JUDGMENT R.M. Sahai, J. - Legal issue that arises for decision in this petition filed by a permanent processing Superintendent, of a subsidiary company of British India Corporation, acquired by Central Government against termination of his services without any inquiry or proceeding either under disciplinary and conduct rules of the company or in compliance with principle of natural justice is if the expanding horizon of Article 226 extends to granting of redress against violation of basic norms of service jurisprudence even by a body which may not be wholly governmental. Associated-'with this is the issue if subsidiary company of a Government Company is subject to same restrictions as are legally applicable to a Government Company and whether such a company is State or not within meaning of Article 12 of the Constitution against whose actions writ petition are maintainable} under Article 226. 2. Factual canvass is plain and simple, la April, 1978 the petitioner was appointed as permanent Processing Superintendent after successful completion of one year probation by the Elgin Mills Company, a subsidiary of British India Corporation which was acquired by Central Government in June, 1981. In 1983 the Company enforced disciplinary and conduct rules with effect from February, 1981, but no action was taken under it. And the services of petitioner were terminated not under service and conditions applicable to Staff Management as was stipulated in the orders of appointment but in purported exercise of power governing relations between Master and Servant. 3. That the order of termination banishing the petitioner was naked exercise of `hire and fire' rule thus violative of the "great rules of natural justice", the "audi altcrum" rule as was observed by Hon'ble Supreme Court in Central Inland Water Transport Corporation v. Braj Nath, AIR 1986 SC 1571 , and arbitrary exercise of power enabling opposite-party to act discriminately cannot be doubted. Nor it could be disputed that such power flowing from agreement or contract was against public policy as a bargain entered between unequals with "gross inequality of bargaining power with terms unreasonably favourable to the stronger party" may render the agreement unconscionable. Nor it could be disputed that such power flowing from agreement or contract was against public policy as a bargain entered between unequals with "gross inequality of bargaining power with terms unreasonably favourable to the stronger party" may render the agreement unconscionable. But the thrust of submission by Sri Venu Gopal, the learned Senior Advocate of Supreme Court, while candidly stating that since nature of duties of petitioner were supervisory in nature, therefore, he could not seek any redress under Industrial Disputes Act, was that the jurisdiction of this Court to entertain any petition under -Article 226 extended to constitutional or statutory violations and not to contractual breaches. He urged that arbitrariness or fairness at the stage of entering into agreement may be open to challenge under Article 226, but no after the agreement became final and ripened into a contract the infringement or violation of which could result into damages enforceable by a suit and not reinstatement though certiorari. Maintainability of the petition was also challenged because even if 100% shares was held by Government, the Company still would not be "State" within-meaning of Article 12 as take over of sick commercial company to ameliorate the labour results in change of ownership and not in activities which continue to be commercial. Therefore, irrespective of financing or even presence of Government officials on the Board of Company it could be "State" only, if the Government exercised control and the nature of activity was governmental or akin to it. 4. To begin with Elgin Mills being a subsidiary of British India Corporation, which as acquired by Central Government on 11th June, 1981 and whose entire share capital is held by Central Government, it became a Government Company within meaning of Section 617 of Indian Companies Act. Even factually there is no escape from the conclusion that the Mill became a Government Company as is clear from various letters and resolutions of the Company. Immediately after take over the Annual General Meeting of the Mill appears to have taken place in September, 1981 in which a resolution was passed during preparation of explanatory statement pursuant to Section 172(2) of the Companies Act which reads as under : "After promulgation of Ordinance 5 of 19s I British India Corporation became a Government Company as defined under Section 617 of the Companies Act. Its two subsidiary Companies viz. Its two subsidiary Companies viz. Elgin Mills Company Ltd. and Brushware Ltd., become Government Companies". In 1984 the financial condition of the Mill appears to have deteriorated and on 24th April, and 31st May two letters were written by Ministry of Commerce, Government of India sanctioning substantial loan for reimbursement of cash losses "since the Mill became a Government Company in 1981". Therefore, it is too late in the day to claim that the Mill which was taken over along with British India Corporation did not become a Government Company. 5. Does that make it State within meaning of Article 12 of the Constitution ? That is not easy to answer. As even alter numerous decisions of Hon'ble Supreme Court no cut and dried method to determine if a Company or Corporation was State could be authentically said to be established. That is why as recently as 1988 the Hon'bit Supreme Court in Tekraj v. Union of India, AIR 1988 SC 469 , observed : "There cannot indeed be a straight jacket formula. It is not necessary that all the test should be satisfied for reaching the conclusion either for holding an institution to be State. In a given case soma of the features any emerge so baldy that a second view may not be possible. There may be on the border line and it would be difficult to take one view or the other." Prior to ascertaining what are those tests which are sufficient to warrant conclusion that a corporation or company or society is State it may be stated that the definition in Article 12 has been held by Hon'ble Supreme Court to be extensive and not restrictive in Central Inland Water Transport Corporation Ltd. v. Brij Nath, AIR 1986 SC 1571 . It was reiterated in Tekraj v. Union of India, AIR 1988 SC 469 , and it was held that expression used in Article 12 was wide enough to include within it every authority created by a Statute and functioning within the territory of India or under the Central of the Government of India. The Hon'ble Court further observed that it did not see any reason to narrow down its meaning. The Hon'ble Court further observed that it did not see any reason to narrow down its meaning. With this preface it may now be examined what are those relevant factors which are taken individually or collectively lead to irresistible inference that a body is an authority and if those tests are satisfied by the Elgin Mills. The Courts have gone about this task frequently over years both in America, where it has been labelled as State action, and the Hon'ble Supreme Court yet they have not succeeded in developing a set of rules which may be applied universally. However, by a coincidence while American Courts were still lamenting in 1967 that, "formulating on infallible test of State action was an impossible task" Reitanan v. Mulkey, (1967) 387 US 369, the Hon'ble Supreme Court in the same year in Rajasthan State Electricity Board v. Mohan Lal, AIR 1967 SC 1857 , opened up new horizon by widening interpretation of word `State' in Article 12 to include all constitutional or statutory authorities on whom powers were conferred by law irrespective of the fact that some of the powers conferred were for purposes of carrying on commercial activities. The foundation was thus laid for enforcing rights guaranteed by the Constitution to a person or citizen against violations by Corporation established by law which went on becoming stronger and firmer in years to come. It was broadened in Sukhdev v. Bhagat Ram, AIR 1975 SC 1331 , when the Hon'ble Court emphasised the nature of duties performed by the body or authority, rather confining it to conferment of power and authority to frame rules. Yet another significant milestone was covered when in R.D. Shelly v. J. A. Authority of India, 1979 SC 1628, the distinction between Corporation,, created by Stature and those created under a Statute was obliterated and the Hon'ble Court observed, "whether the legal person is a Corporation created by a Statute as distinguished from under a Statute is not an important criteria although it may be an indicum" and proceeded to liberalise the circumstances in which a Company or even a Cooperative Society could be State. This widening of expanse of word State so as to include companies, acquired by State either because of labour unrest or it was a sick unit was attempted to be got over in Som Prakash Rekhi v. Union of India, AIR 1981 SC 212 , a case in which Burmah Shell Oil