Image source - https://bit.ly/3BEHuo7

This article is written by Ishani Khanna and Kaushiki Keshari.

Table of Contents

Abstract

The Constitution of India is the supreme command. The Constitution assures certain fundamental rights to each and every citizen of India. Under this article Article 12 is discussed in detail which focuses on the term ‘State’ which clearly helps to understand what actually the term ‘State’ includes. It is critical to ascertain which bodies drop under the definition of State in order to decide who bears the burden. The makers of the Constitution have defined the term ‘State’ in a broader sense than what is commonly recognized. The executive, as well as the legislative organs of the Union and the State, are included in the term ‘State’. This article focuses on the issue that whether the Airport Authority of India is covered under the definition of ‘State’ under Article 12 of the Indian Constitution. Various tests have been laid down to understand which authorities would come under the ‘State’. 

Introduction

Article 12 of the Indian Constitution merely focuses on the term ‘State’ used in Part III of the Constitution. It states that the term ‘State’ includes:

  1. India’s Government and Parliament, i.e. the Union’s Executive and Legislative branches.
  2. Each state’s governor and legislature, i.e., the Executive and Legislative branches of government.
  3. All local and other authorities in India’s territory.
  4. All local and other authorities under the control of the government of India.

The definition of the word “state” totally relies on the context in which it is used. According to John Locke, the objective of the state is to promote the “common good or the good of mankind.” The state is an entity that exists for the purpose of preserving life and upholding the dignity of its citizens. Its goal is to protect an individual’s dignity and way of life by upholding their rights. Individuals cannot have rights if the state is unable to fulfil its obligations.

Other authorities

There have been debates and deliberation on the term ‘other authorities’ defined under Article 12 of the Indian Constitution. Previously, this phrase was given a narrow connotation, implying that authority performing governmental or sovereign functions would only be covered by other authorities. According to the liberal interpretation, a sovereign or governmental function is not required for an authority to fall under the definition of the state. Other authorities include the State Electricity Board, LIC, ONGC, and the International Finance Corporation (IFC).

The University of Madras v. Santa Bai AIR 1954 Mad.67: Other authorities, according to the Madras High Court, could only be of a similar type, i.e. ejusdem generis. It may only signify authority performing governmental or sovereign tasks in this sense. It could not include natural or legal persons, such as universities unless they were sustained by the state.

Ujjammbai v. State of Uttar Pradesh AIR 1962 SC 1621: The court rejected the Madras High court’s limited interpretation of the term “other authorities” and found that the ejusdem generis criterion could not be applied to this expression. The administration of the union and the states, the legislature of the union and the states, and local authorities are particularly mentioned in Article 12. No common genus pervades through these bodies, nor can these bodies be rationally classified into one single category.

Where statutory corporations are considered as the “mouth and hands” of the central government, they are regarded as “authorities” under Article 12 of the Indian Constitution and will be treated as “states.” A public authority is a body that has public or statutory responsibilities and performs these responsibilities and transactions for the public good rather than for private profit. The state was deemed to be an abstract thing. It can only function through natural or juridical people’ instrumentality or agency. As a result, the idea of the State operating through a corporation and constituting it an agent of the State is not uncommon. Airport Authority of India works under the Government of India, Ministry of Civil Aviation, Directorate General of Civil Aviation and also supervisor of managing, developing, maintaining and upgrading the infrastructure of civil aviation being a statutory body as per the Airport Authority of India Act, 1994.

Law Commission Report

The Law Commission’s report examines whether public sector enterprises should be exempt from the provisions of Article 12 of the Indian Constitution. In a formal reference filed to the commission by the government of India at the request of the bureau of public enterprises, the law commission of India has been asked to look into the matter.

The Indian Supreme Court has ruled in a number of cases that public enterprises and undertakings are included in the state’s broad definition. As a result, Part III of the Constitution applies to these businesses and activities. As a result, the Supreme Court and the High Court have judicial review powers under Article 32 and 226 of the Constitution, respectively. In service matters as well as commercial transactions, the Supreme court and the High court have intervened with the orders of public enterprises and organizations in commercial and industrial principles.

Present position

It was required to develop some formula in order to analyze the relationship between the state and the venture in question, and this is the main approach taken by the Supreme court in its well-known judgement relating to the international airport authority. The International Airport Authority Act of 1971 established the international airport authority as a legal entity. The authority’s director had published a notice asking bidders for the construction and operation of a second-class restaurant and two snack bars at Bombay’s international airport.

The appellant, Shri R.D. Shetty, who was not a tenderer, filed a writ suit, which the Bombay High Court dismissed. He petitioned the Supreme Court for special leave to appeal, which he was granted. He claimed that a criterion of eligibility was mentioned in the Airports Authority’s notice seeking tenders, but that it was later amended without any valid justification, preventing him from submitting his tender. The International Airport Authority, as a “State” within the meaning of Article 12 of the Constitution, was further argued before the Supreme Court that it was obligated to give effect to the condition of eligibility established by it and not entitled to depart from it at its leisure without rational justification. 

