Author: Harsh Agarwal, National Law University Visakhapatnam (DSNLU)
To the Point
At the heart of Article 12 lies the question: who is the “State”? This inquiry is not semantic but deeply constitutional, determining whether fundamental rights can be enforced against a given entity. While Articles 13 to 32 ensure enforceability of rights against state action, the definition of “State” in Article 12 has never been static. Liberalization and privatization have blurred the public-private divide, demanding sharper judicial tools for classification. The rise of “local authorities”, panchayats, municipalities, development boards, and statutory corporations, illustrates this tension. These bodies oscillate between autonomy and accountability: autonomy to discharge localized functions effectively, and accountability to fundamental rights when they wield coercive or regulatory power. The jurisprudence of the Supreme Court has been central in reconciling these competing imperatives.
Abstract
This paper examines the evolving contours of “local authorities” under Article 12 of the Indian Constitution, with particular focus on the challenges posed by India’s post-liberalization governance landscape. The abstract legal question, what constitutes “State” for the purposes of fundamental rights enforcement, assumes acute practical importance as public-private partnerships; statutory bodies, and hybrid institutions increasingly shape governance. Early jurisprudence, beginning with University of Madras v. Shanta Bai and Rajasthan Electricity Board v. Mohan Lal, laid a restrictive foundation, but the Supreme Court’s later instrumentalist approach in Ramana Dayaram Shetty and Ajay Hasia expanded Article 12’s reach. This expansion confronted new tests in education and regulatory sectors, exemplified by Unni Krishnan and Dr. Janet Jeyapaul. By situating Indian law within comparative perspectives from the United Kingdom and the United States, the paper argues for a balanced interpretation that safeguards accountability without eroding institutional autonomy.
Use of Legal Jargon
Article 12 defines the “State” to include the Government and Parliament of India, the Government and Legislature of each State, and “all local or other authorities within the territory of India or under the control of the Government of India.” The inclusion of “local authorities” is a deliberate constitutional design to subject decentralized and statutory bodies to the discipline of Part III.
The doctrinal development has moved through three identifiable phases:
1. Formalistic Phase: exemplified by University of Madras v. Shanta Bai, where “local authority” was interpreted narrowly using the General Clauses Act, 1897.
2. Functional/Instrumentality Phase: initiated in Rajasthan Electricity Board v. Mohan Lal and crystallized in Ramana Shetty and Ajay Hasia, emphasizing governmental control, funding, and public functions as determinative.
3. Post-Liberalization Phase: testing the limits of Article 12 in the context of PPPs, deemed universities, and hybrid regulatory bodies, as seen in Unni Krishnan and Janet Jeyapaul.
This trajectory reflects the judiciary’s oscillation between two legal imperatives: preventing the constitutional evasion of fundamental rights through corporatization, and preserving the autonomy of entities performing specialized or quasi-private functions.
The Proof
The proof of Article 12’s elasticity lies in its ability to adapt to changing governance structures while maintaining fidelity to constitutional principles. In India’s post-liberalization era, where state functions are frequently devolved to statutory bodies, regulatory authorities, and hybrid entities, the judiciary’s interpretive role has become decisive in preserving constitutional accountability.
The Doctrinal Core of Article 12
The Supreme Court’s jurisprudence demonstrates that the inquiry under Article 12 has never been static. While the General Clauses Act provided an initial textual anchor, courts have consistently recognized that constitutional law must evolve with socio-economic realities. Rajasthan Electricity Board v. Mohan Lal was pivotal in detaching the definition of “authority” from a rigid textualist frame. By holding that the Electricity Board, though not a “local authority” under the General Clauses Act, was nevertheless an “authority” under Article 12, the Court asserted that entities wielding statutory power in the public interest cannot evade constitutional scrutiny.
