This article is couched in comprehensive

phraseology and it ex-facie confers a wide power on

the High Courts to reach injustice wherever it is

found. The Constitution designedly used a wide

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language in describing the nature of the power, the

purpose for which and the person or authority

against whom it can be exercised. It can issue writs

in the nature of prerogative writs as understood in

England; but the scope of those writs also is

widened by the use of the expression “nature”, for

the said expression does not equate the writs that

can be issued in India with those in England, but

only draws an analogy from them. That apart, High

Courts can also issue directions, orders or writs

other than the prerogative writs. It enables the High

Court to mould the reliefs to meet the peculiar and

complicated requirements of this country. Any

attempt to equate the scope of the power of the High

Court under Article 226 of the Constitution with that

of the English courts to issue prerogative writs is to

introduce the unnecessary procedural restrictions

grown over the years in a comparatively small

country like England with a unitary form of

Government into a vast country like India

functioning under a federal structure. Such a

construction defeats the purpose of the article itself.”

20. The term “authority” used in Article 226, in the

context, must receive a liberal meaning unlike the

term in Article 12. Article 12 is relevant only for the

purpose of enforcement of fundamental rights under

Article 32. Article 226 confers power on the High

Courts to issue writs for enforcement of the

fundamental rights as well as non-fundamental

rights. The words “any person or authority” used in

Article 226 are, therefore, not to be confined only to

statutory authorities and instrumentalities of the

State. They may cover any other person or body

performing public duty. The form of the body

concerned is not very much relevant. What is

relevant is the nature of the duty imposed on the

body. The duty must be judged in the light of

positive obligation owed by the person or authority

to the affected party. No matter by what means the

duty is imposed, if a positive obligation exists

mandamus cannot be denied.

7.4. In the case of Biman Krishna Bose , Hon’ble Apex

Court in paragraph 3 of the said decision has held as

follows:

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3. Under Section 9 of the General Insurance Business

(Nationalisation) Act, 1972 (hereinafter referred to as

“the Act”), General Insurance Corporation of India (in

short GIC) was set up as a government company for

the purpose of superintendence, control and carrying

out the business of general insurance in the country.

Under Section 24 of the Act, the acquiring companies

were given the exclusive privilege to carry on general

insurance business in India. Under Section 3(a) of the

Act, an acquiring company has been defined to mean

any Indian insurance company in which any other

company has been merged in pursuance of the

amalgamation scheme formulated under the Act. The

respondent Insurance Company is one of such

acquiring companies. A perusal of the provisions of

the Act makes it evident that it is only the acquiring

companies which have exclusive privilege of carrying

on the general insurance business in India, under the

supervision and control of General Insurance

Corporation of India. Excepting the acquiring

companies, no other company in the private sector

has a right and privilege to carry on general

insurance business in India and to that extent the

acquiring companies have a monopoly over such

business. In such a situation, acquiring companies

have the trappings of “the State” being other

authorities under Article 12 of the Constitution of

India. The acquiring companies thus being “the State”

under Article 12 of the Constitution are expected to

act fairly and reasonably. In the present case, what

we find is that the respondent Insurance Company

refused to renew the insurance policy of the appellant

on the ground of his past conduct. The past conduct

attributed is that the appellant had gone in litigation

for payment of his claim lodged by him with the

respondent Insurance Company. If an insured lodges

a claim with the company and the company does not

honour the claim, the insured is left with no

alternative but to knock the doors of a court of law.

Merely because the appellant had approached the

Consumer Forum and this Court for redressal of his

grievance, can such an act be attributed as bad

record as to disentitle the appellant to get his policy

renewed? The answer is “no”. Where an insurance

company under the provisions of the Act has

assumed monopoly in the business of general

insurance in the country and thus acquired the

trappings of the “State” being other authorities under

Article 12 of the Constitution, it requires to satisfy the

requirement of reasonableness and fairness while

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dealing with the customers. Even in an area of

contractual relations, the State and its

instrumentalities are enjoined with the obligations to

act with fairness and in doing so, can take into

consideration only the relevant materials. They must

not take any irrelevant and extraneous consideration

while arriving at a decision. Arbitrariness should not

appear in their actions or decisions. In the present

case, what we find is that arbitrariness is writ large

in the actions of the respondent Company when it

refused to renew the mediclaim policy of the insured

on the ground of his past conduct i.e. having gone into

litigation for payment of his claim against the

respondent Company. We are, therefore, in agreement

with the view taken by the High Court that the order

of the respondent Company refusing to renew the

mediclaim policy of the appellant was unfair and

arbitrary.

7.5. In the case of Balmer Lawrie & Co. Ltd., Hon’ble Apex

Court in paragraph 21 to 24 & 28 of the said decision has

held as follows:

21. 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

organisation 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 the expression

“authority”, as mentioned in Article 12 of the

Constitution, upon consideration of all relevant factors.

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22. 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.

23. 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 in fact 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.

24. 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

Karibasappa [(1974) 2 SCC 498 : AIR 1974 SC 1863]

, U.P. Coop. Cane Unions Federations v. West U.P. Sugar

Mills Assn. [(2004) 5 SCC 430 : AIR 2004 SC 3697] , Zee

Telefilms Ltd. [Zee Telefilms Ltd. v. Union of India,

(2005) 4 SCC 649 : AIR 2005 SC 2677] and Union of

India v. Asian Food Industries [(2006) 13 SCC 542 : AIR

2007 SC 750] .)

xxx xxx xxx

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28. In order to determine whether an authority is

amenable to writ jurisdiction except in the case of

habeas corpus or quo warranto, it must be examined,

whether the company/corporation is an instrumentality

or an agency of the State, and if the same carries on

business for the benefit of the public; whether the entire

share capital of the company is held by the Government;

whether its administration is in the hands of a Board of

Directors appointed by the Government; and even if the

Board of Directors has been appointed by the

Government, whether it is completely free from

governmental control in the discharge of its functions;

whether the company enjoys monopoly status; and

whether there exists within the company, deep and

pervasive State control. The other factors that may be

considered are whether the functions carried out by the

company/corporation are closely related to

governmental functions, or whether a department of the

Government has been transferred to the

company/corporation, and the question in each case,

would be whether in light of the cumulative facts as

established, the company is financially, functionally and

administratively under the control of the Government. In

the event that the Government provides financial

support to a company, but does not retain any

control/watch over how it is spent, then the same would

not fall within the ambit of exercising deep and

pervasive control. Such control must be particular to the

body in question, and not general in nature. It must also

be deep and pervasive. The control should not,

therefore, be merely regulatory.

7.6. In the case of Ravi Khokhar, Hon’ble Apex Court in

paragraph 7,7.1,16 & 17 of the said decision has held as

follows:

7. Since the advent of the Constitution, the question of

whether a particular body can or cannot be recognised

as ‘State’ within the meaning of Article 12

11

has arisen

time and again. Initially, this Court adopted a narrow

and formalistic approach focusing on whether the body

concerned which was created under a statute was part

of the traditional Government structure. Over the time

however, as functions of the Government expanded

multi-fold there was a shift in this approach. State

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instrumentalities, corporations and autonomous bodies

were recognised as covered under this Article, with the

shift to a functional and purposive analysis. The test to

be satisfied pertained to the nature of functions,

character of activity, degree of governmental control.

This ensured that the breadth or scope of examination

when this question arises is not limited to

ownership/origin but is instead informed by

accountability, the rule of law in furtherance of

practical governance. It shall be useful to refer to

certain cases to exemplify the requirements that need

to be established for an organization be held to be

“State”.

7.1. P.N Bhagwati J. (as His Lordship then was)

writing for the Court in Ramana Dayaram

Shetty v. International Airport Authority of India

12

,

observed:

“14. A corporation may be created in one of two ways. It

may be either established by statute or incorporated

under a law such as the Companies Act, 1956 or the

Societies Registration Act, 1860. Where a corporation is

wholly controlled by Government not only in its policy-

making but also in carrying out the functions entrusted

to it by the law establishing it or by the charter of its

incorporation, there can be no doubt that it would be an

instrumentality or agency of Government. But ordinarily

where a corporation is established by statute, it is

autonomous in its working, subject only to a provision,

oftentimes made, that it shall be bound by any

directions that may be issued from time to time by

Government in respect of policy matters. So also a

corporation incorporated under law is managed by a

board of directors or committees of management in

accordance with the provisions of the statute under

which it is incorporated. When does such a corporation

become an instrumentality or agency of Government? Is

the holding of the entire share capital of the corporation

by Government enough or is it necessary that in

addition, there should be a certain amount of direct

control exercised by Government and, if so, what should

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be the nature of such control? Should the functions

which the corporation is charged to carry out possess

any particular characteristic or feature, or is the nature

of the functions immaterial? Now, 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. But, as is quite often the case, a

corporation established by statute may have no shares

or shareholders, in which case it would be a relevant

factor to consider whether the administration is in the

hands of a board of directors appointed by Government,

though this consideration also may not be

determinative, because even where the directors are

appointed by Government, they may be completely free

from governmental control in the discharge of their

functions. What then are the tests to determine whether

a corporation established by statute or incorporated

under law is an instrumentality or agency of

Government? It is not possible to formulate an all-

inclusive or exhaustive test which would adequately

answer this question. There is no cut and dried formula

which would provide the correct division of corporations

into those which are instrumentalities or agencies of

Government and those which are not.”

