Supreme Court holds National Book Trust is 'State' under Article 12, subject to fundamental rights

Resolving a reference, the Supreme Court held that the National Book Trust, India is an 'other authority' within the meaning of Article 12 of the Constitution and is therefore a 'State' bound by the fundamental rights in Part III. Article 12 defines 'State' to include not only the Government and legislatures but 'all local or other authorities' under governmental control, a definition courts have read widely so that constitutional obligations cannot be evaded merely by hiving governmental functions off into a separate legal entity. Applying the cumulative test drawn from Ramana Dayaram Shetty v. International Airport Authority of India, Ajay Hasia v. Khalid Mujib Sehravardi and Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, the Court examined whether the Trust was financially, functionally and administratively dominated by, or under the pervasive control of, the Government, rather than looking at any single factor in isolation.

It found that the Trust was created by government resolutions, its Chairman is appointed by and holds office at the pleasure of the Government, its governing bodies include government nominees, and its finances, accounts and rule-making remain subject to governmental approval. The Court clarified that 'State' status under Article 12 does not convert Trust employees into civil servants or extend to them the service protections in Part XIV of the Constitution; its only consequence is that the Trust must act consistently with fundamental rights. The appeal against the finding was dismissed.