Forgot password
New User/ Regiser
⇒ Register to get Live Demo
1979 (5) TMI 144 - SC - Indian Laws
What are the constitutional obligations on the State when it takes action in exercise of its statutory or executive power?
Is the State entitled to deal with its property in and manner it likes or award a contract to any person it chooses without any constitutional limitations upon it?
What are the parameters of its statutory or executive power in the matter of awarding a contract or dealing with its property?
Held that:- The corporations acting as instrumentality or agency of Government would obviously be subject to the same limitations in the field of constitutional and administrative law as Government itself, though in the eye of the law, they would be distinct and independent legal entities. If Government acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that Government acting through the instrumentality or agency of corporations should equally be subject to the same limitations. But the question is how to determine whether a corporation is acting as instrumentality or agency of Government. It is a question not entirely free from difficulty.
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.
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 impregegnated 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 characteristic an operation as State action"
