Bangalore Water Supply Case: Sovereign Functions

By Debkanya Naskar, NUJS

Editor’s Note: The author, in this project, seeks to answer the following question. Does Bangalore Water-Supply & Sewerage Board, Etc. v. R. Rajappa & Others, 1978 SCC (2) 213 give us manageable standards for the application of the Doctrine of Sovereign Function?

1. INTRODUCTION

The Bangalore case bench[i] was constituted to clarify the concept of “industry”[ii]. The majority in the case re-stated[iii] ‘sovereign functions’ as an exception to what amounts to an ‘industry’.  The scope of this project is to determine whether the Bangalore case gave manageable standards for the application of this exception.

Broadly the activities which are argued to be sovereign function are:[iv]

  • Core functions of the state.
  • Activities governed under Article 309, 310 and 311 of the Constitution.[v]
  • Functions of the state in furtherance of Part IV of the Constitution[vi].

The project will analyze the standards set in the Bangalore case for the above functions separately. Through this exercise, I will try to prove that the judgment does not give us a clear idea as to what extent of the above functions is covered under the exception. I will also use subsequent judgments to highlight the ambiguity faced (either in principle or in practical application) while applying the ‘sovereign function’ standards laid down in the case.

2. THE CORE-FUNCTION OF THE STATE

 According to the leading-judgment, the benchmark for determining the core-functions is the “primary and inalienable functions of the Constitutional Government”.[vii]  It is limited in scope than the tortuous-defence of sovereign-immunity and is subject to modification by the legislature.[viii] The concurring opinion[ix] explained that this standard can be referred to as the governmental function in the limited sense. It is neither the regal function (them being a misfit in the Republican form of government) nor the sovereign function (them operating on a separate plain in itself).

This standard given in the case, according to me does not give us a workable formula. This is for the following reasons.

  • Firstly, the standards are not static. They are subject to the changing role of the government with time. This is relevant because the government is increasingly stepping into industrial domain and also outsourcing its functions to private entities.[x] Therefore the standards of ‘legislative, executive and judicial functions’[xi] as being the only primary functions have a high probability of changing with time.
  • Secondly, the Court did not clarify the standard for practical application. It did not outline the functions what it considered to fall in the exemption.  Therefore subsequently the court again had to step in to clear the confusion by listing the functions.[xii] It also had to be later clarified that the test to determine primary and inalienable functions is to check whether any private person can perform the same activity.[xiii]

Thus, the standard for determining the core-function as laid down in the case provided scope for ambiguity and needs further clarification.

3. ACTIVITIES GOVERNED UNDER ARTICLE 309, 310 AND 311 OF THE CONSTITUTION.

The Bangalore case also held that activities under Article 309, 310 and 311 will be covered under sovereign function. But the standards regarding determining when such activities will fall into the exception can be argued to be ambiguous.

 On one hand, the leading judgment held that such activities “may” be considered as sovereign function “subject to the interpretation of the rules governing them”[xiv]. In the absence of statutory rules, the key aspects of public administration will fall into the exception.[xv] On the other hand, the concurring opinion held that the activities which are governed by separate statutory rules and constitutional provisions “should strictly speaking” be considered as a sovereign function.[xvi]

Therefore the judgment is unclear whether there is a mandatory or a discretionary exclusion of activities governed by statutory-rules. This ambiguity gives a possibility for a wide interpretation which will, in essence, be self-contradictory.[xvii]  The wide reading would be that, although any activity is governed by statutory rules; they would still fall into the domain of an ‘industry’ as per Section 2 (j) of the Act. Subsequently, an expansive reading was indeed taken in a case which allowed the concurrent operation of the act and the statutory rules.[xviii]  Therefore the court again had to step in to clarify that the Bangalore case cannot be interpreted in the above manner.[xix] This back and forth over with the court indicates the lack of manageable standards.

4. FUNCTION OF THE STATE IN FURTHERANCE OF PART IV OF THE CONSTITUTION

Bangalore case was unanimous to exclude the activities of the state in furtherance of Part IV from sovereign function. According to this case, ‘welfare activities of economic adventure’ are excluded from the sovereign function exemption to industry.[xx]  This is a policy choice made by the court to increase the ambit of benefit available by the application of the Act.[xxi]

Although it was a clear stand taken by the court, a subsequent case (per in curium) argued for the inclusion of welfare activities as sovereign function.[xxii]  According to that interpretation, welfare functions arising out of the duties of the state under Part IV of the Constitution. Therefore they are constitutional functions as well. Constitutional functions are part of sovereign function, hence excluded from the ambit of an industry.

The line of arguments supporting the inclusion of the welfare functions into the Doctrine of sovereign function has been gaining support steadily.[xxiii] The general trend stands contrary to the Bangalore case, which being a higher judge bench is a binding precedent for application of the Doctrine in the concept of ‘industry’. The justification for this argument is found in the altered notions of sovereignty in a Constitutional democracy.[xxiv] Unlike the mandate of the Crown, the constitutional government is obliged to discharge welfare functions due to the mandate under Part IV. [xxv] Therefore the court needs to provide adequate justification for opting them out of sovereign function.  Maximizing the benefit from the Act cannot alone be the consideration. Even if that be the case, the legislature and not the judiciary should be making the choice.

Therefore although the standard to exclude welfare function from the Doctrine of Sovereign function is clear, it may not be manageable for future.