Storage Ltd. was acquired by Central Government. But the Hon'ble Court discovered, "broad consensus" from two decisions mid negatived the submission that the decision in Sukhdev Singh's, ease (supra) indicated that the scope of Article 12 was restricted t statutory Corporation by observing that there was nothing "to confine the concept of State to statutory Corporation. May the tests are common to any agency or instrumentality, the key factor being the brooding presence of the State behind the operations of the body, Statutory or other". Thus any instrumentality or agency of Government would be `State' whether it was a Corporation Government Company, Co-operative Society or any other registered body or`society', "not in the sense of being an agent of Government or existence of relationship of principal and agent but that a part of the governing power of the State is located in it". Study of Sukhdev Singh's case, (supra) by the Hon'ble Court yielded the result that the prepondent consideration for pronouncing an entity as State agency or instrumentality were, (1) financial resources of the State being the Chief funding source, (2) functional character being governmental in essence, (3) plenary control residing in Government, (4) prior history of the same activity having been carried on by Government and made over to the new body and (5) some element of authority or command". And the "telling though not clinching" tests decoyed from Ramma's decision were stated thus : "(1) One thing is clear that if the entire share capital of the Corporation is held by Government it would go a long way towards indicating that the Corporation is an instrumentality or agency of Government. (2) "it may also be a relevant factor whether the Corporation enjoys monopoly states which is State conferred or State protected . (3) Existence of `deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality'. (2) "it may also be a relevant factor whether the Corporation enjoys monopoly states which is State conferred or State protected . (3) Existence of `deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality'. (4) `If the functions of , the Corporation are of public importance and, closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government'. (5) Specifically, if a department of Government is transferred to Corporation it would be a strong factor supportive of this inference of the Corporation being an instrumentality or agency of Government." 6. The issue, therefore, is whether those tests singly or jointly are satisfied so as to render the Company a State. The status of company has already been discussed. It became a Government Company by operation of law. Apart from it its 33.07% paid up share capital is held by British India Corporation and 33.99% by State Bank of India. Taken together 57% of paid up share capital is held by the British India Corporation. Loan running into crores were sanctioned by Central Government to meet cash losses. May be after services of petitioner were terminated. But they do establish substantial funding by Government. Much emphasis was laid on trading activities to establish that it was a commercial entity only. In a welfare State is concerned not only with political activity but social and economic as well the involvement of State in commercial sphere including trading is fundamental. In Sukhdev Singh v. Bhagairam, AIR 1975 SC 1331 , it was observed. "The State as defined in Article 12 is comprehended to include bodies creates for the purpose of promoting economic interest of the people. The circumstances that the statutory body is required to carry some activities of the nature of trade or commerce does not indicate that the Board must be excluded from the scope of the word "State". In the same decision the observations of Mathew, J. that in modern concept public corporation were third arm of the State and conduct of basic industries, through giant Corporations was a permanent feature of public life was endorsed in Ramna's case (supra). In the same decision the observations of Mathew, J. that in modern concept public corporation were third arm of the State and conduct of basic industries, through giant Corporations was a permanent feature of public life was endorsed in Ramna's case (supra). Therefore, merely because activity undertaken by a Government Company was trading or commercial shall not lake it out of the extensive meaning of Article 12 as the, "the definition of the expression, "the State", in Article 12 is, however, for the purposes of Parts III and IV of the Constitution", And organising and rehabilitating sick textile undertaking so as to subserve the interest of general public by augmentation of the production and distribution, at fair prices of different varieties of cloth and yarn and for matters connected therewith held by Hon'ble Supreme Court in Minerva Mills Ltd. v. Union of India, AIR 1986 SC 2030 , to be State policy towards securing principles specified in clause (b) of Article 39. Further from Memorandum of Association of company it is clear that it was incorporated with main object of manufacturing not only textiles but dyes and chemicals as well. Its incidental and ancillary objects included establishment and maintenance of educational and training institutes, research laboratories for scientific and technical research etc. Other objects extended to carry on not only business of fruit growers but of ocean going and Inland waterways, shipping transport and acid, alkalies etc. Other objects for which the company was thus incorporated were like those which were undertaken by Central Inland Water Transport Corporation and Rivers Steam Navigation Company. Termination of its employees, was challenged in the Central Inland Corporation decision ( AIR 1986 SC 1571 ), and it was held to be instrumentality of State. 7. A Company is a subsidiary company of another company under Section 4 of the Companies Act only if that company controls the composition of Board of Directors of that company. Since Elgin Mills was a subsidiary company of the British India Corporation the composition of its Board of Directors was under the control of the Corporation. And the effect of take over of the Corporation was that from the date of take over it was the Central Government which became the authority to control the Board of Directors of the Mill. And the effect of take over of the Corporation was that from the date of take over it was the Central Government which became the authority to control the Board of Directors of the Mill. Law apart the control of company under paragraph 124 of Articles of Association vests in the Board which is entitled to exercise all powers and do acts and things which the company is authorised to exercise and do. And the `Board' or the Board of Directors' in paragraph one of the Articles means the Board of Directors for the time being of the company. Since take over the Board comprises of Government Officers or its nominees. To take out the company from ambit of Article 12 a supplementary affidavit was a filed by Secretary and the status of the company was averred to be independent trading company. Even absence of financial and governmental control or control by British India Corporation was asserted with reference to Article and Memorandum of Association of Company. But these were framed when company was incorporated in 1911. They have to be read subject to the take over by Government and its effect. Averment in supplementary rejoinder-affidavit filed in May, 1988 asserting that appointment of all directors of the company after take over the British India Corporation is controlled by Government and the Chairman of Board of Directors of Company is the Managing Director of British India Corporation and all such Directors of Company are Government Officers or nominees of Financial Institutions nominated with consent of Government supported by Directors. Reports and accounts for various years from the date of take over remained un-controverted or unexplained by any supplementary affidavit. Nor the allegation of financial assistance from 1983-84 to 1987 Rs. 35.64 crores from Government and Rs. 5.75 crores and Rs. 1.50 crores amounting to respectively from Banks or financial institutions on Government of India guarantee have been denied. The claim, therefore, that the company enjoyed independent status appears far from truth. Nor it could be denied that as a consequence of take over the entire share that the Corporation held in the Mills stood transferred to Government. The company thus became under effective control of Government. Financing apart the directors of the company through whom the company is administered were appointed or nominated by Government. The control of Government, therefore was complete. The company thus became under effective control of Government. Financing apart the directors of the company through whom the company is administered were appointed or nominated by Government. The control of Government, therefore was complete. It was unlike Institute of Constitutional and Parliamentary Studies which was a society registered as