Xxx xxx xxx

16. We are unable to accept this contention. It may be

that in so far as financial aspects of AFGIS are

concerned, the Government may not have a direct role

however for a body to be held to be a ‘State’ it is the

cumulative effect and impact of deep and pervasive

control, financial and administrative control along with

other factors such as carrying out of public duty.

17. We are of the considered view that AFGIS does

indeed perform a public duty. The protection and

welfare of armed forces personnel is a core government

function. The role of the armed forces is directly linked

to the sovereignty and security of the nation and in

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protecting the same members of the forces are required

to adhere to, abide by, and maintain a strict set of rules,

unquestionable conduct, and at times in the most severe

and adverse circumstances. Thus, providing insurance

coverage is a public function as it addresses a collective

obligation the State has towards a defined public class

whose service is indispensable. The body, in effect,

becomes a conduit for the discharge of that obligation.

The role of the State in protecting them does not end

upon their superannuation from service for the life of a

person from the forces is forever shaped by their time in

service. Insurance to service members is a critical

instrument for safeguarding their physical, mental well-

being, dignity and economic security. It operates as an

assurance of protection and support in case

contingencies such as disability or illness befall them or

even untimely death which is a real possibility in these

services. The fact that healthcare, rehabilitation, support

to dependants is available readily, is undoubtedly an

aspect that gives great peace of mind to the member of

service enabling them to carry out their duties without

worry, at least in this regard.

7.7. In the case of Pradipta Chandra Singh , Hon’ble

Apex Court in paragraph 10,11 & 12 of the said decision

has held as follows:

10. Now, health insurance has become a fundamental

component of India's healthcare ecosystem, playing a

pivotal role in ensuring that individuals have access to

necessary medical services and are protected from the

financial burdens associated with healthcare. Given its

essential nature, the issuance and management of

health insurance--whether by private companies or

public entities--should be regarded as a "public function"

under Article 12 of the Constitution of India. This

classification is vital because health insurance directly

contributes to the realization of the right to health, which

is an integral part of the right to life under Article 21 of

the Constitution.

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11. Article 21 guarantees the right to life, which the

Supreme Court of India has expansively interpreted to

include the right to health. Health insurance, by

providing financial access to healthcare, enhances the

ability of individuals to secure timely and adequate

medical treatment, thereby upholding their right to

health. The act of issuing health insurance, therefore,

transcends mere commercial activity and becomes a

matter of public duty. Entities engaged in this activity--

whether they are public bodies or private insurers--must

be seen as performing a public function because they

are instrumental in fulfilling a constitutionally protected

right.

12. Recognizing the issuance of health insurance as a

public function under Article 12 ensures that these

entities are subject to constitutional scrutiny, requiring

them to operate with fairness, equity, and

accountability. This classification also mandates that

they align their operations with the broader goal of

ensuring that healthcare is accessible and affordable for

all citizens, thereby contributing to the protection of the

right to health under Article 21. By bringing health

insurance under the ambit of public function, the state

reinforces its commitment to safeguarding the health

and welfare of its people, making health insurance an

indispensable tool in the realization of fundamental

rights.

8. Mr. K.M.H Niamati, learned counsel appearing for

Opp. Party No.1 and Mr. B. Mohapatra, learned

counsel appearing for Opp. Party Nos.3 & 4 on the

other hand while opposing the submission made by the

learned Sr. Counsel appearing for the Petitioner,

contended that Opp. Party No.3 being a Private Limited

Company, it is neither a State within the meaning of

Article 12 of the Constitution of India nor any Writ can

// 18 //

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be issued by this Court under Article 226 of the

Constitution of India.

8.1. It is contended that though Opp. Party Nos.1 & 2

are having 44% and 30% share in Opp. Party No.3-

Company, but Opp. Party No.3 being a Private Limited

Company and Petitioner being in service under a

contract, no Writ can be issued with regard to the action

taken by Opp. Party Nos.3 & 4, in terminating the

Petitioner from his services vide Order under Annexure-

1.

8.2. It is contended that Opp. Party No.3 is having

operational independence and manages its own fund

and resources, Pay roll and Disciplinary actions.

Neither Bank of Baroda-Opp. Party No.1 nor Andhra

Bank-Opp. Party No.2 have any control with regard to

the employment and disciplinary action taken by Opp.

Party Nos.3 & 4 against any of its employee.

8.3. Since Petitioner admittedly was under employment

in the establishment of Opp. Party Nos.3 & 4 and

because of his non-performance, the appointment letter

issued by Opp. Party No.3 was cancelled with

// 19 //

Page 38 of 56

termination of the Petitioner from his services vide

order under Annexure-1, no Writ can be issued against

Opp. Party Nos.3 & 4. It is further contended that as

found from Anenxure-2, Petitioner was appointed by

Opp. Party Nos.3 & 4 and because of non-performance,

he was terminated vide order dtd.15.05.2017 under

Annexure-1.

8.4. It is also contended that Petitioner by accepting

terms and conditions of the appointment, accepted the

offer so issued vide Annexures-2 & 3. However, it is

contended that since Opp. Party No.3 is a Private

Limited Company, because of non-performance of the

Petitioner, Petitioner was issued with a show-cause by

Opp. Party No.3 on 08.05.2016 under Annexure-8 and

was terminated vide order dtd.15.05.2017 under

Annexure-1.

8.5. It is further contended that Petitioner is neither an

employee under Opp. Party No.1 or Opp. Party No.2

and Opp. Party Nos.1 & 2 being not the employer of the

Petitioner, they have nothing to say with regard to the

order of termination issued by Opp. Party No.3.

// 20 //

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8.6. In support of the submission, learned Counsel

appearing for Opp. Party No.1 as well as opp.Party 3 & 4

relied on the following decisions.

1. Sukhdev Singh v. Bhagatram Sardar Singh

Raghuvanshi, (1975) 1 SCC 421

2. Ramana Dayaram Shetty v. International

Airport Authority of India, (1979) 3 SCC 489

3. Som Prakash Rekhi v. Union of India, (1981)

1 SCC 449

4. M.C. Mehta v. Union of India (Shriram -

Oleum Gas), (1987) 1 SCC 395

5. Dileep Kumar Pandey versus Union of India

& Ors

8.7. In the case of Sukhdev Singh, Hon’ble Apex Court in

paragraph 25,30,31,33,34,36 & 39 of the said decision has

held as follows:

25. The Additional Solicitor-General submitted that

regulations could not have the force of law because

these regulations are similar to regulations framed by

a company incorporated under the Companies Act.

The fallacy lies in equating rules and regulations of a

company with rules and regulations framed by a

statutory body. A company makes rules and

regulations in accordance with the provisions of the

Companies Act. A statutory body on the other hand

makes rules and regulations by and under the powers

conferred by the statutes creating such bodies.

Regulations in Table-A of the Companies Act are to be

adopted by a company. Such adoption is a statutory

requirement. A company cannot come into existence

unless it is incorporated in accordance with the

provisions of the Companies Act. A company cannot

exercise powers unless the company follows the

statutory provisions. The provision in the Registration

// 21 //

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Act requires registration of instruments. The

provisions in the Stamp Act contain provisions for

stamping of documents. The non-compliance with

statutory provisions will render a document to be of

no effect. The source of the power for making rules

and regulations in the case of corporation created by

a statute is the statute itself. A company incorporated

under the Companies Act is not created by the

Companies Act but comes into existence in

accordance with the provisions of the Act. It is not a

statutory body because it is not created by the

statute. It is a body created in accordance with the

provisions of the statute.

xxx xxx xxx

30 In this view a regulation is not an agreement or

contract but a law binding the corporation, its

officers, servants and the members of the public who

come within the sphere of its operations. The doctrine

of ultra vires as applied to statutes, rules and orders

should equally apply to the regulations and any other

subordinate legislation. The regulations made under

power conferred by the statute are subordinate

legislation and have the force and effect, if validly

made, as the Act passed by the competent legislature.

31. In U.P. Warehousing Corporation [(1969) 2 SCC

838 : (1970) 2 SCR 250] and Indian Airlines

Corporation cases [(1971) 2 SCC 192 : 1971 Supp

SCR 510] the terms of the regulations were treated as

terms and conditions of relationship between the

Corporation and its employees. That does not lead to

the conclusion that they are of the same nature and

quality as the terms and conditions laid down in the

contract of employment. Those terms and conditions

not being contractual are imposed by one kind of

subordinate legislation viz. regulations made in

exercise of the power conferred by the statute which

constituted that Corporation. Terms of the regulations

are not terms of contract. In the Indian Airlines

Corporation case [(1971) 2 SCC 192 : 1971 Supp SCR

510] under Section 45 of the Air Corporations Act,

1953, the Corporation had the power to make

regulations not inconsistent with the Act and the

rules made by the Central Government thereunder.

The Corporation had no power to alter or modify or

rescind the provisions of these regulations at its

discretion, which it could do in respect of the terms of

contract that it may wish to enter with its employees

independent of these regulations. So far as the terms

// 22 //

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of the regulations are concerned, the actions of the

Corporation are controlled by the Central

Government. The decisions of this Court in U.P.