This doctrinal turn was deepened by Ramana Dayaram Shetty, which explicitly articulated that Article 12 must be interpreted in light of the Directive Principles of State Policy and the constitutional vision of a welfare state. Bhagwati, J. emphasized that to confine “State” to traditional organs of government would allow fundamental rights to be undermined through privatization or corporatization of public functions.
Ajay Hasia operationalized this vision by articulating the “instrumentality/agency” test. The Court laid down six non-exhaustive criteria, including financial support, functional character, and administrative control, to determine whether an entity qualifies as “State.” This test has since guided Indian courts, though its application has often been inconsistent.
Education and the Expanding Horizon.
The education sector, particularly after liberalization, has been central to the Article 12 discourse. In J.P. Unni Krishnan v. State of Andhra Pradesh, the Court confronted the question of whether private educational institutions, albeit heavily regulated, fell within Article 12. The majority declined to treat such institutions as “State,” reasoning that mere affiliation and regulatory oversight did not transform them into constitutional authorities. Yet the judgment simultaneously expanded the right to education as part of Article 21, thereby indirectly subjecting private institutions to constitutional norms. This duality, non-State classification yet constitutional obligations, epitomizes the judiciary’s pragmatic approach.
The tension resurfaced in Dr. Janet Jeyapaul v. SRM University. Here, the Supreme Court held that a deemed university, established under statutory authority and enjoying pervasive state control, fell within Article 12. The Court distinguished it from private institutions in Unni Krishnan, emphasizing that deemed universities derive their status from statutory recognition and are entrusted with public functions in higher education. This case highlights that post-liberalization entities cannot cloak themselves in private garb when their existence and powers are rooted in statute.
Local Authorities and the Constitutional Amendments
The constitutionalization of local bodies through the 73rd and 74th Amendments entrenched Panchayats and Municipalities as “State” entities. Articles 243 and 243P–243ZG codify their roles, powers, and responsibilities, thereby eliminating any doubt about their inclusion under Article 12. Judicial review has consistently held that actions of municipal councils and panchayats constitute “State action” and must adhere to fundamental rights.
Yet autonomy has also been safeguarded. Courts have warned against excessive interference with the decision-making of elected local bodies, recognizing that decentralization is a constitutional value in itself. This dual emphasis on accountability and autonomy underscores the doctrinal complexity of Article 12: constitutional supervision must not suffocate institutional independence.
Hybrid Authorities and Public-Private Partnerships
Post-liberalization, hybrid authorities, such as airport operators, industrial development corporations, and housing boards, pose unique challenges. In Ramana Dayaram Shetty, the International Airport Authority, a statutory body managing airports, was subjected to Article 14 scrutiny when it awarded contracts arbitrarily. The case established that even contractual dealings of statutory authorities are bound by constitutional norms.
The principle was tested again in contexts like Zee Telefilms Ltd. v. Union of India, where the Board of Control for Cricket in India (BCCI), though discharging public functions, was held not to be “State” under Article 12 due to lack of governmental control. This revealed the limits of the instrumentality test: entities wielding enormous influence may escape Article 12, though later jurisprudence allowed writ petitions under Article 226 against such bodies on functional grounds.
Such cases expose a doctrinal gap. As Shukla notes, Article 12 jurisprudence has oscillated between “functional realism” and “formal control,” leading to uncertainty. Seervai similarly criticizes the lack of a consistent yardstick, cautioning that over-expansion undermines institutional autonomy, while under-expansion risks constitutional evasion.
The Balancing Act: Accountability and Autonomy
The proof of Article 12’s vitality lies in the judiciary’s ability to strike a balance. On one hand, local authorities, statutory corporations, and deemed universities must remain accountable to fundamental rights, ensuring that citizens do not suffer from arbitrary exercises of public power. On the other hand, excessive constitutionalization of entities risks undermining their efficiency and independence.
Basu persuasively argues that the Indian approach, though inconsistent, leans towards accountability—a necessary stance in a polity where corporatization of public functions is rampant. Jain, however, emphasizes the need for doctrinal clarity, suggesting that the Court develop a “core-periphery” test that anchors Article 12 in functional realities while preventing undue judicial encroachment.