a voluntary organisation to fulfil the objective to study courses and fundamental research relating to developments in constitutional law. It was neither a Government organisation in inception nor it became subsequently. Mere presence of big personalities holding important constitutional or governmental officers may not have rendered it Government organisation. Nor even the financial assistance given by Central Government could make it governmental society. That is why the Hon'ble Supreme Court while reiterating principles laid down by this court in Sukhdev's and Rammand's case. For the same reason no assistance can be derived from Sabhajeet Tewari v. Union of India, AIR 1975 SC 1329 , where too the Council of 'Scientific and Industrial Research, a body registered under Societies Act was not found to be an agency or instrumentality of Government. But a Government Company stands on a different footing. In cannot be equated with a Society registered under Societies Registration Act for the limited purpose of running a voluntary organisation or even an ordinary company incorporated under Indian Companies Act. In Central Inland Water Corporation's case (supra) the Hon'ble Court while discussing S.C. Dhaon v. Municipal Corporation, Delhi, AIR 1981 SC 1395 , highlighted the distinction between a Government and private company and opined that the observations made in Dhanoas of Legislature can only mean a body corporate which owns its existence, and not merely its corporate status to the Act were "not intended by it to apply to Government companies as defined in Section 317 of the Companies Act, 1956." 8. Reference to two decisions appears necessary at this stage as one was relied as a binding authority laying down the ratio that Government Company is not State and the other as of persuasive value since on more or less similar facts, a Division Bench of Orissa High Court in B. Raghumar Patra v. Union of India, AIR 1981 Ori 143 , negatived the claim that a Government Company was State. For the decision in Heavy Engineering Mazdoor Sabha v. State of Bihar, AIR 1970 SC 82 . For the decision in Heavy Engineering Mazdoor Sabha v. State of Bihar, AIR 1970 SC 82 . It was also urged that its ratio was approved by the Hon'ble Court in Sukhdev's case (supra). But that does not appear to be correct as it was noticed in the minority judgment. The occasion to examine its impact arose in Ramanna's case (supra). And it was observed as under : "The argument of the Union was that the Industry in question was carried on under the authority of the Central Government and the reference could, therefore, be made only by the Central Government the court held that the `words under the authority' mean pursuant to the authority, such as where an agent or a servant acts under or pursuant to the authority of his principal or master' and on this view, the Corporation could be said to be carrying on business pursuant to the authority of the Central Government. The answer to this question was obviously `no' because the Corporation was carrying on business in virtue of the authority derived from its memorandum of articles of association and not by reason of any authority granted by the Central Government, was acting on its own behalf and not on behalf of the Central Government and it was, therefore, not a servant or agent of the Central Government in the sense, that its action would bind the Central Government. There was no question in this case whether the Corporation was an instrumentality of the Central Government and, therefore an authority, within the meaning of Article 12...............This decision dealing an altogether different point has no bearing on the present case." This ratio on Article 12 has not been doubted in any subsequent decision. Therefore a Corporation or company may by acting on its own behalf as an independent entity and not on behalf of Government yet it may be State if its actions are in the nature of State action. Even the one time popular notion derived from Sukhdev Singh's ease (supra) that a Company or Corporation can be `State only if it was empowered to make laws was broadened in Ramantfs and Som Prakas'h case, where it was held that it was not necessary that a juristic person must have power to make laws. Even the one time popular notion derived from Sukhdev Singh's ease (supra) that a Company or Corporation can be `State only if it was empowered to make laws was broadened in Ramantfs and Som Prakas'h case, where it was held that it was not necessary that a juristic person must have power to make laws. The clear and unambiguous picture that emerges from these decisions and the decision which were given latter leave no room for doubt that line between Corporations which are State within Article 12 and otherwise is thinning every day where governmental shadow is cast around it.. The decision of the Orissa High Court no doubt related to a Government Company but i: was rendered at a rime when the horizon of Article 12 had not been widened as much as it is today by the Hon'ble Court in Central Inland Water Corporation's case (supra) or M. C. Mehta's case (supra), or B. S. Minhas's case. And the Bench in the case had confined its decision and put it in the limited scope on the facts disclosed and, therefore, the Company was not held to be instrumentality of State'. In fact in M. C. Mehta v. Union of India, AIR 1987 SC 1086 , the Hon'ble Court came very close to roping in even private Corporation and Companies under Article 12 where it was concerned with human rights jurisprudence. From the body being endowed with Sovereign functions' in Rajasthan State Electricity Board v. Mohan Lal, AIR 1967 SC 1857 , to the body or authority being an, "instrumentality of agency of State'' in Sukhdev Singh's case and its reiteration in Rammana's case and than its expansion in Som Prakash's case," to be mere agent oi surrogate of State in fact owned by the State, in effect and truth an incarnation of State", the distinction between public and private companies with Government fund and control is being obliterated every day and a company like the Airport Authority created by Statute and Burmah Shell recognised and clothed with rights and duties by the State were found in AIR 1981 SC 1395 "parallel" for applicability of Article 12. 9. Functioning of Corporation as Government's arm or limb or the corporation authority being impregnated with Government function was stressed to highlight the distinction between a Corporation and Society or authority carrying on commercial activity with that which share sovereign power. 9. Functioning of Corporation as Government's arm or limb or the corporation authority being impregnated with Government function was stressed to highlight the distinction between a Corporation and Society or authority carrying on commercial activity with that which share sovereign power. But public function or public duty or duty akin to governmental function is every expanding concept in a welfare society the limits of which are incapable of precise specification. In M.C. Mehta's case (supra) the Hon'ble Court did not lay down if private corporations were also State but it approved functional criteria and observed, "whilst deliberating on the functions criteria namely, that the Corporation is carrying out a governmental function, the court emphasised that classification of a function as governmental should not be done on earlier day perceptions but on what the State today views as an indispensable part of its activities, for the State may deem it as essential to its economy that it owns and operates a railroad or a Mill or an irrigation system as it does to own and operate bridges, street lights or a sewage disposal plant". The Hon'ble Court also reiterated what was said in R.D. Shetty's case (supra), while approving observations Mathew, J. in Sukhdev Singh's case, that `institutions engaged in matters of high public interest or public functions are by virtue of the nature of the (unctions performed Government agencies. Activities which are too fundamental to the society are by definition too important not to be considered Government functions". In S.S. Minhas v. Indian Statistical Institution, AIR 1984 SC 363 , an institution registered under Societies Registration Act and funded for integrated programme of training, teaching and research in statistics and application of statistical technique in other deception declared as Institute of national importance was held to be instrumentality of State. The Hon'ble Court approved the view taken in Ajai Hasia v. Khalid Mujib Sheravardi, AIR 1981 SC 437, that Article 12 should be given broad and liberal meaning where constitutional fundamentals vitals to the maintenance of human rights were at stake. In Central Inland Water's case (supra), it was held that definition set out in Article was for purposes of Parts III and IV of the Constitution. Articles 38 and 39 of the Constitution fall in Chapter IV of the Constitution They are aspirations of a State committed welfare society. In Central Inland Water's case (supra), it was held that definition set out in