The Airports Authority argued that the appellant lacked locus standi to file the suit because he had not entered a tender and had not been harmed by the grant of a license to one of the respondents. It further claimed that the eligibility criteria were unenforceable under the law. As a result, even if there was a deviation from the eligibility criterion or norm, it was not justiciable. Nonetheless, the Supreme Court ruled that “where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licenses or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like private individuals, deal with whomever it pleases,” but that “its action must be in conformity with a standard and should not be immaterial. If the government deviates from the norms and acts discriminatory on its part, the government would be penalized to be stuck down.

In Ramana Dayaram Shetty v. Airport Authority of India AIR 1979 SC 1628 The Supreme Court concluded in this decision that if a body is a government agency or instrumentality, it can be an authority under Article 12 regardless of whether it is a statutory corporation, a government company, or a registered society. As a result, the International Airport Authority of India is a State under Article 12 because it was established by an Act of Parliament.

The Court concluded that the following standards can be employed in an illustrative sense to establish whether a body or agency is a government instrumentality. Justice P.N. Bhagwati administered a 5-point test. This is a test to see if a body is a government agency or instrumentality, and it goes like this:

  • The government’s financial resources are the primary source of funding for such an organization, as the government owns the whole share capital of the corporation.
  • The existence of a deep and extensive state control system.
  • Such an organization or agency’s functions are of public importance and are closely tied to government functions.
  • That is to say, such functions should be primarily governmental in nature.
  • A government department was turned over to a company.
  • The agency’s status, whether monopoly or not, is bestowed and safeguarded by the state.

After considering the powers and functions bestowed upon the International Airport Authority, the Supreme Court determined that the Authority fell within the concept of “State.”

I.T.D.C Ltd. v. The Municipal Commissioner of Dum Dum Municipality The properties vested in the International Airport Authority of India under the provisions of the International Airports Authority Act, 1971 can still be called the properties of the Union within the meaning of Article 285 of the Indian Constitution, and thus exempt from all taxes imposed by a State or by any authority within a State, a single judge of the Calcutta High Court considered. The Dum Dum Municipality was aiming to collect a tax on the land of the Dum Dum airport in Calcutta, according to Dipak Kumar Sen. J. The I.T.D.C. was building a hotel on part of the property and argued that it could not be taxed since it was protected under Article 285 of the Constitution.

Under section 12(3) of the Act, the central government had also decided that the land belonged to it. The Act’s provisions were examined by the learned court. He cited the Supreme Court’s decision in the Fruit and Vegetable Merchants Unions case and the Gujarat High Court’s division bench decision in the State of Gujarat v. Port of Kandla case. According to the preamble, the act’s purpose appears to be to provide for the management of aerodromes that provide international air transportation services. The purpose of the Act was not to transfer airport holdings from the federal government to the authority. The central government retained exclusive control of the authority under the Act’s terms. The central government was also in charge of appointing members of the authority and terminating their terms of office.

The central government maintained nearly complete control over the authority’s fund. The remainder of the authority’s yearly net profit was to be made to the central government. The federal government retained the ability to take the authority’s administration of the airports and transfer it to anybody else. The fact that the statute didn’t provide a specific method for divesting the authority’s properties was crucial. In the event of a disagreement over a central government decision, the central government retains the right to decide. Following an examination of the act’s provisions, the learned judge concluded that the act’s plan was to vest the authority with the central government’s holdings for the restricted purpose of administration and management. The federal government’s title or ownership interest in such properties was never meant to be transferred.

Conclusion

The status of the corporation or authority is protected by the government and also the existence of control of the government makes it clear that it comes under the term ‘State’ defined under Article 12 of the Indian Constitution of India. The Court went on to say that, just as government operating via its officials is bound by Constitutional and public law constraints, the government acting through an agency is bound by the same set of rules. As a result, the Constitution and other public laws impose constraints or restrictions on the International Airport Authority of India.

References

  1. Article 12 of the Indian Constitution, https://byjus.com/free-ias-prep/article-12-indian-Constitution/
  2. Law Commission 145 Report, https://lawcommissionofindia.nic.in/101-169/Report145.pdf
  3. Article 12 of the Constitution and Public Sector Undertakings, https://indiankanoon.org/doc/11291596/
  4. Ramana Dayaram Shetty vs The International Airport on 4 May, 1979 https://indiankanoon.org/doc/1281050/
  5. I.T.D.C Ltd. v. The Municipal Commissioner of Dum Dum Municipality ,1995 https://indiankanoon.org/doc/1983849/

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

LEAVE A REPLY

Please enter your comment!
Please enter your name here