Case Laws
The development of Article 12 jurisprudence cannot be understood without engaging deeply with landmark decisions that have shaped the definitional and functional scope of “the State.” Each of the following cases demonstrates how the judiciary has progressively interpreted the Constitution to meet the realities of governance and accountability.
1. University of Madras v. Shanta Bai
This early Madras High Court case (AIR 1954 Mad 67) represented the narrowest approach to Article 12. The Court, relying heavily on the General Clauses Act, held that “other authorities” in Article 12 should be confined to those ejusdem generis with government and local authorities. Accordingly, universities and similar statutory bodies were excluded.
While not binding on the Supreme Court, this judgment typified the initial reluctance to broaden Article 12’s ambit. Its textualist rigidity was later overruled, but it remains significant as a baseline, against which the progressive expansions of the Supreme Court must be measured.
2. Rajasthan Electricity Board v. Mohan Lal
In this seminal 1967 case, the Supreme Court explicitly rejected the ejusdem generis approach. The Court held that statutory authorities, like the Rajasthan Electricity Board, created under statute and endowed with power to make rules and enforce them, fell within Article 12.2^22 Importantly, the Court emphasized that the decisive factor is the nature of powers conferred and their impact on the public, not formal categorization.
This case shifted the focus from form to function. By holding that regulatory bodies exercising statutory powers are subject to constitutional scrutiny, the Court laid the foundation for accountability of a new class of public institutions.
3. Ramana Dayaram Shetty v. International Airport Authority of India
Perhaps the most cited case in this field, Ramana Dayaram Shetty (1979) was pathbreaking for two reasons. First, it subjected contractual actions of statutory corporations to Article 14 scrutiny. Second, it articulated that the interpretation of Article 12 must reflect the Directive Principles and the overarching philosophy of the welfare state.
Justice Bhagwati’s dictum that “the government cannot act arbitrarily, even in contractual dealings” transformed administrative law and constitutional law simultaneously. This judgment paved the way for recognizing that bodies discharging public functions cannot hide behind their corporate veil.
4. Ajay Hasia v. Khalid Mujib Sehravardi
In Ajay Hasia (1981), the Court provided the most detailed articulation of the “instrumentality or agency” test. The six criteria included:
1. Entire share capital held by government.
2. Financial assistance meeting nearly the whole expenditure.
3. Monopoly status conferred by law.
4. Deep and pervasive government control.
5. Functions of public importance closely related to government functions.
6. Transfer of a government department to the body.
The Court emphasized that the list is not exhaustive but indicative. What mattered was the functional and financial nexus with the State. This test remains the primary judicial tool for assessing Article 12 applicability, even though later cases sometimes narrowed or expanded its use.
5. J.P. Unni Krishnan v. State of Andhra Pradesh
This 1993 case confronted the status of private educational institutions, which proliferated in the liberalization era. The Court held that such institutions, though subject to regulatory control, are not “State” under Article 12. However, it simultaneously expanded the right to education as part of Article 21, thereby imposing indirect obligations
This nuanced stance reveals judicial pragmatism: to constitutionalize private institutions wholesale would compromise autonomy, yet ignoring their societal role would leave citizens vulnerable. The solution, reading Article 21 expansively, demonstrates the Court’s balancing act.
6. Dr. Janet Jeyapaul v. SRM University
The 2015 judgment represents the post-liberalization trajectory of Article 12. The Court held that SRM University, as a “deemed university,” was squarely within Article 12 because its establishment and recognition were rooted in statutory authority, and it performed a critical public function in higher education.
By distinguishing deemed universities from private unaided institutions, the Court reaffirmed that statutory origin and public function remain decisive. In the context of liberalization, where higher education has increasingly been corporatized, this case reasserted constitutional accountability over institutions that function as extensions of state policy.