Article was for purposes of Parts III and IV of the Constitution. Articles 38 and 39 of the Constitution fall in Chapter IV of the Constitution They are aspirations of a State committed welfare society. Therefore, the activity of State in producing textiles in furtherance of these principles renders its work of public utility. If imparting training in statistics is work of public importance there appears no rationale to hold that the activity of manufacturing textile by a Government Company the sixty per cent supply of which is made to defence personnel is not public function. A trading or commercial activity undertaken by a Government assumes governmental nature, as it is not the birth of juristic person but the purpose of its being brought into existence which is determinative of a body being State." In M.C. Mehta's case (supra), the Hon'ble Court endorsed the view taken in Ajai Hasia v. Khalid Mujib, AIR 1981 SC 437, that the "enquiry has to be not as to show the juristic person is born but why it was brought into existence". The corporation may be a statutory Corporation created by a statute or it may be a Government Company or a Company formed under the Companies Act, 1956 or it may be a society registered under Societies Registration Act, 1860 or any other similar Statute. Or the company may be born after take over as was in case of Burmah Shell, for achieving the goal set out in Articles 38 and 39 of the Constitution as "material resources" of the community" means all things which are capable of producing wealth for the community". Sanjeev Lake Mfg. Co. v. M/s. Bharat Coking Coal Ltd., AIR 1983 SC 239 . Since one of the purposes for which the company was incorporated was to produce chemicals and its other objects included steam navigation etc. The functional test was satisfied as such duties are for benefit of public. On functional test a company or society may become State as may be performing vital social duties and play a prominent role by undertaking scientific and technological research etc. And if the same is undertaken by a Government Company there should be no doubt in it being State. On functional test a company or society may become State as may be performing vital social duties and play a prominent role by undertaking scientific and technological research etc. And if the same is undertaken by a Government Company there should be no doubt in it being State. For instance if a private Company is incorporated for producing or manufacturing such goods as are needed by defence personnel and the Government purchases all its produce the Company may be a private company. But if the Government itself establishes a Company for producing same goods it would be difficult to contest its status and urge that it was not State. The test appears to be not what is manufactured or produced. But by whom and for what purpose. 10. To employees of such Company or Corporation provision of Article 311 may not be available as was held by Hon'ble Court in Parges Tools Corporation v. C.B. Imanual, AIR 1969 SC 1306 ; Heavy Engineering Mazdoor Union v. State of Bihar, AIR 1970 SC 32 and S. D. Agrawal v. Hindustan Steels, AIR 1970 SC 1250, as they cannot be considered to be members of civil service of the Union or of all India Service or Civil Service of State or holding a civil post under the Union or State but an employee of a Government Company acquires a status of public employment which cannot be determined except in consonance with principle of natural justice or the rules and regulations framed by the company. In Sukhdev Singh's case, (supra), Mathew, J. while discussing employment under Corporations observed : such a philosophy of the employer's dominion over his employee may have been in tune with the rustic simplicity of bygone days. But that philosophy is incompatible with these days of large, impersonal, Corporation employers. The conditions have now vastly changed and it is difficult to regard the contract of employment with large scale industries and Government enterprises conducted by bodies which are created under special Statutes as mere contract of personal service.' The Hon'ble Judge further observed . But that philosophy is incompatible with these days of large, impersonal, Corporation employers. The conditions have now vastly changed and it is difficult to regard the contract of employment with large scale industries and Government enterprises conducted by bodies which are created under special Statutes as mere contract of personal service.' The Hon'ble Judge further observed . "The discretion which should guide the court must be in tune with the modern conditions of life and should result in reversal of present day attitude." In Som Prakash's case the observations in U. P. Warehousing Corporation v. V. N. Vajpaee, AIR 1980 SC 840 , to the effect that there was "no distinction of principle between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality of the Government or Corporation set up under a statute or incorporated but wholly owned by the Government'' where apparent. And the device to "Scuttle Part III through the alibi of`Company not State' was not approved and the observation in Rammana's case (supra; were approved. "This renders it necessary to structure and restrict the power of the executive Government as to prevent its arbitrary application or exercise "The Corporations acting as instrumentality or agency of Government would obviously be subject to the same limitation 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." 11. Thus, the company satisfied the relevant criteria which undoubtedly established that it is State within the meaning of Article 12 of the Constitution. It is Government Company which is substantially if not fully financed by Government or the money is advanced to it on Governments guarantee. In Sukhdev Singh's case (supra). It was observed, by Mathew, J. `the decision of the State Courts therefore, established that a private agency supported by public money be State'. If that be true of private company then it certainly is a very vital factor which may on its own without anything more may go to establish that the Government Company is State. It was observed, by Mathew, J. `the decision of the State Courts therefore, established that a private agency supported by public money be State'. If that be true of private company then it certainly is a very vital factor which may on its own without anything more may go to establish that the Government Company is State. However, even the additional factor of Government control established by American decisions referred by Hon'ble Mathew, J. and reiterated in almost every decision, is amply demonstrated as the financial and administrative functioning is exercised by Government through the Board of the company all of whose directors are appointed by Government. And the criteria of the company of body discharging public function or function akin to Government function is fully established As the activity of Company is to cater the needs of defence personnel, a public function from any standard. A trading or commercial activity performed by Government is Government function on its own as the Constitution under Article 289 itself empowers the Government to carry on trade or business. 12. Ratio of R.K. Agrawal v. State of Bihar, AIR 1977 SC 1496 , that discrimination could be invoked, "at the very threshold or at the time of entry into the field of considerations of person with whom the Government could contract at all "but after the," State or its agents have entered into the field of ordinary contracts", rendered in a case where enhancement of royalty by the lessor was made without consulting the lessee against the clause in the agreement relating to royalty cannot be of any help as, employment under Corporations which are State within the meaning of Article 12 confers status on employees "which would enable him to obtain declaration for continuance in service if he was dismissed or discharged contrary to the regulation" (Mathew, J. in Sukdev Singhs case). In Central Inland Water Corporation's case it was held by the Hon'ble Court, "as the Corporation is" the State within the meaning of Article 12, it was amenable to the writ jurisdiction of the High Court under Article 226. In Central Inland Water Corporation's case it was held by the Hon'ble Court, "as the Corporation is" the State within the meaning of Article 12, it was amenable to the writ jurisdiction of the High Court under Article 226. It is now well established that an instrumentality or agency of the State being "the state" under Article 12 of the Constitution is subject to the constitutional limitations, and its actions are State actions and must be judged in the light of the Fundamental rights guaranteed by Part III of the Constitution. See, for instance, Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, AIR 1975 SC 1331 . The International Airport Authority's case, AIR 1979 SC 1628 , and Ajay Hasia's case, AIR 1981 SC 437.Action of opposite party has to be tested therefore, on touchstone of Article 14 and the ratio extracted above and not whether it was a breach of contract, Like the Central Inland Water's case, the opposite parties did not purport to terminate services of petitioner under any rule empowering them to terminate services of permanent employee without any inquiry but in purported exercise of Master and Servant rule, an outdated and obsolete concept. The exercise of power was arbitrary as the rules having been enforced in 1983, it was applicable to petitioner, which was not disputed even by Sri Venu Gopal, and his services could be terminated for misconduct or in accordance with procedure provided in it as the terms of employment explicitly stipulated that service conditions shall be governed by rule applicable to staff management and not by resorting to hire and fire rule. For the same reason the ratio of Union of India v. W.P. Factories, AIR 1966 SC 335, relating to termination of a manager appointed by custodian to look after certain evacuee property is not of any assistance. 