Warehousing Corporation [(1969) 2 SCC 838 : (1970) 2

SCR 250] and Indian Airlines [(1971) 2 SCC 192 :

1971 Supp SCR 510] Corporation are in direct conflict

with the decision of this Court in Naraindas Barot

case [AIR 1966 SC 1364 : (1966) 3 SCR 40 : (1966) 1

Lab LJ 437] which was decided by the Constitution

Bench.

Xxx xxx xxx

33. There is no substantial difference between a rule

and a regulation inasmuch as both are subordinate

legislation under powers conferred by the statute.

xxx xxx xxx

In the case of statutory bodies it has been said that the

element of public employment or service and the

support of statute require observance of rules and

regulations. Failure to observe requirements by

statutory bodies is enforced by courts by declaring

dismissal in violation of rules and regulations to be

void. This Court has repeatedly observed that

whenever a man's rights are affected by decision taken

under statutory powers, the Court would presume the

existence of a duty to observe the rules of natural

justice and compliance with rules and regulations

imposed by statute.

34. On behalf of the State it is contended that these

corporations cannot be said to be “other authority”

contemplated in Article 12 for two principal reasons.

First, one of the attributes of a State is making laws.

The State exercises governmental functions and the

executive power of the State is co-extensive with the

legislative power of the State. Second, authority as

contemplated in Article 12 means a body of persons

established by statute who are entitled as such body to

command obedience and enforce directions issued by

them on pain of penalty for violation. On these grounds

it was said that these corporations cannot make laws

like a State and cannot enforce directions.

xxx xxx xxx

36. This Court in Rajasthan State Electricity Board,

Jaipur v. Mohan Lal [AIR 1967 SC 1857 : (1967) 3 SCR

// 23 //

Page 38 of 56

377 : (1968) 1 Lab LJ 257] said that an “authority” is a

public administrative agency or corporation having

quasi-governmental powers and authorised to

administer a revenue-producing public enterprise. The

expression “other authorities” in Article 12 has been

held by this Court in the Rajasthan Electricity Board

case to be wide enough to include within it every

authority created by a statute and functioning within

the territory of India, or under the control of the

Government of India. This Court further said referring

to earlier decisions that the expression “other

authorities” in Article 12 will include all constitutional

or statutory authorities on whom powers are conferred

by law. The State itself is envisaged under Article 298

as having the right to carry on trade and business. The

State as defined in Article 12 is comprehended to

include bodies created for the purpose of promoting

economic interests of the people. The circumstance that

the statutory body is required to carry on some

activities of the nature of trade or commerce does not

indicate that the Board must be excluded from the

scope of the word “State”. The Electricity Supply Act

showed that the Board had power to give directions, the

disobedience of which is punishable as a criminal

offence. The power to issue directions and to enforce

compliance is an important aspect.

xxx xxx xxx

39. A public authority is a body which has public or

statutory duties to perform and which performs those

duties and carries out its transactions for the benefit of

the public and not for private profit. Such an authority

is not precluded from making a profit for the public

benefit. (See Halsbury's Laws of England 3rd Edn., Vol.

30 para 1317 at p. 682).

112. I do not think there is any basis for the

apprehension expressed that by holding that these

public corporations are “State” within the meaning of

Article 12, the employees of these corporations would

become government servants. I also wish to make it

clear that I express no opinion on the question whether

private corporations or other like organizations, though

they exercise power over their employees which might

violate their fundamental rights, would be “State”

within the meaning of Article 12.

// 24 //

Page 38 of 56

117. The original concept of employment was that of

master and servant. It was therefore held that a court

will not specifically enforce a contract of employment.

Xxxxxx

He must face the prospect of discharge for failing or

refusing to do his work in accordance with his

employers directions. Such control by the employer over

the employee is fundamental to the employment

relationship.

Xxxxxxx

. From the contractual principle of mutuality of

obligation, it was reasoned that if the employee can quit

his job at will, then so too must the employer have the

right to terminate the relationship for any or no reason.

8.8. In the case of Ramana Dayaram Shetty , Hon’ble

Apex Court in paragraph 14,15,16,18,19 & 29 has held

as follows:

14. A corporation may be created in one of two ways.

It may be either established by statute or incorporated

under a law such as the Companies Act, 1956 or the

Societies Registration Act, 1860. Where a corporation is

wholly controlled by Government not only in its policy-

making but also in carrying out the functions entrusted

to it by the law establishing it or by the charter of its

incorporation, there can be no doubt that it would be

an instrumentality or agency of Government. But

ordinarily where a corporation is established by statute,

it is autonomous in its working, subject only to a

provision, oftentimes made, that it shall be bound by

any directions that may be issued from time to time by

Government in respect of policy matters. So also a

corporation incorporated under law is managed by a

board of directors or committees of management in

accordance with the provisions of the statute under

which it is incorporated. When does such a corporation

become an instrumentality or agency of Government? Is

the holding of the entire share capital of the corporation

by Government enough or is it necessary that in

addition, there should be a certain amount of direct

control exercised by Government and, if so, what

// 25 //

Page 38 of 56

should be the nature of such control? Should the

functions which the corporation is charged to carry out

possess any particular characteristic or feature, or is

the nature of the functions immaterial? Now, 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. But, as is quite often the case, a

corporation established by statute may have no shares

or shareholders, in which case it would be a relevant

factor to consider whether the administration is in the

hands of a board of directors appointed by Government,

though this consideration also may not be

determinative, because even where the directors are

appointed by Government, they may be completely free

from governmental control in the discharge of their

functions. What then are the tests to determine whether

a corporation established by statute or incorporated

under law is an instrumentality or agency of

Government? It is not possible to formulate an all-

inclusive or exhaustive test which would adequately

answer this question. There is no cut and dried formula

which would provide the correct division of corporations

into those which are instrumentalities or agencies of

Government and those which are not.

15. The analogy of the concept of State action as

developed in the United States may not, however, be

altogether out of place while considering this question.

The decisions of the courts in the United States seem to

suggest that a private agency, if supported by

extraordinary assistance given by the State, may be

subject to the same constitutional limitations as the

State. Of course, it may be pointed out that “the State's

general common law and statutory structure under

which its people carry on their private affairs, own

property and contract, each enjoying equality in terms

of legal capacity, is not such State assistance as would

transform private conduct into State action”. But if

extensive and unusual financial assistance is given and

the purpose of the Government in giving such

assistance coincides with the purpose for which the

corporation is expected to use the assistance and such

purpose is of public character, it may be a relevant

circumstance supporting an inference that the

corporation is an instrumentality or agency of

// 26 //

Page 38 of 56

Government. The leading case on the subject in the

United States is Kerr v. Enock Pratt Free Library [149 F

2d 212] . The library system in question in this case

was established by private donation in 1882, but by

1944, 99 per cent of the system's budget was supplied

by the city, title to the library property was held by the

city, employees were paid by the city payroll officer and

a high degree of budget control was exercised or

available to the city government. On these facts the

Court of Appeal required the trustees managing the

system to abandon a discriminatory admission policy

for its library training courses. It will be seen that in

this case there was considerable amount of State

control of the library system in addition to extensive

financial assistance and it is difficult to say whether, in

the absence of such control, it would have been

possible to say that the action of the trustees

constituted State action. Thomas P. Lewis has

expressed the opinion in his article on “The Meaning of

State Action” [60 Columbia Law Review 1083] that in

this case “it is extremely unlikely that absence of public

control would have changed the result as long as 99 per

cent of the budget of a nominally private institution was

provided by Government. Such extensive governmental

support should be sufficient identification with the

Government to subject the institution to the provisions

of the Fourteenth Amendment”. It may, therefore, be

possible to say that 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. But where financial assistance

is not so extensive, it may not by itself, without

anything more, render the corporation an

instrumentality or agency of government, for there are

many private institutions which are in receipt of

financial assistance from the State and merely on that

account, they cannot be classified as State agencies.

Equally a mere finding of some control by the State

would not be determinative of the question “since a

State has considerable measure of control under its

police power over all types of business operations”. But

“a finding of State financial support plus an unusual

degree of control over the management and policies

might lead one to characterise an operation as State

action”. Vide Sukhdev v. Bhagatram [(1975) 1 SCC 421,

// 27 //

Page 38 of 56

454 (para 96) : (1975) 3 SCR 619, 650] . 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 Douglas, J.,

in Jackson v. Metropolitan Edison Co. [419 US 345 : 42

L Ed 2d 477]

16. 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. Miller: “The Constitutional Law of the ‘Security

State’” [10 Stanford Law Review 620 at 664] . It was

pointed out by Douglas, J., in Evans v. Newton [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

agencies or instrumentalities of the State”. Of course,

with the growth of the welfare State, it is very difficult to

define what functions are governmental and what are

not, because, as pointed out by Villmer, L.J.,

in Pfizer v. Ministry of Health [(1964) 1 Ch 614, 641 :

(1963) 1 All ER 590 (affirmed in 1965 AC 512 : (1965) 1

All ER 450)] 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”. Douglas, J., also

observed to the same effect in New York v. United

States [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. Helvering v. Gerhardt [304 US 405, 426,

427] . A State may deem it as essential to its economy

that it own 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

// 28 //

Page 38 of 56

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

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. This is

precisely what was pointed out by Mathew, J.,

in Sukhdev v. Bhagatram where the learned Judge said

that “institutions engaged in matters of high public

interest or performing public functions are by virtue of

the nature of the functions performed government

agencies. Activities which are too fundamental to the

society are by definition too important not to be

considered government functions”.

