{"id":343539,"date":"2025-03-12T14:00:47","date_gmt":"2025-03-12T08:30:47","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=343539"},"modified":"2025-03-18T12:52:52","modified_gmt":"2025-03-18T07:22:52","slug":"companies-not-state-under-article-12-unless-pervasive-control-allahabad-hc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2025\/03\/12\/companies-not-state-under-article-12-unless-pervasive-control-allahabad-hc\/","title":{"rendered":"Companies complying with rules of Ministries and Public Regulators are not ‘State’ under Article 12, unless under pervasive Government control: Allahabad HC"},"content":{"rendered":"
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Allahabad High Court:<\/span> In a matter concerning the issue of maintainability of the writ petition, the division bench of Shekhar B. Saraf<\/span> * and Vipin Chandra Dixit, JJ. stated that the mere fact that private companies comply with the rules and regulations established by the various Ministries and public regulators do not by itself bring them within the meaning of ‘State’ under Article 12<\/a> of the Constitution<\/a>, as these companies are not under the pervasive control (functionally, financially and\/or administratively) of the Government of India. Thus, the petitioners were pursuing the wrong course by seeking relief under writ jurisdiction, as Nayara Energy Limited (‘NEL’) (formerly Essar Oil Limited) does not fall within the definition of ‘State’ as enunciated and explicated by the Supreme Court within the ambit of Article 12<\/a> of the Constitution of India<\/a>.<\/p>\n

The Court also extracted the principles that would apply to make a company amenable to writ jurisdiction.<\/p>\n

Background<\/h3>\n

Petitioner 1 was a partnership firm registered with the objective of selling petroleum products, grease, distilled water, and other products. The firm obtained a franchise agreement with Nayara Energy Limited (formerly Essar Oil Limited) for the sale of Motor Speed Petrol and High-Speed Diesel lubes at a retail outlet in Bulandshahar, Uttar Pradesh.<\/p>\n

On 18-08-2021, officials from NEL visited the outlet to conduct an inspection and collect product samples, which were sent to Bharat Petroleum Corporation Limited Quality Assurance Laboratory for testing. The test report highlighted several discrepancies in the samples that did not meet required specifications. Based on this report, NEL issued a show-cause notice to the petitioner, citing violations of the franchise agreement.<\/p>\n

Petitioner 1 raised concerns about discrepancies in petrol and diesel delivery and questioned the authenticity of the test samples. However, the responses were deemed unsatisfactory, and the franchise agreement was terminated.<\/p>\n

Aggrieved by the termination, the petitioner approached the Central Vigilance Commission (‘CVC’) on 31-01-2022, seeking redressal, but no action was taken. The petitioner sent a reminder on 04-03-2022 but received no response. Consequently, petitioner 1 has now approached the court seeking relief for the wrongful termination of the franchise agreement and the inaction of the authorities.<\/p>\n

Issue<\/h3>\n

Whether NEL falls within the definition of ‘State’ as enunciated and explicated by the Supreme Court within the ambit of Article 12<\/a> of the Constitution of India<\/a>.<\/p>\n

Analysis and Decision<\/h3>\n

The Court highlighted that Article 12<\/a> of the Constitution of India<\/a> defines the term ‘State’ for the purpose of enforcing fundamental rights. Fundamental rights are primarily enforceable against the ‘State’ and its instrumentalities rather than private individuals or bodies. Writ petitions under Article 226 are only maintainable against bodies\/persons covered within the terminology of Article 12<\/a> of the Constitution of India<\/a>.<\/p>\n

Upon perusal of Article 12, the Court noted that the term ‘State’ includes:<\/p>\n