13. For the reasons stated above this petition succeeds and is allowed. B.L. Yadav, J. - I have had the advantage of reading the judgment prepared by learned brother R. M. Sahai, J. for whom I have profound regards. I agree with the conclusion arrived at. I would, however, like to add a few words of mine. 14. The relevant facts of the case have been succinctly set out in the judgment of learned brother R.M. Sahai, J. and In need not repeat the same. I agree with the conclusion arrived at. I would, however, like to add a few words of mine. 14. The relevant facts of the case have been succinctly set out in the judgment of learned brother R.M. Sahai, J. and In need not repeat the same. The points that fell for consideration are whether M/s. Elgin Mills Co. Ltd., which was a subsidiary Company of the British India Corporation, which was acquired by the Government of India, under the provisions of British India Corporation Ltd. (Acquisition of Shares) Act, 1981 (for short the Act) was a `State' within the meaning of Article 12 of the Constitution, whether the services of the petitioner were contractual in nature, and remedy was by a civil suit rather to approach this Court under Article 226 of the Constitution of India. Another point emanating from this points is that assuming that the petitioner was appointed under some contract, whether the order terminating services was an unconscionable contract which rendered it void, and whether without an opportunity of hearing the petitioner's services could have been terminated. 15. As regards the first point whether the Elgin Mills Company was a `State' within the meaning of Article 12 (Twelve) of the Constitution, ex abundanti cautola, the provisions of Article 12 are set out below : "In this part unless the context otherwise requires, `State'includes Government and Parliament of India and the Government and Legislatures of each States and all local or other authorities within the territory of India or under the Control of the Government of India." 16. Before coming to the actual interpretation of this constitutional provision, it may be stated that the Constitution of a country being a living document and an organic law, cannot be interpreted in a narrow' pedantic sense. A broad and liberal spirit should inspire those who are called upon to interpret it. The purpose and the scheme of every provision, if possible, the history, its object and result which it seeks to achieve, may be kept in mind. May be that the difficulties which are faced now may not have been foreseen by the great thinkers, philosophers and forefathers of the Constitution. 17. The purpose and the scheme of every provision, if possible, the history, its object and result which it seeks to achieve, may be kept in mind. May be that the difficulties which are faced now may not have been foreseen by the great thinkers, philosophers and forefathers of the Constitution. 17. In Compers v. United States, 233 US 604-610, Oliver Wendell Holma, J. observed as follows : "The provisions of the Constitution are not mathematical formula's having their essence in their form, they are organic living instances ..................their significance is vital, not formal, it is to be gathered not by simply taxing the words but by considering origin and life of their growth." 18. The sacred provisions of our Constitution are sue generis and deal with the situation of significance and consequences. Our Constitution was given to the people about forty years ago, it is wedded to the idea of justice, economic, social and political given to all. Such a Constitution must be given a generous interpretation so as to give all its citizens full measure of justice promised by the expositors of the Constitution. 19. What is to be emphasised and noticed is that the definition of State opens with the word `includes' and not with the word `means'. In this way the framers were conscious in not providing an `exclusive definition' of the word the `State', rather they refrained from providing a restrictive definition. In other words, after the word the `State' is the expression `includes'. If the expression `shall mean' would have been used, that could indicate that the definition bears the natural meaning assigned to it by the definition clause. The word `includes' indicates extension of the meaning in a broader sense which continues to apply in appropriate cases in addition to the meanings indicated in the definition clause. There can be other meanings in the appropriate cases which could be more appropriate than the meaning indicated in the definition clause of Article 12 of the Constitution. The word `includes' indicates extension of the meaning in a broader sense which continues to apply in appropriate cases in addition to the meanings indicated in the definition clause. There can be other meanings in the appropriate cases which could be more appropriate than the meaning indicated in the definition clause of Article 12 of the Constitution. In Central Inland Water Transport Corporation Ltd., and another, v. Brojo Nath Ganguli and another, AIR 1986 SC 1571 , the expression `includes' used under Article 12 was explained (on Page 1583, Paras 23 and 24), as follows : "As pointed out in Caries on Statute Law, Seventh Edition, Page 213, where an interpretation clause defines a word `to mean' a particular thing, the definition is explanatory and prima facie restrictive, and whenever an interpretation clause defines a term "to include", something, the definition is extensive. While an explanatory and restrictive definition confines the meaning of the word defined to what is stated in the interpretation clause, so that wherever the word defined is used in the particular statute in which that interpretation clause occurs, it will bear only that meaning unless where, as is usually provided, the subject or context otherwise requires, an extensive definition expands or extends the meaning of the word defined to include within it what would otherwise not have been comprehended in it when the word defined is used in its originary sense. Article 12 uses the word "includes". It thus extends the meaning of the expression "the State" so as to include within it also what otherwise may not have been comprehended by that expression when used in its ordinary legal sense. Article 12 defines the expression "the State" while the other Articles of the Constitution referred to above, such as Article 152 and Article 308, and Clause (58) of Section 3 of the General Clauses Act define term "State". The deliberate use of the expression "the State" in Article 12 as also in Article 36 would have normally shown that this expression was used to,..denote the State in its ordinary and constitutional sense of an independent or sovereign State and the inclusive clause in Article 12 would have extended this meaning to include within its scope whatever has been expressly set out in Article 12. The definition of the expression "the State" in Article 12 is, however, for the purposes of Parts III and IV of the Constitution. The contents of these two parts clearly show that the expression "the State" in Article 12 as also in Article 36 is not confined to its ordinary and constitutional sense as extended by the inclusive portion of Article 12 but is used in the concept of the State in relation to the Fundamental Rights guaranteed by Part HI of the Constitution and the Directive Principles of State Policy contained in Part IV of the Constitution which Principles are declared by Article 37 to be fundamental to the governance of the country and enjoins upon the State to apply in making laws." 20. To explain the meaning of express `includes' a reference may be made to the following observations in Dilworth v. Stamp Commissioner, (1899) AC 99 at pp 105-106 as follows : "The word `include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the Statute, and when it is so used those words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word `include' is susceptible of another construction, which may became imperative if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural signification of the words or expressions defined. It may be equivalent to `mean and include' and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act must invariably be attached to these words or expressions." 