R.D. Shetty v. International Airport Authority (1979)

Constitutional Law I · State under Article 12

Facts.

The International Airport Authority, a statutory corporation, invited tenders to run a restaurant at the airport and then accepted a bid that did not meet its own eligibility conditions. R.D. Shetty, a rejected bidder, argued that a “State” body could not act arbitrarily and had violated Article 14.

Issue.

Is a statutory corporation an “other authority” and therefore “State” under Article 12, so that it is bound by the Fundamental Rights?

Held.

Justice Bhagwati laid down the instrumentality or agency test: a body is “State” if factors such as deep and pervasive State control, government financing, a monopoly status, the transfer of a government department, or the performance of public functions point to it being an instrument of the government. On these factors the Authority was held to be “State”.

Why it matters.

This is the foundational test for deciding when public corporations, boards and agencies are bound by the Fundamental Rights — the reason Fundamental Rights reach far beyond the government’s own departments.

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