Goa State Cooperative Bank Ltd Not A State Under Art. 12, Does Not Discharge Any Public Functions: Full Bench Of...
Goa State Cooperative Bank Ltd Not a “State” Under Article 12
Background: Understanding Article 12 of the Constitution
Article 12 of the Indian Constitution defines the term “State” for the purposes of Part III (Fundamental Rights).
It includes:
The Government and Parliament of India,
The Government and Legislature of each State,
Other authorities within the territory of India or under the control of the Government of India.
The scope of “other authorities” has been expansively interpreted by courts over time.
Entities performing public functions or controlled substantially by the government have often been held to be “State” under Article 12.
Issue
Whether Goa State Cooperative Bank Ltd (GSC Bank) qualifies as a State under Article 12, thereby making its actions amenable to writ jurisdiction for violation of fundamental rights.
Full Bench Judgment Summary
The Full Bench examined the nature of the Goa State Cooperative Bank Ltd, its ownership, control, and functions.
It held that GSC Bank is a cooperative society registered under the Cooperative Societies Act and operates as a commercial entity.
It does not perform any public functions akin to a government or statutory authority.
The bank’s role is primarily financial and commercial, not regulatory or governmental.
The government’s involvement or shareholding is insufficient to transform it into “State” under Article 12.
The bank does not discharge any sovereign or public functions nor acts as an instrumentality or agency of the State.
Legal Principles Applied
Instrumentality or Agency Test
An entity can be “State” if it functions as an instrumentality or agency of the government.
Mere government funding, shareholding, or regulation is not enough.
The entity’s functions and control must be public in nature.
Public Function Test
Courts look at whether the entity performs public functions.
Public functions include functions that affect public at large or exercise sovereign authority.
Control Test
Degree of government control over the entity’s affairs is considered.
However, control must be significant and affect functioning, not just regulatory oversight.
Relevant Case Laws
1. Rajasthan State Electricity Board vs. Mohan Lal (1967)
Supreme Court held that statutory bodies or corporations owned and controlled by government are “State” under Article 12.
But they must discharge public functions or perform sovereign duties.
2. Electricity Board, Rajasthan vs. Shobha Devi (1992)
Held that if an entity is created by statute, controlled by the government, and performs public functions, it qualifies as “State.”
3. Ajay Hasia vs. Khalid Mujib Sehravardi (1981)
Laid down the test for “instrumentality or agency” of the State, including:
Financial aid by government,
Government control,
Government appointment of majority of management,
Function being of public importance.
4. Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology (2002)
Court held that the nature of the entity and the functions it performs are crucial.
Merely being government funded does not make it “State”.
5. BCCI vs. Kochi Cricket Pvt. Ltd. (2018)
Supreme Court clarified that a private or cooperative body is generally not “State” unless it performs public/state functions.
Application to Goa State Cooperative Bank Ltd
GSC Bank is a registered cooperative society, engaged in banking and financial activities.
It operates under the Cooperative Societies Act, a statutory but not a sovereign authority.
Its functions are primarily commercial, serving its members, not the general public.
There is no direct government control or sovereign function being performed.
Therefore, it does not fall within the definition of “State” under Article 12.
Significance of the Judgment
This judgment clarifies the scope of writ jurisdiction under Article 32/226 against cooperative banks and similar entities.
It limits fundamental rights claims against such entities as they are not “State”.
It draws a line between commercial bodies with government participation and state instrumentalities.
Ensures that only entities performing public or sovereign functions are amenable to constitutional scrutiny under Article 12.
Summary Table
| Aspect | Explanation |
|---|---|
| Entity | Goa State Cooperative Bank Ltd (Cooperative Society) |
| Nature of Entity | Commercial financial institution, not statutory government agency |
| Government Control | Limited/Regulatory, not managerial or sovereign |
| Functions | Banking and financial services to members, not public functions |
| Held as “State” under Article 12 | No |
| Impact | Writ petitions under Fundamental Rights cannot be directly filed against GSC Bank |
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