21. In the present case the framers of the Constitution refrained from using the expression "means'' rather they designedly used only the expression `includes". Neither the expression "means" has been used immediately after in the definition clause nor the expression "means and includes" has been used, rather to signify the intention only the expression "includes" has been used. This simply connotes that there can be so many other authorities", other than those mentioned in the Article 12 (Twelve) which can be covered by the definition of the word the `State'. This simply connotes that there can be so many other authorities", other than those mentioned in the Article 12 (Twelve) which can be covered by the definition of the word the `State'. In case only the authorities mentioned under Article 12 of the Constitution are deemed to be within the meaning of "other authorities", that would mean to supplement the language of the article or the meaning of the term. In the case of "omisus causa'', it is for the Parliament to fill up the language or supplements the meaning, rather than for the Court. 22. In order to have a correct interpretation of Article 12 with a view to ascertain the intention of framers of the Constitution, some special features and back ground of enunciation of present Article 12 may be referred. For that purpose, a precise reference to discussions in the Constitution Assembly may be referred. The expression `or under the Control of the Government of India' do not occur in the draft Article 7. It was added as a result of an amendment moved by Dr. B. R. Ambedkar, Chairman of the Drafting Committee. Some other amendments were also moved to the original Draft Article 7. It was with a view to give a very wide and comprehensive meaning to the word `State'. It would not be inept to refer to an objection raised by one Sri Nazeer Uddiu Ahmad, a member of the Constitution Assembly from West Bengal, that the Municipalities, District Boards and other authorities need not be styled as the `State'. Sri Mahmood Ali Baig, a member from Madras objected to the different meaning given to the expression "the State" at different places in the Constitution. He remarked that it is not feasible that an expression in a legislative enactment should bear different meanings in different parts of the enactment, it will create confusion. He in fact, indicated that this definition of 'State' similar to the present form should not have been entered in this Article at all. He even questioned the wisdom of including the expression `other authorities' which was not defined anywhere in the Constitution. (See Constituent Assembly Debates Vol. VII 1948-49, pages 607, 608 and 609). Dr. Arabedkar further defended the Draft Article 7 (corresponding to present Article 12). The words of Dr. Ambedkar reflects the object and purpose of present Article 12 and particularly of Part HI of the Constitution. (See Constituent Assembly Debates Vol. VII 1948-49, pages 607, 608 and 609). Dr. Arabedkar further defended the Draft Article 7 (corresponding to present Article 12). The words of Dr. Ambedkar reflects the object and purpose of present Article 12 and particularly of Part HI of the Constitution. Dr. Ambedkar's reasoning explains the basis of wide import of Article 12. Dr. Ambedkar stated as follows : "The object of the Fundamental Rights m two fold. First, that every citizen must be in a position to claim those rights. Secondly, they must be binding upon every authority I shall presently explain what the word authority - upon every authority which has got either the power to make laws or the power to have discretion vested in it. Therefore, it is quite clear that if the Fundamental Rights are to be clear, then they must be binding not only upon the Central Government they must not only be binding upon the Governments established in the Indian States, they must also be binding upon the District Local Boards, Municipalities, even Village Panchayats and taluk Boards, in fact, every authority which has been created by law and which has got certain powers to make Laws, to make rules or make bye-laws." "If that proposition" he continued, "is accepted and I do not see any one who cares for Fundamental Rights can object to such a universal obligation being imposed upon every authority created by law - then, what are we to do to make our intention clear ? There are two ways of doing it. One way is to use, a composite phrase such as "the State'' as we have done in Article 7 or to keep on repeating every time, "the Centra' Government, the provincial Government, the State Government the Municipality, the Local Board, the Port Trust or any other authority" It seems to me not only most cumbersome but stupid to keep on repeating this phraseology every time we have to make a reference to some authority. The wisest course is to have this comprehensive phrase and to economise in words. I hope that my friend will now understand why we have to use the word "State" in this Article and why the article must stand as part of this Constitution". (See Constituent Assembly Debates, Vol. VII, 1948-49, page 610). 23. The wisest course is to have this comprehensive phrase and to economise in words. I hope that my friend will now understand why we have to use the word "State" in this Article and why the article must stand as part of this Constitution". (See Constituent Assembly Debates, Vol. VII, 1948-49, page 610). 23. It may also be pointed out that the development of case-law and interpretation of Article 12 of the Constitution by the Supreme Court has been in a zig-zag way. In the words of Hon' ble Krishna Iyer, J. ( AIR 1981 SC 212 ) at page 220, para 31 - Som Prakash Rekhi v. Union of India and another : "True a tour of the case law runs zigzag, but guided by the principles and jurisprudential discernment, it is possible to reach the same destination to which the two rulings referred to above (i.e., Airport Authority case (1979) 3 SCC 489 : AIR 1979 SC 2628 ; U.P. Warehosing Corporation case, (1980) 3 SCC 459 : AIR 1980 SC 840 , take us." 24. In the case of Som Parkash Rekhi, (supra), on page 221, para 32, what must be the approach of the Court while interpreting Article 12, has been pointed out as follows : "Let us dilate a little on the living essence of constitutional fundamentals if we are not to reduce fundamental rights to paper hopes and people's dupes. The judicial branch shall not commit breach of faith with the bill of rights by interpretative exoneration of the State from observance of these founding faiths. The higher values enacted into Part III of the Constitution certainly bind the State in its executive and legislative branches. They are Constitution guarantees to the Indian people, not fleeing promises in common enactments. So long as they last in the National Charter they should not be truncated in their application unless a contra-indication is clearly written into the prescription, (sic) Articles 31-A, 31-B and 31-C. Article 12 is a special definition with a broader goal. Far from restricting the concept of State it enlarges the scope to embrace all authorities under the control of Government. Far from restricting the concept of State it enlarges the scope to embrace all authorities under the control of Government. The constitutional philosophy of a democratic, socialist republic mandated to undertake a multitude of socio-economic operations inspires Part IV and so we must envision the State entering the vast territory of Industrial and commercial activity, competitively or monopolistic-ally, for ensuring the welfare of the people." 25. Keeping in view the language in which Article 12 has been couched, particularly the use of the word `includes' in the definition of State' which indicates extension of meaning in a broader sense and which continues to apply in appropriate cases in addition to the meaning indicated in the definition clause, this definition has been provided with a broader goal keeping in view the Preamble of the Constitution indicating the solemn resolution of the people of India to constitute it into a sovereign socialist secular democratic republic and to secure to all its citizens, justice, social, economic and political. It is to be remembered that the democracy precedes on the premises that the sovereign or the executive represents the microcosm of the subject and common man. Sovereign socialist in common parlance means a system of social organisation based on holding of property of the State in common. In other words, where all the economic activities are socially planned and controlled in which the distribution of benefits either in service matters or in economic spheres would be in accordance with the maxim from each to his capacity, from each to his needs". To put it differently, it connects to distribute national wealth and chances of employment in the State on the basis of just reward to each person for the amount and quality of his or her words. The higher values have been enacted in Part III of the Constitution but the same has not to be reduced just to paper hopes. The Court is not to commit breach of faith which was promised to all the citizens that they shall have social justice and equality of status and opportunity. The concept of `other authorities' under Article 12 of the Constitution in a welfare State, is much comprehensive so as to extend it to the companies under the Control of the Government of India or its subsidiary Company. The use of the word `other authorities' preceded by the word `include. The concept of `other authorities' under Article 12 of the Constitution in a welfare State, is much comprehensive so as to extend it to the companies under the Control of the Government of India or its subsidiary Company. The use of the word `other authorities' preceded by the word `include. is comprehensive enough to take care of Part III of the Constitution without unduly starching the meaning of `State'. This would extend to any autonomous body which has some nexus with the Government. The definition clause of Article 12 is not to be interpreted just like dry mathematical formula having their essence in their form, rather they have to be taken as living documents or organic living instances. 