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Report No. 145

2.5. Government companies.-

One consequence of the broader test of "agency or instrumentality" that came to be laid down (as stated above) was that Government companies, as defined in section 617 of the Companies Act, 1956 came to be included within the concept of "State", for the purposes of Article 12 of the Constitution. Thus, the Bharat Petroleum Corporation was held to fall within its ambit.1 Comparatively recently, the Indian Oil Corporation has also been held to fall within the ambit of Article 12.2

Accordingly, the sudden stoppage of supply of lubricants to the petitioner firm by the Indian Oil Corporation, without notice, was held to be violative of Article 14 of the Constitution as arbitrary, against natural justice and fair play and unreasonable and practically amounting to blacklisting of the petitioner firm. It may be mentioned that Government companies are not created directly by statute, but (like other companies) are incorporated under statute. Nevertheless, the test of "agency or instrumentality" became relevant for coming to this positive conclusion.

1. Som Prakash Rekhi v. Union of India, AIR 1981 SC 212: (1981) 1 SCC 499.

2. Mahabir Auto Stores v. Indian Oil Corporation, (1990) 3 SCC 752.

Article 12 of the Constitution and Public Sector Undertakings Back

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