Xxx xxx xxx

18. We find that the same test of public or

governmental character of the function was applied by

the Supreme Court of the United States

in Evans v. Newton and Smith v. Allwight [321 US 649] .

But the decisions show that even this test of public or

governmental character of the function is not easy of

application and does not invariably lead to the correct

inference because the range of governmental activity is

broad and varied and merely because an activity may

be such as may legitimately be carried on by

Government, it does not mean that a corporation, which

is otherwise a private entity, would be an

instrumentality or agency of Government by reason of

carrying on such activity. In fact, it is difficult to

distinguish between governmental functions and non-

governmental functions. Perhaps the distinction

between governmental and non-governmental functions

is not valid any more in a social welfare State where the

laissez faire is an outmoded concept and Herbert

Spencer's social statics has no place. The contrast is

rather between governmental activities which are

private and private activities which are governmental.

(Mathew, J., Sukhdev v. Bhagatram at p. 652: SCC pp.

452, 456, para 103). But the public nature of the

function, if impregnated with governmental character or

“tied or entwined with Government” or fortified by some

// 29 //

Page 38 of 56

other additional factor, may render the corporation 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.

19. It will thus be seen that there are several factors

which may have to be considered in determining

whether a corporation is an agency or instrumentality

of Government. We have referred to some of these

factors and they may be summarised as under: whether

there is any financial assistance given by the State, and

if so, what is the magnitude of such assistance, whether

there is any other form of assistance, given by the State,

and if so, whether it is of the usual kind or it is

extraordinary, whether there is any control of the

management and policies of the corporation by the

State and what is the nature and extent of such control,

whether the corporation enjoys State conferred or State

protected monopoly status and whether the functions

carried out by the corporation are public functions

closely related to governmental functions. This

particularisation of relevant factors is however not

exhaustive and by its very nature it cannot be, because

with increasing assumption of new tasks, growing

complexities of management and administration and

the necessity of continuing adjustment in relations

between the corporation and Government calling for

flexibility, adaptability and innovative skills, it is not

possible to make an exhaustive enumeration of the

tests which would invariably and in all cases provide an

unfailing answer to the question whether a corporation

is governmental instrumentality or agency.” Moreover

even amongst these factors which we have described,

no one single factor will yield a satisfactory answer to

the question and the Court will have to consider the

cumulative effect of these various factors and arrive at

its decision on the basis of a particularised inquiry into

the facts and circumstances of each case. “The

dispositive question in any State action case”, as

pointed out by Douglas, J., in Jackson v. Metropolitan

Edison Company “is not whether any single fact or

relationship presents a sufficient degree of State

involvement, but rather whether the aggregate of all

relevant factors compels a finding of State

responsibility”. It is not enough to examine seriatim

// 30 //

Page 38 of 56

each of the factors upon which a corporation is claimed

to be an instrumentality or agency of Government and

to dismiss each individually as being insufficient to

support a finding of that effect. It is the aggregate or

cumulative effect of all the relevant factors that is

controlling.

Xxx xxx xxx

29. The second decision to which we must refer is that

in Heavy Engineering Mazdoor Union v. State of

Bihar [(1969) 1 SCC 765 : (1969) 3 SCR 995] . The

question which arose in this case was whether a

reference of an industrial dispute between the Heavy

Engineering Corporation Limited (hereinafter referred to

as the “Corporation”) and the Union made by the State

of Bihar under Section 10 of the Industrial Disputes

Act, 1947 was valid. The argument of the Union was

that the industry in question was “carried on under the

authority of the Central Government” and the reference

could, therefore, be made only by the Central

Government. The Court held that the words “under the

authority” mean “pursuant to the authority, such as

where an agent or a servant acts under or pursuant to

the authority of his principal or master” and on this

view, the Court addressed itself to the question whether

the Corporation could be said to be carrying on

business pursuant to the authority of the Central

Government. The answer to this question was obviously

‘no’ because the Corporation was carrying on business

in virtue of the authority derived from its memorandum

and articles of association and not by reason of any

authority granted by the Central Government. The

Corporation, in carrying on business, was acting on its

own behalf and not on behalf of the Central

Government and it was therefore not a servant or agent

of the Central Government in the sense that its actions

would bind the Central Government. There was no

question in this case whether the Corporation was an

instrumentality of the Central Government and

therefore an “authority” within the meaning of Article

12. We may point out here that when we speak of a

Corporation being an instrumentality or agency of

Government, we do not mean to suggest that the

Corporation should be an agent of the Government in

the sense that whatever it does should be binding on

the Government. It is not the relationship of principal

and agent which is relevant and material but whether

the Corporation is an instrumentality of the

// 31 //

Page 38 of 56

Government in the sense that a part of the governing

power of the State is located in the Corporation and

though the Corporation is acting on its own behalf and

not on behalf of the Government, its action is really in

the nature of State action. This decision dealing with an

altogether different point has no bearing on the present

issue.

8.9. In the case of Som Prakash Rekhi , Hon’ble Apex

Court in paragraph 26,27,28,29, 32,34,37 & 41 has held

as follows:

26. If we distil the essence of Article 12 textually and

apprehend the expanded meaning of “State” as

interpreted precedentially, we may solve the dilemma as

to whether Bharat Petroleum is but a double of Bharat

Sarkar. Let us be clear that the jurisprudence bearing

on corporations is not myth but reality. What we mean

is that corporate personality is a reality and not an

illusion or fictitious construction of the law. It is a legal

person. Indeed, “a legal person” is any subject-matter

other than a human being to which the law attributes

personality. “This extension, for good and sufficient

reasons, of the conception of personality. . . is one of

the most noteworthy feats of the legal imagination.” [

Salmond : JURISPRUDENCE, 10th Edn, pp 324-25]

Corporations are one species of legal persons invented

by the law and invested with a variety of attributes so

as to achieve certain purposes sanctioned by the law.

For those purposes, a corporation or company has a

legal existence all its own. The characteristics of

corporations, their rights and liabilities, functional

autonomy and juristic status, are jurisprudentially

recognised as of a distinct entity even where such

corporations are but State agencies or

instrumentalities. For purposes of the Companies Act,

1956, a government company has a distinct personality

which cannot be confused with the State. Likewise, a

statutory corporation constituted to carry on a

commercial or other activity is for many purposes a

distinct juristic entity not drowned in the sea of State,

although, in substance, its existence may be but a

projection of the State. What we wish to emphasise is

// 32 //

Page 38 of 56

that merely because a company or other legal person

has functional and jural individuality for certain

purposes and in certain areas of law, it does not

necessarily follow that for the effective enforcement of

fundamental rights under our constitutional scheme,

we should not scan the real character of that entity;

and if it is found to be a mere agent or surrogate of the

State, in fact owned by the State, in truth controlled by

the State and in effect an incarnation of the State,

constitutional lawyers must not blink at these facts and

frustrate the enforcement of fundamental rights despite

the inclusive definition of Article 12 that any authority

controlled by the Government of India is itself State.

Law has many dimensions and fundamental facts must

govern the applicability of fundamental rights in a given

situation.

27. Control by Government of the corporation is writ

large in the Act and in the factum of being a

government company. Moreover, here, Section 7 gives to

the Government company mentioned in it a statutory

recognition, a legislative sanction and status above a

mere government company. If the entity is no more

than a company under the Company law or society

under the law relating to registered societies or

cooperative societies you cannot call it an authority. A

ration shop run by a cooperative store financed by

Government is not an authority, being a mere

merchant, not a sharer of State power. “Authority” in

law belongs to the province of power: “Authority (in

administrative law) is a body having jurisdiction in

certain matters of a public nature.” [ P Ramanatha

Aiyar : THE LAW LEXICON OF BRITISH INDIA (1940) p

101] Therefore, the “ability conferred upon a person by

the law to alter, by his own will directed to that end, the

rights, duties, liabilities or other legal relations, either

of himself or of other persons” [ Salmond :

JURISPRUDENCE, 10th Edn 243] must be present ab

extra to make a person an “authority”. When the person

is an “agent or instrument of the functions of the State”

the power is public. So the search here must be to see

whether the Act vests authority, as agent or instrument

of the State, to affect the legal relations of oneself or

others.

28. Sometimes the test is formulated, over-simplified

fashion, by asking whether the corporation is

// 33 //

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formed by a statute or under a statute. The true test is

functional. Not how the legal person is born but why it

is created. Nay more. Apart from discharging functions

or doing business as the proxy of the State, wearing the

corporate mask there must be an element of ability to

affect legal relations by virtue of power vested in it by

law.

29. In the present instance, the source of both, read in

the light of Sections 3 and 7, is saturated with State

functions. Avowedly, the statutory contemplation, as

disclosed by Section 7, is that the Company should step

into the shoes of the executive power of the State. The

legislative milieu in which the second respondent came

to be the successor of Burmah Shell suggests that the

former is more than a mere company registered under

the Companies Act. It has a statutory flavour acquired

under Section 7. Moreover, everything about the second

respondent in the matter of employees, their provident,

superannuation and welfare funds, is regulated

statutorily unlike in the case of ordinary companies.