26. With this background the submissions made by Sri M.S. Negi, learned Counsel for the petitioner and that of Sri K.K. Venugopal, learned senior counsel for the respondents, may be considered. In bereft Sri Negi submitted that M/s. Elgin Mills Co. Ltd. was covered by the expression the `State' within the meaning of Article 12 of the Constitution and it was a subsidiary Company of the British India Corporation, which was acquired by the Government of India under the provisions of British India Corporation Ltd. (Acquisition of Shares) Act, 1981 and the order terminating the services of the petitioner was void. Even assuming, but without conceding, that the services of the petitioner contractual nevertheless it could not have been terminated in a way it has been done without any opportunity of hearing. Reliance was placed on Som Prakash Rekhi v. Union of India and others, AIR 1981 SC 212 ; Central Inland Water Transport Corporation Ltd. v. Brajonath Ganguli, AIR 1986 SC 1571 ; Ramanna Dayaram Shetty v. International Airports Authority of India and others, AIR 1979 SC 1628 ; Ajai Hasia v. Khalid Mujeeb Sohrawardi, AIR 1981 SC 487 ; Managing Director, U.P. Warehousing Corporation v. Vijai Narain Bajpai, AIR 1980 SC 840 . 27. Sri Venngopal, learned senior counsel appearing for the respondents, on the other hand, urged that the M/s. Elgin Mills Ltd. or even the British India Corporation Ltd. cannot be covered by the definition of 'State', not the employees thereof were entitled to fundamental right enshrined in Part III of the Constitution and in any case, the Eligin Mills Co. would not be an instrumentality of State nor the same was impregnated with the State actions. would not be an instrumentality of State nor the same was impregnated with the State actions. In any view of the matter the services of the petitioner were contractual in nature and for breach of contract a writ petition under Article 226 of the Constitution was not the proper remedy rather a civil suit must have been filed. Reliance was placed on Radha Krishna Agarwal v. State of Bihar, AIR 1977 SC 1496 ; Century Spinning Mills and Manufacturing Co. Ltd. v. Ulhas Nagar Municipal Council and another, AIR 1971 SC 1021 ; Executive Committee of Vaish Degree College Shamli v. Laxmi Narain and others, AIR 1976 SC 888 ; Sukhdev Singh v. Bhagat Ram Sardar Singh Raghuvanshi and others, AIR 1975 SC 1331 ; Central Inland Water Corporation v. Brajanath Ganguly, AIR 1986 SC 1571 and Ramanna Dayaram Shetty v. International Airports Authority of India and others, AIR 1979 SC 1628 and B. Rajkumar Patra v. Union of India, AIR 1981 Ori 143 ; Tekraj Vasandi v. Union of India, AIR 1988 SC 469 . 28. As regards the first point as to whether the Elgin Mills Co. Ltd. was `State' within the meaning of Article 12 of the Constitution, it is better to consider the provisions of the British India Corporation Ltd. (Acquisition of Shares) Act, 1981, under which the British India Corporation Ltd. was acquired or taken over and the Elgin Mills Co. Ltd. was its subsidiary company, hence that was also acquired in view of Section 617 of the Companies Act, 1956. The Act was to provide for the acquisition of certain shares of the British India Corporation Ltd. with a view to secure proper management of the affairs of the Company and the continuity and development of the production of goods which are vital to the needs of the country and for matter connected therewith or incidental, thereto. Section 3 of the Act provides that on the appointed date all the shares of the Company shall, by virtue of this Act, stand transferred to and vest in the Central Government, and the Central Government shall be deemed on and from the appointed date to have been registered in the register of members of the Company as the holder of each share, which has been transferred to and vested in it by virtue of the provisions of sub-section (1). 29. 29. Section 4 of the Companies Act, 1956 enacts that a company shall be deemed to be a subsidiary of another if that other controls the composition of its Board of directors. In the instant case there is no dispute that M/s. Elgin Mills Co. Ltd. was a subsidiary of that, (British India Corporation. Hence after the acquisition of the latter, former also stood acquired and came under the control and superintendence of the Central Government in view of Section 617 of the Companies Act, 1956. Facts in detail pertaining to the shares etc. were canvassed by the learned counsel for the parties and the same need not be repeated here. After the acquisition by the Central Government under the Act, M/s. Elgin Mills Co. Ltd. even though it was subsidiary of British India Corporation Ltd. but it became wholly controlled and managed by the Central Government. It may be stated that the function of the Central. Government or State has long since ceased to he confined to the preservation of the public peace, it is rather to secure social, economic and political justice, to preserve liberty of thought, expression, belief, faith and worship and to ensure equality of status and of opportunity to the citizens. That is the proclamation of the people in the Preamble to the Constitution. 30. In Managing Director U. P. Warehousing Corporation and others v. Vijay Narayan Bajpayee, AIR 1980 SC 840 (supra) U.P. State Warehousing Corporation was held to be covered within the definition of State or authority within the meaning of Article 12. 31. In Som Prakash Rekhi v. Union of India ami another, AIR 1981 SC 212 (supra) meaning of `other authorities' under the Control of Government of India was explained and Bharat Petroleum Corporation Ltd. was held to be `State' within the meaning of Article 12. About the control of Government it is better to quote para 28 at pages 218-219. "Control by Government of the Corporation is writ large in the Act and in the factum of being a Government Company. Moreover, here Section 7 gives to the Government company mentioned in it a statutory recognition, a legislative sanction and a status above a mere Government Company. If the entity is no more than a company under the Company Law or society under the law relating to registered societies or co-operative societies you cannot call it an authority. Moreover, here Section 7 gives to the Government company mentioned in it a statutory recognition, a legislative sanction and a status above a mere Government Company. If the entity is no more than a company under the Company Law or society under the law relating to registered societies or co-operative societies you cannot call it an authority. A ration shop run by a co-operative store financed by Government is not any authority, being a mere merchant not a sharer of State power. `Authority' in law belongs to the province of power.'' 