Constitutionalism and privatisation: who is 'the State' under Article 12?

1. Constitutionalism

Constitutionalism is the idea that government power is legitimate only when it is limited by law, and that those limits are enforceable. Carl J. Friedrich and Charles McIlwain traced it to the medieval distinction between gubernaculum (government) and jurisdictio (law). Its elements are usually listed as: a written or recognised higher law, separation of powers, guaranteed rights, an independent judiciary to enforce them, and accountable government. Constitutionalism is therefore more than having a constitution; authoritarian States have constitutions without limited government.

The premise of classical constitutionalism is that the danger to liberty comes from the State. Fundamental rights are accordingly framed as limits on “the State”, defined in Article 12 to include the Government and Parliament of India, the Government and legislature of each State, and all local or other authorities within India or under the control of the Government of India.

2. The expansion of “other authorities”

• University of Madras v. Shantha Bai (1954) applied the ejusdem generis rule, limiting the phrase to bodies like those listed. This was rejected in Rajasthan State Electricity Board v. Mohan Lal (1967): any authority created by statute and having power to issue binding directions is included.
• Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, 1975 INSC 44: statutory corporations (ONGC, LIC, IFC) are State; Mathew J’s concurrence argued that a public corporation is an agency of the government performing public functions.
• Ramana Dayaram Shetty v. International Airport Authority, 1979 INSC 104: Bhagwati J laid down indicia of an instrumentality or agency of the State, and held that the government must act non-arbitrarily even in awarding contracts.
• Ajay Hasia v. Khalid Mujib Sehravardi, 1980 INSC 218, (1981) 1 SCC 722: a society registered under the Societies Registration Act can be State. The six tests: share capital held by government; financial assistance meeting almost all expenditure; monopoly status; deep and pervasive State control; functions of public importance closely related to governmental functions; transfer of a government department to the body. Form is irrelevant; the question is function and control.
• Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, 2002 INSC 202, (2002) 5 SCC 111: a seven-judge Bench held CSIR to be State and restated the test: whether the body is financially, functionally and administratively dominated by or under the control of the government. The control must be deep and pervasive, not merely regulatory.
• Zee Telefilms Ltd. v. Union of India, 2005 INSC 59, (2005) 4 SCC 649: by 3:2, the BCCI is not State under Article 12, as it is not financially, functionally or administratively controlled by the government. But because it performs public functions (selecting the team that represents India), it is amenable to writ jurisdiction under Article 226. Sinha J’s dissent would have treated it as State, given its de facto monopoly over a national activity.

3. The Article 226 route

Article 226 allows writs against “any person or authority”, wider than Article 12. In Andi Mukta Sadguru Trust v. V.R. Rudani (1989) a private trust running a college was subject to mandamus for a public duty. In Board of Control for Cricket in India v. Cricket Association of Bihar (2015) the Court confirmed that BCCI, discharging public functions, is subject to judicial review. Later decisions have refined the test: a writ lies against a private body only when the dispute arises from its public function or duty; purely contractual or private employment disputes of a private unaided institution are outside the writ, as the Court held in St. Mary’s Education Society v. Rajendra Prasad Bhargava (2022).

4. Privatisation and the shrinking State

Since 1991 India has disinvested in public sector undertakings, contracted out services (prisons catering, waste management, toll roads, power distribution), and run infrastructure through public-private partnerships. Three consequences follow for rights:

1. A company that ceases to be government-controlled after disinvestment ceases to be State; its employees lose the protection of Articles 14 and 16, and the reservation obligations that come with them. In BALCO Employees’ Union v. Union of India (2001) the Court refused to review the policy of disinvestment itself, as an economic decision within executive competence.
2. Services that were once governmental (schools, hospitals, telecommunications) are delivered by private bodies that are not bound by Part III unless a statute or the public-function doctrine applies.
3. The State’s own conduct as contractor remains reviewable: when it sells assets or awards concessions it must act fairly and non-arbitrarily, as in the 2G spectrum case, Centre for Public Interest Litigation v. Union of India (2012), and the Natural Resources Allocation Reference (2012).

5. Should the definition be widened?

For widening: a functional test (does the body perform a public function or exercise power affecting rights at large?) would follow the function wherever it goes. South Africa’s Constitution (section 239) defines an “organ of state” to include any functionary exercising a public power or performing a public function in terms of legislation; the UK Human Rights Act, 1998, section 6(3)(b), binds any person certain of whose functions are of a public nature.

Against: treating private bodies as the State would burden them with Article 14 and 16 obligations in all their activities, chill private enterprise and blur the distinction between the public and private spheres. The House of Lords, in YL v. Birmingham City Council (2007), held that a private care home housing residents under council contracts was not exercising public functions, showing that even functional tests can be read narrowly; Parliament reversed the result by statute in 2008.

The middle path India has largely taken: keep Article 12 confined by Pradeep Kumar Biswas, but (a) use Article 226 for public functions, (b) impose rights obligations on private actors by statute (the Right of Children to Free and Compulsory Education Act, 2009; the Rights of Persons with Disabilities Act, 2016; the Digital Personal Data Protection Act, 2023), and (c) develop the horizontal application of fundamental rights, considered in the next note, most notably in Kaushal Kishor v. State of U.P., 2023 INSC 4.

6. US comparison: state action

The US Constitution binds only “state action”. A private company town was held bound by the First Amendment in Marsh v. Alabama (1946) because it performed a public function, but the doctrine has since been narrowed: in Manhattan Community Access Corp. v. Halleck (2019) a private operator of public-access cable channels was not a state actor. The US experience suggests that a public-function test without textual support tends to contract over time.

How this is examined

Either as a long answer (“Discuss constitutionalism in the wake of privatisation; is there a need to widen the scope of State?”) or as part of “Right to equality and privatisation”. Define constitutionalism, trace Article 12 through the cases, explain the Article 226 route, list the effects of privatisation and argue for or against widening with comparative support.