5. CONCLUSION

More than three decades after the Bangalore case, it still stands as a binding precedent. Many jurists have argued either in favor or against the decision since then, but the general trend of cases[xxvi], shows that there is a growing need to review the judgment especially to include welfare function as part of the sovereign function. The issue is a policy matter needs government intervention.[xxvii]

On the application of the doctrine of sovereignty, it has been attempted to show that even if we disregard the under-inclusion issue, yet the Bangalore case is not definite about what falls in the strict interpretation of sovereign function. The confusing standards lead to multiple judgments trying to interpret them. Therefore whether the issue is of inalienable functions or Constitutional activities, the case did not lay down manageable standards as what amounts to a doctrine of sovereign function.

Formatted on 26th February 2019.

Footnotes

[i] The 7 judge bench comprised of Krishna Iyer, Bhagwati, Desai, Chandrachud, Jaswant Singh and Tulzapurkar JJ.  The leading opinion was delivered by Krishna Iyer J. (on behalf of himself, Bhagwati and Desai JJ.). Beg J.  gave a concurring opinion. Jaswant Singh J. on behalf of himself and Tulzapurkar J gave a separate opinion. Chandrachud J. (and later CJ.) gave a dissenting opinion. The applicability of the doctrine of sovereign function was discussed primarily in the opinion of Krishna Iyer, Beg and Chandrachud JJ. Chandrachud J. denied the application of the doctrine. Therefore the project discusses the leading opinion and the concurring opinion of Beg J. to identify the standards laid down for application of the doctrine.

[ii] See The Industrial Disputes Act, 1947 (hereinafter referred to as ‘the Act’), § 2 (j).

[iii] See, e.g. State of Bombay v. Hospital Mazdoor Sabha, (1960) 1 LLJ 251 and Corporation of City of Nagpur v. Its Employees, (1960) 1 LLJ 523 (had incorporated the doctrine of sovereign function while interpreting the concept of industry, prior to the Bangalore case).

[iv] Bangalore case, Supra note 1. See also Vithalbhai B Patel, Law on Industrial Disputes 286 (Gyanendra Saran ed., 2010)

[v] The Constitution of India, Article 309-11.

[vi] Id., Part IV.

[vii] Bangalore case, Supra note 1, ¶ 50, 143 clause (b).

[viii] Id., ¶ 50.

[ix] Id., ¶ 163.

[x] See Ramana Dayaram Shetty v. International Airports Authority of India, AIR 1979 SC 1628, ¶ 13 (where the court observes that the nature of function performed by the state has changed over time).

[xi] Richard Coomber v. Justice of the County of Berks, [1883-84] 9 AC 61, Lord Watson, as cited in O. P. Malhotra, Law of Industrial Disputes, Volume 1 150-151 (2004) (recognized legislative, executive and judicial function as the primary functions).

[xii] See Agricultural Produce Market Committee v. Shri Ashok Harikuni & Anr. Etc, (2000) 8 SCC 61.

[xiii] See All India Radio v. Shri Santosh Kumar & Anr, AIR 85 1998 Supreme Court 941.

[xiv] Bangalore case, Supra note 1, ¶ 50.

[xv] Id.

[xvi] See Id., ¶ 163.

[xvii]  It is self contradictory because the majority opinion intends to include only “key aspects of public administration” in the exception and a wider interpretation will defeat this purpose. Id. ¶ 50.

[xviii] Bombay Telephone Canteen Employees’ Association, Prabhadevi v. Union of India, AIR 1997 SC 2817, ¶ 9 (“Therefore, two streams, namely, remedy under the Act by way of reference and remedy of judicial redressal by way of proceedings under Article 226 or a petition filed before the Administrative Tribunal to the aggrieved persons, are co-existing. If the doctrine laid in Bangalore Water Supply Board case, (1978) I LLJ 349 SC, is strictly applied, the consequence is catastrophic and would give a carte blanche power with lesser faire legitimacy which was buried fathom deep under the lethal blow of Article 14 of the Constitution which assures to every person just, fair and reasonable procedure before terminating the services of an employee.”).

[xix] See General Manager, Telecom v. S. Srinivasa Rao & Ors, AIR 85 1998 Supreme Court 656. (Bangalore case being the binding precedent, subsequent lower benches cannot deviate from the previous case.).

[xx]Bangalore case, Supra note 1, ¶ 143 clause (b).

[xxi] Id., (Krishna Iyer J. judgment is colored in a pro-worker approach. It tries to maximize the benefit from the Act to all sectors of workers).

[xxii] Sub-Divisional Inspector of Post, Vaikam and others v. Theyyam Joseph and others, 1996 (8) SCC 489.

[xxiii] Compare with cases on the interpretation of “State” as per Art. 12, Constitution. The general trend shows the dilution of the concept of “State”. See Supra note 11, ¶ 14 (Instrumentality test: the bodies acting as instruments of the State are deemed to be ‘State’ as well.)

[xxiv] State of U.P. v. Jai Bir Singh, (2005) 5 SCC 1, (“The concept of sovereignty in a constitutional democracy is different from the traditional concept of sovereignty which is confined to `law and order’, `defence’, `law making’ and `justice dispensation’. In a democracy governed by the Constitution the sovereignty vests in the people and the State is obliged to discharge its constitutional obligations contained in the Directive Principles of the State Policy in Part -IV of the Constitution of India. From that point of view, wherever the government undertakes public welfare activities in discharge of its constitutional obligations, as provided in part-IV of the Constitution, such activities should be treated as activities in discharge of sovereign functions falling outside the purview of `industry’.).

[xxv] Id.

[xxvi] Id.

[xxvii] Post Bangalore case, the definition of industry was amended, Industrial Disputes (Amendment) Act 1982 Act 46 of 1982). But the definition is yet to come to force.

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