Sections 9 and 10 deal with these aspects. These two

provisions which regulate the conditions of service and

even provide for adjudication of disputes relating to

employees indicate that some of the features of a

statutory corporation attach to this government

company. Sections 9 and 10, in terms, create rights and

duties vis-a-vis the Government company itself apart

from the Companies Act. An ordinary company, even a

government company simpliciter has not the obligations

cast on the second respondent by Sections 9 and 10.

And, Section 11 specifically gives the Act primacy vis-a-

vis other laws. Section 12, although it has no bearing

on the specific dispute we are concerned with in this

case, is a clear pointer to the statutory character of the

Government company and the vesting of an authority

therein. This provision clothes the Government

company with power to take delivery of the property of

Burmah Shell from every person in whose possession,

custody or control such property may be. There are

other powers akin to this one in Section 12. The

provision for penalties if any person meddles with the

property of the second respondent emphasises the

special character of this Government company. Equally

unique is the protection conferred by Section 16 on the

// 34 //

Page 38 of 56

Government company and its officers and employees

“for anything which is, in good faith, done or intended

to be done under this Act”. Such an immunity does not

attach to employees of companies simpliciter, even if

they happen to be Government companies. In the same

strain is the indemnity conferred by Section 18. This

review, though skeletal, is sufficient strikingly to bring

home the point that the Corporation we are concerned

with is more than a mere government company.

Whatever its character antecedent to the Act, the

provisions we have adverted to have transformed it into

an instrumentality of the Central Government with a

strong statutory flavour superadded and clear indicia of

power to make it an “authority”. Although registered as

a company under the Indian Companies Act, the second

respondent is clearly a creature of the statute, the

Undertaking having vested in it by force of Section 7 of

the Act. The various provisions to which our attention

was drawn, an elaboration of which is not called for,

emphasise the fact that the second respondent is not a

mere company but much more than that and has a

statutory flavour in its operations and functions, in its

powers and duties, and in its personality itself, apart

from being functionally and administratively under the

thumb of Government. It is a limb of Government, an

agency of the State, a vicarious creature of statute

working on the wheels of the Acquisition Act. We do not

mean to say that for purposes of Article 309 or

otherwise this Government company is State but limit

our holding to Article 12 and Part III.

xxx xxx xxx

32. Let us dilate a little on the living essence of

constitutional fundamentals if we are not to reduce

fundamental rights to paper hopes and people's dupes!

The judicial branch shall not commit breach of faith

with the bill of rights by interpretative exoneration of

the State from observance of these founding faiths. The

higher values enacted into Part III of the Constitution

certainly bind the State in its executive and legislative

branches. They are constitutional guarantees to the

Indian people, not fleeting promises in common

enactments. So long as they last in the National Charter

they should not be truncated in their application unless

// 35 //

Page 38 of 56

a contra-indication is clearly written into the

prescription, a la Articles 31-A, 31-B and 31-C. Article

12 is a special definition with a broader goal. Far from

restricting the concept of State it enlarges the scope to

embrace all authorities under the control of

Government. The constitutional philosophy of a

democratic, socialist republic mandated to undertake a

multitude of socio-economic operations inspires Part IV

and so we must envision the State entering the vast

territory of industrial and commercial activity,

competitively or monopolistically, for ensuring the

welfare of the people. This expansive role of the State

under Part IV is not played at the expense of the

cherished rights of the people entrenched in Part III

since both the sets of imperatives are complementary

and coexist harmoniously. Wherever the Constitution

has felt the need to subordinate Part III to Part IV it has

specificated it and absent such express provision, both

the Parts must and can flourish happily together given

benign judicial comprehension a

la Kerala v. Thomas [State of Kerala v. NM Thomas ,

(1976) 2 SCC 310 : 1976 SCC (L&S) 227] . There is no

inherent conflict between the two parts if orchestrated

humanely. We are at pains to emphasise this

perspective because the substance of Part III, save

where the Constitution says so, shall not be sacrificed

at the altar of Part IV by the stratagem of incorporation.

It is well known, and surely within the erudite and

experienced ken of our “founding fathers”, that

government embarks on myriad modern commercial

activities by resort to the jurisprudential gift of

personification through incorporation. This contrivance

of carrying on business activities by the State through

statutory corporations, government companies and

other bodies with legal personality, simplifies and

facilitates transactions and operations beyond the

traditional and tardy processes of Governmental desks

and cells noted for their red tape exercise and

drowsy dharma. But to use the corporate methodology

is not to liberate the State from its basic obligation to

obey Part III. To don the mantle of company is to free

the State from the inevitable constraints of

Governmental slow motion, not to play truant with the

great rights. Otherwise, a cunning plurality of

corporations taking over almost every State business —

the post and the rail-road, the T.V. and the radio, every

// 36 //

Page 38 of 56

economic ministry's activity, why, even social welfare

work — will cheat the people of Part III rights by the

easy plea: “No admission for the bill of rights; no State

here”. From Indian Posts and Telegraphs Limited to

Indian Defence Manufacturers Limited, from Social

Welfare Board to Backward Classes Corporation, the

nation will be told that “the State has ceased to be, save

for the non-negotiable sovereign functions”; and

fundamental rights may suffer eclipse only to be viewed

in museum glass cases. Such a situation will be a

treachery on the founding fathers, a mockery of the

Constitution and a government by puppetry because

the crowd of corporations which have carved out all

functions will still be controlled completely by the

switchboards of bureaucrats and political bosses from

remote control rooms in government secretariats. The

extended definition of “the State” in Article 12 is not to

be deadened but quickened by judicial construction.

Before our eyes the corporate phenomenon is becoming

ubiquitous. What was archaically done yesterday by

Government departments is alertly executed today by

Government companies, statutory corporations and like

bodies and this tribe may legitimately increase

tomorrow. This efficiency is not to be purchased at the

price of fundamental rights. As Mathew, J., stated in V.

Punnen Thomas v. State of Kerala [AIR 1969 Ker 18 (FB)

: ILR (1968) 2 Ker 1 : 1968 Ker LT 800 : 1968 Ker LT

619] :

“The Government is not and should not be as free as

an individual in selecting the recipients for largess.

Whatever its activity, the Government is still the

Government and will be subject to restraints inherent

in its position in a democratic society. A democratic

Government cannot lay down arbitrary and capricious

standards for the choice of persons with whom alone it

will deal.

‘What's in a name? That which we call a rose by any

other name would smell as sweet.’ [ OMEO AND

JULIET, II. ii 43] And the State is fragrant with

fundamental rights whatever the legal hue or jural

cloak of its surrogate. And, to alter the imagery,

Maricha is Ravana, the misleading golden deer mask

notwithstanding.”

Xxx xxx xxx

// 37 //

Page 38 of 56

34. Article 12 gives the cue to forbid this plea. “Other

authorities. . . under the control of the Government of

India” are comprehensive enough to take care of Part III

without unduly stretching the meaning of “the State” to

rope in whatever any autonomous body which has some

nexus with Government. A wide expansion coupled with

a wise limitation may and must readily and rightly be

read into the last words of Article 12.

xxx xxx xxx

37. 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

entities. 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] Article 12 uses

the expression “other authorities” and its connotation

has to be clarified. On this facet also, the Airport

Authority case [Ramana Dayaram Shetty v. International

Airport Authority of India, (1979) 3 SCC 489] supplies a

solution: [(1979) 3 SCC 489, 517] (SCC p. 517, para 27)

“If a statutory corporation, body or other authority is an

instrumentality or agency of the Government, it would

be an ‘authority’ and therefore “State” within the

meaning of that expression in Article 12.”

xxx xxx xxx

41. This divagation explains the ratio of the Airport

Authority [Ramana Dayaram Shetty v. International

Airport Authority of India, (1979) 3 SCC 489] in its full

spectrum. There the main contention was that the said

authority, a statutory corporation, was not State and

enforcement of fundamental rights against such a body

was impermissible. As is apparent from the extensive

// 38 //

Page 38 of 56

discussion above, the identical issue confronting us as

to what are the “other authorities” contemplated by

Article 12 fell for consideration there. Most of the

rulings relied on by either side received critical

attention there and the guidelines and parameters spelt

out there must ordinarily govern our decision. A careful

study of the features of the Airport Authority and a

government company covered by Sections 7, 9, 10 and

12 of the Act before us discloses a close parallel except

that the Airport Authority is created by a statute while

Bharat Petroleum (notified under Section 7 of the Act)

is recognised by and clothed with rights and duties by

the statute.

8.10. In the case of M.C. Mehta Hon’ble Apex Court in

paragraph-29,30 & 33 has held as follows:

29. That we in no way consider ourselves bound by

American exposition of constitutional law is well

demonstrated by the fact that in R.D. Shetty [(1979) 3

SCC 489 : AIR 1979 SC 1628 : (1979) 3 SCR 1014] this

Court preferred the minority opinion of Douglas, J.

in Jackson v. Metropolitan Edison Company [42 L Ed (2d)

477] as against the majority opinion of Rehnquist, J. And

again in Air India v. Nergesh Meerza [(1981) 4 SCC 335 :

1981 SCC (L&S) 599 : (1982) 1 SCR 438] this Court

whilst preferring the minority view in General Electric

Company v. Martha V. Gilbert [50 L Ed (2d) 343] said

that the provisions of the American Constitution cannot

always be applied to Indian conditions or to the

provisions of our Constitution and whilst some of the

principles adumbrated by the American decisions may

provide a useful guide, close adherence to those

principles while applying them to the provisions of our

Constitution is not to be favoured, because the social

conditions in our country are different.

30. xxx xxx xxx

But we do not propose to decide finally at the present

stage whether a private corporation like Shriram would

fall within the scope and ambit of Article 12, because we

have not had sufficient time to consider and reflect on

this question in depth.

Xxx xxx xxx

// 39 //

Page 38 of 56

33. Since we are not deciding the question as to whether

Shriram is an authority within the meaning of Article 12

so as to be subjected to the discipline of the fundamental

right under Article 21, we do not think it would be

justified in setting up a special machinery for

investigation of the claims for compensation made by

those who allege that they have been the victims of

oleum gas escape.

8.11. In the case of Dillip Kumar Pandey , Hon’ble Apex

Court in paragraph-9,12,15,16,17 & 19,20,21 & 23 has held

as follows:

9. Learned senior counsel submitted that IAF has

functional and administrative control over the said

Society and the said school. Therefore, he submitted

that Air Force Schools are “authority” within the

meaning of Article 12 of the Constitution of India and

thus, are amenable to writ jurisdiction under Article

226 of the Constitution of India.

Xxx xxx xxx

12. By way of rejoinder, learned counsel appearing for

the appellants submitted that the cases of Army Welfare

Education Society8 and St.Mary’s Education Society &

Ors.9 stand on a different footing. He tried to

distinguish the decisions in the cases of Army Welfare

Education Society8 and St.Mary’s Education Society &

Ors.9 and submitted that the said decisions will not

apply.

Xxx xxx xxx

15. Now, we will refer to the law laid down on this

aspect. Paragraphs 15 and 20 of the decision of this

Court in the case of Andi Mukta Sadguru Shree

Muktajee Vandas Swami Suvarna Jayanti Mahotsav

Smarak Trust read thus: “15. If the rights are purely of

a private character no mandamus can issue. If the

management of the college is purely a private body with

no public duty mandamus will not lie. These are two

exceptions to mandamus. But once these are absent

and when the party has no other equally convenient

remedy, mandamus cannot be denied. It has to be

// 40 //

Page 38 of 56

appreciated that the appellants trust was managing the

affiliated college to which public money is paid as

government aid. Public money paid as government aid

plays a major role in the control, maintenance and

working of educational institutions. The aided

institutions like government institutions discharge

public function by way of imparting education to

students. They are subject to the rules and regulations

of the affiliating University. Their activities are closely

supervised by the University authorities. Employment

in such institutions, therefore, is not devoid of any

public character. [ See The Evolving Indian

Administrative Law by M.P. Jain (1983), p. 226] So are

the service conditions of the academic staff. When the

University takes a decision regarding their pay scales, it

will be binding on the management. The service

conditions of the academic staff are, therefore, not

purely of a private character. It has super-added

protection by University decisions creating a legal right-

duty relationship between the staff and the

management. When there is existence of this

relationship, mandamus cannot be refused to the

aggrieved party.

20. The term “authority” used in Article 226, in

the context, must receive a liberal meaning

unlike the term in Article 12. Article 12 is

relevant only for the purpose of enforcement of

fundamental rights under Article 32. Article 226

confers power on the High Courts to issue writs

for enforcement of the fundamental rights as well

as non-fundamental rights. The words “any

person or authority” used in Article 226 are,

therefore, not to be confined only to statutory

authorities and instrumentalities of the State.

They may cover any other person or body

performing public duty. The form of the body

concerned is not very much relevant. What is

relevant is the nature of the duty imposed on the

body. The duty must be judged in the light of

positive obligation owed by the person or

authority to the affected party. No matter by

what means the duty is imposed, if a positive

obligation exists mandamus cannot be denied.

16. In the case of Pradeep Kumar Biswas , this Court

dealt with the aspect of control over the institution. This

Court relied upon the decision in the case of Ajay

Hasia5 . In paragraph 40, this Court held thus: “40.

The picture that ultimately emerges is that the tests

formulated in Ajay Hasia [Ajay Hasia v. Khalid Mujib

// 41 //

Page 38 of 56

Sehravardi, (1981) 1 SCC 722 : 1981 SCC (L&S) 258]

are not a rigid set of principles so that if a body falls

within any one of them it must, ex hypothesi, be

considered to be a State within the meaning of Article

12. The question in each case would be — whether in

the light of the cumulative facts as established, the

body is financially, functionally and administratively

dominated by or under the control of the Government.

Such control must be particular to the body in question

and must be pervasive. If this is found then the body is

a State within Article 12. On the other hand, when the

control is merely regulatory whether under statute or

otherwise, it would not serve to make the body a State.”

17. In the case of All India Sainik Schools Employees

Association, as a matter of fact, it was found that the

entire funding for running the school was provided by

the State and Central Governments. Even the overall

control was found vested in governmental authority.

Xxx xxx xxx

19. Now, we turn to the decision of this Court in the

case of St.Mary’s Education Society. It is true that this

Court did not consider the decision of this Court in the

case of Andi Mukta Sadguru Shree Muktajee Vandas

Swami Suvarna Jayanti Mahotsav Smarak Trust of this

Court. However, this Court has discussed all relevant

principles. The principles laid down in the said decision

in the case of St.Mary’s Education Society & Ors. are in

paragraphs 75.1 to 75.5, which read thus:

“75.1. An application under Article 226 of the

Constitution is maintainable against a person or a

body discharging public duties or public functions.

The public duty cast may be either statutory or

otherwise and where it is otherwise, the body or the

person must be shown to owe that duty or obligation

to the public involving the public law element.

Similarly, for ascertaining the discharge of public

function, it must be established that the body or the

person was seeking to achieve the same for the

collective benefit of the public or a section of it and

the authority to do so must be accepted by the public.

75.2. Even if it be assumed that an educational

institution is imparting public duty, the act

complained of must have a direct nexus with the

discharge of public duty. It is indisputably a public

law action which confers a right upon the aggrieved to

invoke the extraordinary writ jurisdiction under

Article 226 for a prerogative writ. Individual wrongs or

// 42 //

Page 38 of 56

breach of mutual contracts without having any public

element as its integral part cannot be rectified

through a writ petition under Article 226. Wherever

Courts have intervened in their exercise of

jurisdiction under Article 226, either the service

conditions were regulated by the statutory provisions

or the employer had the status of “State” within the

expansive definition under Article 12 or it was found

that the action complained of has public law element.

75.3. It must be consequently held that while a body

may be discharging a public function or performing a

public duty and thus its actions becoming amenable

to judicial review by a constitutional court, its

employees would not have the right to invoke the

powers of the High Court conferred by Article 226 in

respect of matter relating to service where they are

not governed or controlled by the statutory provisions.

An educational institution may perform myriad

functions touching various facets of public life and in

the societal sphere. While such of those functions as

would fall within the domain of a “public function” or

“public duty” be undisputedly open to challenge and

scrutiny under Article 226 of the Constitution, the

actions or decisions taken solely within the confines

of an ordinary contract of service, having no statutory

force or backing, cannot be recognised as being

amenable to challenge under Article 226 of the

Constitution. In the absence of the service conditions

being controlled or governed by statutory provisions,

the matter would remain in the realm of an ordinary

contract of service.

75.4. Even if it be perceived that imparting education

by private unaided school is a public duty within the

expanded expression of the term, an employee of a

nonteaching staff engaged by the school for the

purpose of its administration or internal management

is only an agency created by it. It is immaterial

whether “A” or “B” is employed by school to discharge

that duty. In any case, the terms of employment of

contract between a school and nonteaching staff

cannot and should not be construed to be an

inseparable part of the obligation to impart education.

This is particularly in respect to the disciplinary

proceedings that may be initiated against a particular

employee. It is only where the removal of an employee

of non-teaching staff is regulated by some statutory

provisions, its violation by the employer in

contravention of law may be interfered with by the

Court. But such interference will be on the ground of

// 43 //

Page 38 of 56

breach of law and not on the basis of interference in

discharge of public duty.

75.5. From the pleadings in the original writ petition,

it is apparent that no element of any public law is

agitated or otherwise made out. In other words, the

action challenged has no public element and writ of

mandamus cannot be issued as the action was

essentially of a private character.”

20. The law laid down in this decision was followed by

this Court in the case of Army Welfare Education

Society, In that case, this Court dealt with a school

taken over by the Army Welfare Education Society,

which required existing teachers to requalify under new

conditions. The High Court held that the school could

not impose service conditions to the teachers’

disadvantage. In the said decision, this Court was

concerned with a case where a school was taken over by

the petitioner – the Army Welfare Education Society. A

letter was sent to the teachers in the school run by St.

Gabriel’s Academy indicating that those among the

teachers who are eligible in terms of CBSE guidelines

would be considered for appointment on ad hoc basis

for one year and thereafter, they will have to appear and

qualify written test conducted by the Army Welfare

Education Society. The teachers approached the High

Court. Learned Single Judge held that the school

cannot impose the service conditions on the teaching

staff to their disadvantage. The issue before this Court

in the said case was whether the Army Welfare

Education Society was a "state" or "authority" within

the meaning of Article 12 of the Constitution. This

Court found that the Society was a purely unaided

private Society established for the purpose of imparting

education to the children of the army personnel. This

Court applied the law laid down in the case of St.Mary’s

Education Society & Ors.9 and held that though the

Society was imparting education, which involves public

duty, the relationship between the respondents and the

Army ‘Welfare Education Society was that of an

employee and private employer arising out of a private

contract. Therefore, a breach of contract does not touch

any public law element, and the school cannot be said

to be discharging any public duty in connection with

the employment of the teachers.