32. The Preamble of the Act indicates that the Act was to provide for the acquisition of certain shares of the British India Corporation Ltd. with a view to secure proper management of the affairs of the Company and the continuity and development of the production of goods which are vital to the needs of the country and for matters connected therewith or incidental thereto. Section 3 of the Act provides that on the appointed date all the shares of the Company shall, by virtue of this Act, stand transferred to and vest in the Central Government. In the present case in view of the provisions of the Act, there was all pervasive control of the Central Government over the M/s Elgin Mills Co. Ltd. In Som Prakash Rekhi's case, referred above, other cases of Supreme Court were also considered, and following tests were pointed out in order to decide whether a Government Company or a Corporation would be covered under the definition of`State'within the meaning of Article 12 of the Constitution : "(1) One thing is clear that if the entire share capital of the Corporation is held by Government, it would go a long way towards indicating that the Corporation is an instrumentality or agency of Government. (2) Existence of `deep and pervasive State Control may afford an indication that the Corporation is a State agency or instrumentality. (3) It may also be a relevant factor..................whether the Corporation enjoys monopoly status which is State conferred or State protected. (4) If the functions of the Corporation are of public importance and, closely related to Governmental functions, it would be a relevant factor in classifying the Corporation as an instrumentality or agency of Government. (3) It may also be a relevant factor..................whether the Corporation enjoys monopoly status which is State conferred or State protected. (4) If the functions of the Corporation are of public importance and, closely related to Governmental functions, it would be a relevant factor in classifying the Corporation as an instrumentality or agency of Government. (5) Specifically, if a Department of Government is transferred to a Corporation it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government." 33. Taking into account the contents of the supplementary affidavit of K. L Ahuja, who was secretary of M/s. Elgin Mills Co. Ltd. and reply of those paragraphs on behalf of the petitioner it is obvious that the Central Government has deep and pervasive control over the affairs of the Mills which was acquired by the Central Government along with the British India Corporation Ltd. The nature of control by the Central Government was impregnated with governmental functions. Applying aforesaid principles as set out in Som Prakash Rekhi's ease in order to ascertain whether M/s. Elgin Co. Ltd. was `State' within the meaning of Article 12 of the Constitution. I am of the considered opinion that all the pervasive control of the Central Government was impregnated with the governmental functions and M/s. Elgin Mills Co. Ltd. was `State' within the meaning of Article 12 of the Constitution. 34. Reverting to the cases relied upon by Sri Venugopal, learned senior counsel appearing for the respondents, Tekraj Vasandi alias K.S. Vasandi v. Union of India, AIR 1988 SC 469 , was a case dealing with the controversy as to whether Institute of Constitutional and Parliamentary studies, registered under the Societies Registration Act was covered with the definition of State' within the meaning of Article 12 of the Constitution. In that case important decisions of Supreme Court relied upon by the learned counsel for the respondents namely Sukhdev Singh v. Bhagat Ram Sardar Singh Raghuvanshi and others (supra); Ramanna Dayaram Shetty v. International Airports Authority of India and others, (supra) ; Som Prakash Rekhi v. Union of India and another, (supra) were considered, and applying the tests as laid down in Ramanna Dayaram Shetty's case and similar other tests, ultimately it was held that it was not necessary that all the tests should be satisfied for reaching the conclusion either for or against holding an institution to be `S:ate'. As stated in para 17 at page 480, in Tekraj Vasandi alias K.L. Basandhi v. Union of India and others, AIR 1988 SC 469 (supra) the objects of the Society were not governmental business but were certainly the aspects which were expected to equip Members of Parliament and the State Legislatures with the requisite knowledge and experience for better functioning. Many of the objects adopted by the Society were not confined to the Houses of Parliament and were intended to have an impact on society at large, consequently the Institute of Constitutional and Parliamentary Studies was held not to be `State' within the meaning of Article 12 of the Constitution. 35. But in the instant case that is not the functioning of M/s. Elgin Mills Co. Ltd. and the Central Government has deep and pervasive control over the affairs of the Mill and it is impregnated with governmental functions. 36. Central Inland Water Transport Corporation Ltd. and another v. Brajonath Ganguly and another, AIR 1986 SC 1571 , was a case where considering earlier decisions of Supreme Court and definition of `State' under Article 12 of the Constitution, it was held that the Central Inland Water Transport Corporation Ltd. was an instrumentality or agency of the State which has assumed the garb of a Government Company as defined in Section 617 of the Companies Act, it docs not follow that it thereby ceases to be an instrumentality of agency of the State. For the purposes of Article 12 one must necessarily see through the corporate veil to ascertain whether behind that veil is the face of an instrumentality or agency of the State. Applying those principles as crystallised in para 69 page 1600-1061 it is obvious that M/s. Elgin Mills Co. Ltd. being a Government Co. For the purposes of Article 12 one must necessarily see through the corporate veil to ascertain whether behind that veil is the face of an instrumentality or agency of the State. Applying those principles as crystallised in para 69 page 1600-1061 it is obvious that M/s. Elgin Mills Co. Ltd. being a Government Co. as defined in Section 617 of the Companies Act the Central Government has got all pervasive control and it w ,s instrumentality or agency of the State, consequently there should be no doubt that it was `State's within the meaning of Article 12 of the Constitution. 37. In All India Sainik Schools Employees Association v. The Defence Minister cum-Chairman, Board of Governors, Sainik School Society, AIR 1989 SC 88 , under para 9 and 10 principles were indicated in order to determine whether a Society can be`State' within the meaning of Article 12. Those principles were that entire funding must be by State Government, and the Central Government. The overall control vests in the governmental authority. In the present case M/s. Elgin Mills Co. Ltd. was a Government company. It was within all pervasive control of the Central Government rather it was `impregnated with the governmental functions. As there is no doubt that M/s. Elgin Mill Co. Ltd. was `State' within the meaning of Article 12 of the Constitution. 38. As regards the second point as to whether civil suit could have been filed by the petitioner and there was breach of contract of Service of the petitioner, suffice it to say that this point was urged in the Supreme Court in Central Inland Water Corporation's case but that was repelled and the relief was granted under Article 226 of the Constitution. In the present case also assuming that the services of the petitioner were contractual in nature, consequence of which would be considered subsequently as to whether that contract was void or not. I am of the view that the petition should not be rejected for the remedy of civil suit. 39. As regards the last point as to whether the services of the petitioner could not have been legally terminated, assuming it to be contractual in nature but without affording an opportunity of hearing, even though he was confirmed on that post. I am of the view that the petition should not be rejected for the remedy of civil suit. 39. As regards the last point as to whether the services of the petitioner could not have been legally terminated, assuming it to be contractual in nature but without affording an opportunity of hearing, even though he was confirmed on that post. Similar question was involved in Central inland Water Corporation's case, AIR 1986 SC 1571 and that is complete answer to the submissions of learned senior counsel for the respondents. In that case it was held that such clauses (Rules 22 to 23 of The Elgin Mills Co. Ltd. Kanpur, Conduct, Discipline and Appeal Rules in the present case) like Rule 9 (i) in a contract of employment affecting large sections of the public is harmful and injurious to the public interest for its tends to create a sense of insecurity in the minds of those to whom it applies and consequently is against public good. Such a clause, therefore is opposed to public policy and being opposed to publicly, it is void under Section 23 of Contract Act. This ratio is applicable to the facts of present case consequently I have no manner of doubt that M/s. Elgin Mills. Co. Ltd. was `State' within the meaning of Article 12 of the Constitution and the petitioner was entitled to the the fundamental right including Articles 14 and 16 of the Constitution. The contract of employment as incorporated Rules 23 to 25 of the Elgin Mills Co. Ltd. Kanpur, Conduct. Discipline and Appeal Rules, 1983 were void under Section 23 of Indian Contract Act. 40. In view of the premises aforesaid this petition is liable to be allowed with costs. By the Court For reasons given in separate but concurring orders this petition succeeds and is allowed. Orders dated 4th February, 1984 and 12th March, 1985 passed by opposite parties No. 1 and 3 respectively are quashed. The opposite parties are further directed to reinstate petitioner, who shall be entitled to all consequential benefits including payment of back wages etc. The petitioner shall he entitled to its costs.