Doctrinal Synthesis
Read together, these cases trace an arc from formalism (Shanta Bai) to functional realism (Ramana Dayaram Shetty, Ajay Hasia), to pragmatic accommodation (Unni Krishnan), and finally to a renewed emphasis on statutory origin (Dr. Janet Jeyapaul).
This evolution reveals three enduring themes:
1. Accountability: No public functionary, however corporatized, can be allowed to act arbitrarily.
2. Autonomy: Private entities, particularly in education, retain independence despite constitutional shadows.
3. Elasticity: Article 12 adapts to changing governance, ensuring fundamental rights remain enforceable in new institutional contexts.
As Jain observes, this dynamic jurisprudence ensures that Article 12 remains “a living provision, expanding with the State itself.”
Conclusion
The jurisprudence of “local authorities” under Article 12 demonstrates the judiciary’s constant effort to balance accountability with autonomy in a transforming socio-economic landscape. From the narrow textualist reading in Shanta Bai to the expansive instrumentality test in Ajay Hasia and the pragmatic stance in Unni Krishnan, the Indian judiciary has ensured that constitutional rights remain enforceable against entities exercising significant public power.
In the post-liberalization context, where privatization, corporatization, and hybrid models of governance dominate, the significance of this jurisprudence cannot be overstated. Bodies like electricity boards, airport authorities, and deemed universities wield influence comparable to state departments. If left outside constitutional scrutiny, they would undermine the promise of Part III. Conversely, unchecked expansion risks diluting institutional autonomy and overburdening the judiciary with governance questions better left to policy.
Ultimately, the doctrine of “local authorities” reflects a constitutional philosophy: that power, irrespective of the form it takes, must remain tethered to the discipline of rights and accountability. Article 12 thus continues to serve as the gateway through which fundamental rights remain dynamic, relevant, and enforceable in an evolving democracy.
FAQs
1. Why is Article 12 significant in Indian constitutional law?
Because it defines “the State,” which determines the range of bodies bound by fundamental rights obligations.
2. Are private bodies ever included under Article 12?
Not as a rule. Only when a body functions as an instrumentality or agency of the government—e.g., statutory corporations or deemed universities—can it fall within Article 12.
3. How did Ajay Hasia change the law?
It laid down the six-factor instrumentality test, which remains the central doctrinal tool for deciding whether an entity is “State.”
4. Why is post-liberalization jurisprudence different?
Because privatization and regulatory outsourcing created hybrid institutions whose public accountability must be assessed without stifling autonomy.
5. Does Article 12 jurisprudence still evolve today?
Yes. Courts continue to refine its application in sectors like education, healthcare, and infrastructure, ensuring that constitutional rights remain meaningful in new governance models.
Footnotes
1. Rajasthan Electricity Bd. v. Mohan Lal, AIR 1967 SC 1857, 6.
2. Ramana Dayaram Shetty v. Int’l Airport Auth. of India, (1979) 3 SCC 489, ¶20.
3. Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722, 15.
4. J.P. Unni Krishnan v. State of A.P., (1993) 1 SCC 645, 83–85.
5. Dr. Janet Jeyapaul v. SRM Univ., (2015) 16 SCC 530, 21.
6. Kishan Chand Arora v. State of Haryana, (2010) 15 SCC 623, 19.
7. Ramana Dayaram Shetty v. Int’l Airport Auth. of India, (1979) 3 SCC 489, 21.
8. Zee Telefilms Ltd. v. Union of India, (2005) 4 SCC 649, 30–32.
9. V.N. Shukla, Constitution of India 458 (13th ed., EBC 2017).
10. H.M. Seervai, Constitutional Law of India 2823 (4th ed., Universal 2019).
11. D.D. Basu, Commentary on the Constitution of India 1189 (9th ed., LexisNexis 2018).
12. M.P. Jain, Indian Constitutional Law 185 (8th ed., LexisNexis 2018).