21. We have perused the application made to CBSE for

affiliation. The application was made on 22nd August 1985.

It was in the name of the Air Force Primary School. Although

it is stated that the school was fully financed by the IAF,

// 44 //

Page 38 of 56

there is no evidence to show that the school was actually

financed by the IAF. The Education Code, which applies to

Air Force Schools, is not a statutory code that has the force

of law. It is issued under the authority of the Chairman of

the Board of Governors of the IAF Educational and Cultural

Society. It provides that all Air Force Schools are

administered under the Society. As per the Memorandum of

Association of the Society, the members of the Society are

IAF officers who hold their posts ex-officio. The Command

Schools Managing Committees do not have control over the

dayto-day running of Air Force Schools. The day-to-day

control is with the School Managing Committee. Even if the

school building is constructed out of Public funds, there is

no record to show that it receives a grant from Public Funds.

There is nothing in the Education Code to show that the IAF

has control over the said school. The audited accounts of the

school for the period from 2019-20 to 2023-24 indicate that

no public funds or grants were received by the school. Even if

pay scales applicable to all IAF schools are determined by the

IAF, that by itself will not amount to pervasive control by the

IAF over the functioning of the schools.

xxx xxx xxx

23. In the impugned judgment, the Division Bench recorded

the undisputed position that the appellants are employees of

the said school, which is not governed by any statutory

regulations. The Education Code, which applies to the said

school, does not have any statutory sanction or force. A

finding of fact was recorded that there is no material to show

that the Government or the IAF has any control over the

management of the school. It is not possible for us to take a

contrary view.

8.12. Reliance was also placed to a decision of the

Hon’ble Apex Court reported in 2003 AIR (SC ) 4325,

Federal Bank Ltd., Vs. Sagar Thomas and Others .

In the said decision, Hon’ble Apex Court placing

reliance on various decisions of the Apex Court while

setting aside the order passed by the High Court,

allowed the appeal filed by the appellant-bank. Hon’ble

// 45 //

Page 38 of 56

Apex Court in para-1,2,7,27,29,30,31,32 & 34 has held

as follows:

1. Respondent 1 Sagar Thomas was working as a

Branch Manager in Karunagappally Branch of

the appellant Bank, namely, Federal Bank,

having its registered office at Alwaye, Kerala. He

was, however, suspended on 29-5-1982, since a

disciplinary enquiry was ordered into some

charges against him for having exceeded his

authority in grant of loans and advances to

different parties. The inquiry officer found him

guilty of the charges and ultimately punishment

of dismissal was awarded to the respondent.

2. Respondent 1 challenged the order of his

dismissal by filing a writ petition in the High

Court. A preliminary objection about

maintainability of writ petition seems to have

been taken in defence by Federal Bank, saying

that it is a private bank and not a State or its

agency or instrumentality, within the meaning of

Article 12 of the Constitution of India, hence a

writ petition under Article 226 of the

Constitution is not maintainable against it. The

learned Single Judge, however, found that

Federal Bank performs public duty and observed

thus:

“As per statutes, Reserve Bank and the

Central Government exercise all-pervading

functional, fiduciary and managerial control over

the banking industry. Every banking company is

duty-bound to carry on banking business as per

the banking policy under stringent control of

Reserve Bank in the interest of banking system

or in the interest of monetary stability of sound

economic growth, having due regard to the

interest of the depositors. The activities carried

on by the Bank are vital to public interest and

have potential to affect the socio-economic

development and growth of the nation. Banking

companies are therefore, public institutions,

accepting deposits from the public, financial

assistance from the State through its

// 46 //

Page 38 of 56

agencies/instrumentalities, for the purpose of

lending or investment, pursuing banking policy

and engaged in matters of high public interest or

performing public functions, ensuring monetary

stability, sound economic growth, equitable

allocation of various funds to efficient use, for

the promotion and growth of economy and

welfare of the State. The first respondent is thus,

performing a public duty and a positive

obligation towards its employees and customers

exists. Therefore, it is amenable to writ

jurisdiction.”

Ultimately, the order passed by the learned

Single Judge is:

“… In the light of the above decisions of the

Apex Court, I can very well find that Federal Bank

Ltd. is performing public duty and as such it

comes under the definition of ‘other authority’

within the meaning of Article 12 of the

Constitution of India and as such the writ petition

is maintainable before this Court.”

Aggrieved by the aforesaid judgment of the learned

Single Judge, the appellant preferred a writ appeal

but referring to a decision of this Court in U.P.

State Coop. Land Development Bank

Ltd. v. Chandra Bhan Dubey [(1999) 1 SCC 741 :

1999 SCC (L&S) 389 : AIR 1999 SC 753] the

Division Bench observed that in an identical fact

situation it was held that writ application would

be maintainable, minor distinctions on facts, here

and there, would not make the aforesaid decision

inapplicable to scheduled banks. With such

observations the appeal was dismissed providing

that the learned Single Judge shall decide the writ

petition on merits. Federal Bank Ltd. has

preferred this appeal against the aforesaid

judgment of the High Court.

Xxx xxx xxx

7. However, so far as the above proposition is

concerned, the learned counsel for the respondent

submitted that the point relates to the merits of the

matter which is yet to be gone into by the learned

// 47 //

Page 38 of 56

Single Judge in case it is found that a writ petition

is maintainable.

Xxx xxx xxx

27. Such private companies would normally not be

amenable to the writ jurisdiction under Article 226

of the Constitution. But in certain circumstances a

writ may issue to such private bodies or persons as

there may be statutes which need to be complied

with by all concerned including the private

companies. For example, there are certain

legislations like the Industrial Disputes Act, the

Minimum Wages Act, the Factories Act or for

maintaining proper environment, say the Air

(Prevention and Control of Pollution) Act, 1981 or

the Water (Prevention and Control of Pollution) Act,

1974 etc. or statutes of the like nature which fasten

certain duties and responsibilities statutorily upon

such private bodies which they are bound to

comply with. If they violate such a statutory

provision a writ would certainly be issued for

compliance with those provisions. For instance, if a

private employer dispenses with the service of its

employee in violation of the provisions contained

under the Industrial Disputes Act, in innumerable

cases the High Court interfered and has issued the

writ to the private bodies and the companies in that

regard. But the difficulty in issuing a writ may

arise where there may not be any non-compliance

with or violation of any statutory provision by the

private body. In that event a writ may not be

issued at all. Other remedies, as may be available,

may have to be resorted to.

Xxx xxx xxx

29. There are a number of such companies carrying on

the profession of banking. There is nothing which can

be said to be close to the governmental functions. It is

an old profession in one form or the other carried on by

individuals or by a group of them. Losses incurred in

the business are theirs as well as the profits. Any

business or commercial activity, maybe banking,

// 48 //

Page 38 of 56

manufacturing units or related to any other kind of

business generating resources, employment, production

and resulting in circulation of money are no doubt, such

which do have impact on the economy of the country in

general. But such activities cannot be classified as one

falling in the category of discharging duties or functions

of a public nature. Thus the case does not fall in the

fifth category of cases enumerated in the case of Ajay

Hasia [Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1

SCC 722 : 1981 SCC (L&S) 258] . Again we find that the

activity which is carried on by the appellant is not one

which may have been earlier carried on by the

Government and transferred to the appellant company.

For the sake of argument, even if it may be assumed

that one or the other test as provided in the case of Ajay

Hasia [Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1

SCC 722 : 1981 SCC (L&S) 258] may be attracted, that

by itself would not be sufficient to hold that it is an

agency of the State or a company carrying on the

functions of public nature. In this connection,

observations made in the case of Pradeep Kumar

Biswas [(2002) 5 SCC 111 : 2002 SCC (L&S) 633]

quoted earlier would also be relevant.

30. We may now consider the two decisions i.e. Andi

Mukta [(1989) 2 SCC 691] and U.P. State Coop. Land

Development Bank Ltd. [(1999) 1 SCC 741 : 1999 SCC

(L&S) 389 : AIR 1999 SC 753] upon which much

reliance has been placed on behalf of the respondents

to show that a writ would lie against the appellant

company. So far as the decision in the case of U.P. State

Coop. Land Development Bank Ltd. [(1999) 1 SCC 741 :

1999 SCC (L&S) 389 : AIR 1999 SC 753] is concerned, it

stands entirely on a different footing and we have

elaborately discussed it earlier.

31. The other case which has been heavily relied upon

is Andi Mukta [(1989) 2 SCC 691] . It is no doubt held

that a mandamus can be issued to any person or

authority performing public duty, owing positive

obligation to the affected party. The writ petition was

held to be maintainable since the teacher whose

services were terminated by the institution was

affiliated to the university and was governed by the

ordinances, casting certain obligations which it owed to

// 49 //

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that petitioner. But it is not the case here. Our attention

has been drawn by the learned counsel for the

appellant to paras 12, 13 and 21 of the decision (Andi

Mukta [(1989) 2 SCC 691] ) to indicate that even

according to this case no writ would lie against the

private body except where it has some obligation to

discharge which is statutory or of public character.

