Guidelines laid down by the Supreme Court in identifying a body as agency of State
In determining whether a corporation or a government company or a private body is an instrumentality or agency of the state, the following tests was held by the Supreme Court to be applicable in the case of Ajay Hasia v. Khalid Mujib
i) Whether the entire share capital is held by the government.
ii) Whether the corporation enjoys monopoly status conferred by the state.
iii) Whether the functions of the corporation are governmental functions or functions closely related thereto which are basically the responsibilities of a Welfare State,
iv) If a department of the government has been transferred to the corporation.
v) The volume of financial assistance received from the state.
vi) The quantum of state control.
vii) Whether any statutory duties are imposed upon the corporation.
viii) The character of the corporation may change with respect to its different functions.
Maintainability of a writ petition filed against a corporation by virtue of Art.226 of Constitution of India
It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. If a company is an organ or instrumentality of the state then the Company acts in its executive power given under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest.