Report No. 145
5.20. Validity of the proposed amendment.-
We must now turn to the question whether, even if the proposed amendment is sound on the merits, it can be regarded as passing the test of constitutionality. For this purpose, it becomes necessary to quote the tentative proposal in this regard. The proposal is to insert an Explanation below Article 12 as under:-
"A statutory corporation, a company formed and registered under the Companies Act, 1936 or a society registered under the Societies Registration Act shall not be considered as 'State' for the purpose of this Part."
We are not dealing with the question of drafting. But we have to point out that the exclusion of statutory undertakings, Government companies and Government aided registered societies from the benefit of Part III of the Constitution is bound to raise the important constitutional issue whether such an amendment does not impair a basic feature of the Constitution. There are at least two decisions of the Supreme Court which are relevant for answering this question. Applying the test of basic features laid down in Kesavanand Bharati v. State of Kerala, AIR 1973 SC 1461, the Supreme Court, in Minerva Mills Ltd., AIR 1980 SC 1789, observed (in paragraph 31 of the judgment) that Article 14 of the Constitution (right to equality)) is the very foundation of a republican form of Government and is by itself a basic feature of the Constitution."
The second judgment is Vamanarao's case, AIR 1980 SC 271, which reiterates the theory of basic structure. It must also be pointed out that the proposed amendment will affect not merely Article 14, but possibly all fundamental rights in their application to public sector undertakings. Obviously, such an amendment would be regarded as of very far-reaching character and it may be very difficult to defend a challenge to such an amendment, which would take away a large slice of activities, conducted practically under the control of the State, from the ambit of fundamental rights.