32. Merely because Reserve Bank of India lays the

banking policy in the interest of the banking system or

in the interest of monetary stability or sound economic

growth having due regard to the interests of the

depositors etc. as provided under Section 5(c)(a) of the

Banking Regulation Act does not mean that the private

companies carrying on the business or commercial

activity of banking, discharge any public function or

public duty. These are all regulatory measures

applicable to those carrying on commercial activity in

banking and these companies are to act according to

these provisions failing which certain consequences

follow as indicated in the Act itself. As to the provision

regarding acquisition of a banking company by the

Government, it may be pointed out that any private

property can be acquired by the Government in public

interest. It is now a judicially accepted norm that

private interest has to give way to the public interest. If

a private property is acquired in public interest it does

not mean that the party whose property is acquired is

performing or discharging any function or duty of public

character though it would be so for the acquiring

authority.

Xxx xxx xxx

34. In the result, the appeal is allowed and the

judgment and order passed by the High Court is set

aside and the writ petition is held to be not

maintainable. There will, however, be no order as to

costs.

8.13. Reliance was placed to another decision of the

Apex Court reported in AIR 2005 SC 3202, Binny

Limited and Another Vs. V. Sadasivan and Others .

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Hon’ble Apex Court Para-5,6,9,29 & 32 of the said

decision has held as follows:

5. The contention of the appellant in Civil Appeal No.

1976 of 1998 was that the decision of the High Court

invoking the extraordinary jurisdiction under Article

226 of the Constitution was incorrect and that the

Court should not have interfered with the decision of a

private limited company and that the powers under

Article 226 cannot be invoked against a private

authority who is discharging its functions on the basis

of the contract entered into between the employer and

the employees. It was contended that the remedy

available to the workers was only ordinary civil

litigation. It was also contended that there was no

public law element in the action taken by the appellant

against the employees and, therefore, the public law

remedy of judicial review had no application.

6. The employees who are respondents in that appeal

contended that their contract with the appellant

was per se illegal and void as it was opposed to

Section 23 of the Contract Act. It was argued that

under similar circumstances, this Court had given

direction to redress the grievances of the employees.

Reference was made to Central Inland Water

Transport Corpn. Ltd. v. Brojo Nath Ganguly [(1986) 3

SCC 156 : 1986 SCC (L&S) 429 : (1986) 1 ATC 103]

and it was contended by the respondent employees

that the decision to terminate their services was

based on a specific clause in the contract which by

itself is void in view of Section 23 of the Contract Act.

Therefore, the High Court was justified in giving a

declaratory relief in their favour.

Xxx xxx xxx

9. The superior court's supervisory jurisdiction of

judicial review is invoked by an aggrieved party in

myriad cases. High Courts in India are empowered

under Article 226 of the Constitution to exercise

judicial review to correct administrative decisions and

under this jurisdiction the High Court can issue to any

person or authority, any direction or order or writs for

enforcement of any of the rights conferred by Part III

or for any other purpose. The jurisdiction conferred on

// 51 //

Page 38 of 56

the High Court under Article 226 is very wide.

However, it is an accepted principle that this is a

public law remedy and it is available against a body

or person performing a public law function. Before

considering the scope and ambit of public law remedy

in the light of certain English decisions, it is

worthwhile to remember the words of Subba Rao, J.

expressed in relation to the powers conferred on the

High Court under Article 226 of the Constitution

in Dwarkanath v. ITO [(1965) 3 SCR 536 : AIR 1966

SC 81] (SCR, pp. 540 G-541 A):

“This article is couched in comprehensive

phraseology and it ex facie confers a wide power on

the High Courts to reach injustice wherever it is

found. The Constitution designedly used a wide

language in describing the nature of the power, the

purpose for which and the person or authority against

whom it can be exercised. It can issue writs in the

nature of prerogative writs as understood in England;

but the scope of those writs also is widened by the

use of the expression ‘nature’, for the said expression

does not equate the writs that can be issued in India

with those in England, but only draws an analogy

from them. That apart, High Courts can also issue

directions, orders or writs other than the prerogative

writs. It enables the High Court to mould the reliefs to

meet the peculiar and complicated requirements of

this country. Any attempt to equate the scope of the

power of the High Court under Article 226 of the

Constitution with that of the English courts to issue

prerogative writs is to introduce the unnecessary

procedural restrictions grown over the years in a

comparatively small country like England with a

unitary from of Government into a vast country like

India functioning under a federal structure. Such a

construction defeats the purpose of the article itself.”

Xxx xxx xxx

29. Thus, it can be seen that a writ of mandamus or

the remedy under Article 226 is pre-eminently a

public law remedy and is not generally available as a

remedy against private wrongs. It is used for

enforcement of various rights of the public or to

compel public/statutory authorities to discharge their

// 52 //

Page 38 of 56

duties and to act within their bounds. It may be used

to do justice when there is wrongful exercise of power

or a refusal to perform duties. This writ is admirably

equipped to serve as a judicial control over

administrative actions. This writ could also be issued

against any private body or person, specially in view

of the words used in Article 226 of the Constitution.

However, the scope of mandamus is limited to

enforcement of public duty. The scope of mandamus

is determined by the nature of the duty to be

enforced, rather than the identity of the authority

against whom it is sought. If the private body is

discharging a public function and the denial of any

right is in connection with the public duty imposed on

such body, the public law remedy can be enforced.

The duty cast on the public body may be either

statutory or otherwise and the source of such power

is immaterial, but, nevertheless, there must be the

public law element in such action. Sometimes, it is

difficult to distinguish between public law and private

law remedies. According to Halsbury's Laws of

England, 3rd Edn., Vol. 30, p. 682,

“1317. A public authority is a body, not

necessarily a county council, municipal

corporation or other local authority, which

has public or statutory duties to perform

and which perform those duties and carries

out its transactions for the benefit of the

public and not for private profit.”

There cannot be any general definition of

public authority or public action. The facts of

each case decide the point.

Xxx xxx xxx

32. Applying these principles, it can very well be

said that a writ of mandamus can be issued against

a private body which is not “State” within the

meaning of Article 12 of the Constitution and such

body is amenable to the jurisdiction under Article

226 of the Constitution and the High Court under

Article 226 of the Constitution can exercise judicial

review of the action challenged by a party. But there

must be a public law element and it cannot be

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exercised to enforce purely private contracts entered

into between the parties.

9. Having heard learned counsel appearing for the

parties, considering the submission made, materials

available on record and the citations relied on by both

the sides, this Court finds that Petitioner was

appointed with issuance of the offer letter on

22.06.2012 under Annexure-2 and appointment letter

issued on 09.07.2012 under Anenxure-3. Both the

letters under Anexures-2 & 3, were issued by Opp.

Party No.3. Petitioner by accepting the terms and

conditions of the appointment so reflected in Annexure-

3, continued under the Opp Party Nos.3 & 4. As found

from the terms and conditions available under

Annexure-3, Opp. Party No.3 has framed the

disciplinary norms to be followed by its employees.

9.1. As further found, because of non-performance of

the Petitioner, Petitioner was issued with a show-cause

by Opp. Party No.3 on 08.05.2016 under Annexure-8.

Pursuant to such show-cause issued under Annexure-

8, Petitioner was terminated from his services vide

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order dtd.15.05.2017 under Annexure-1 of Opp. Party

No.3.

9.2. Placing reliance on the decisions cited by both the

parties, this Court is of the view that Petitioner was

appointed, with the order of appointment issued in his

favour by Opp. Party No.3 under Annexure-3. As per

the terms and conditions of the Contract, Opp. Party

No.3 has its own set of Rules and Regulations as well

as disciplinary norms to be followed by its employees.

Basing on such rules and regulations with issuance of

the show-cause under Annexure-8, Petitioner was

terminated vide order dtd.15.05.2017 under Annexure-

1 of Opp. Party No.3

9.3. This Court placing reliance on the decisions

relied on by the learned Counsel appearing for Opp.

Party No.1 as well as Opp. Party Nos.3 & 4 and the

available materials, is of the prima facie view that Opp.

Party No.3 is a Private Limited Company and Petitioner

as per the Contract entered in between him and Opp.

Party No.3, joined in his service. Hence, no writ can be

issued by this Court in exercise of its power under

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Article-226 of the Constitution of India against Opp

Party Nos.3 & 4, being a private limited Company with

no control over its management, whatsoever, either by

Opp. Party No.1 or by Opp. Party No.2. It is also the

view of this Court that Opp. Party No.3 being a Private

Limited Company doing non-banking business, is not a

State within the meaning of Article 12 of the

Constitution of India and not coming under any of the

tests laid down in the case of Ajay Hasia cited supra.

9.4. In view of the aforesaid analysis and the fact that

impugned order of termination has been issued by

Opp. Party No.3, this Court is of the view that no Writ

can be issued against Opp. Party Nos.3 & 4. The issue

accordingly is decided.

10. List this matter under the heading “For Orders”

in the week commencing 28

th September, 2026.

(Biraja Prasanna Satapathy)

Judge

Orissa High Court, Cuttack

Dated the 23

rd

Sept., 2026/Sangita