Question

In order to decide whether a particular authority is an instrumentality or agency of the state the following test(s) can be applied in view of the decision of the Supreme Court in Som Prakah Rehi v. Union of India, AIR 1981 S.C. 212

• A. Entire share capital of the corporation is held by Government ; the corporation enjoys monopoly status
• B. Existence of deep and pervasive State control
• C. the functions of the corporation are of public importance and, closely related to governmental functions, or a department of Government is transferred to a corporation
• D. All the above

Answer 1

The Correct Option is D

In Som Prakash Rekhi v. Union of India, AIR 1981 S.C. 212, the Supreme Court of India provides various tests to determine whether an entity is considered an instrumentality or agency of the State. These tests are crucial in the context of understanding the extent of government influence and control over an entity. Let's examine the applicable tests derived from the decision:

1. The entire share capital of the corporation is held by the Government, and the corporation enjoys monopoly status. This indicates significant governmental involvement and financial backing, showcasing government control over the entity.
2. Existence of deep and pervasive State control. This aspect focuses on the degree of governmental control that affects the management and operations of the corporation, indicating that the entity might be an extension of the State.
3. The functions of the corporation are of public importance and closely related to governmental functions, or when a department of Government is transferred to a corporation. If the corporation performs essential public services or executes tasks that were previously undertaken by a government department, it suggests a governmental nature to its functions.

Based on the evaluation of the above criteria, the correct answer is: All the above. These tests collectively demonstrate the characteristics that qualify an entity as an instrumentality or agency of the State under legal interpretation.