Regulatory vs. Pervasive Control: Defining “State” under Article 12 for Autonomous Research Institutes

Introduction

The case of Himanshu Dineshchandra Parekh v. Institute for Plasma Research & Ors. (Gujarat High Court, 4 April 2025) concerned the threshold issue whether the Institute for Plasma Research (“IPR”), an autonomous scientific society established under the Societies Registration Act and aided by the Government of India’s Department of Atomic Energy, qualifies as a “State” under Article 12 of the Constitution. The appellant, Mr. Parekh, challenged his removal from service by way of writ petition. The Single Judge dismissed the petition on the ground that IPR is not a “State.” On Letters Patent Appeal, the High Court was called upon to revisit this question against the background of the test of “functional, financial and administrative control” as enunciated by the Supreme Court in Ajay Hasia and refined in Pradeep Kumar Biswas.

Summary of the Judgment

By a majority decision, the Division Bench (Acting Chief Justice Biren Vaishnav and Justice Hemant Prachchhak) dismissed the appeal. It upheld the Single Judge’s finding that IPR does not fall within the ambit of Article 12. Key observations included:

IPR is a research and development body devoted to plasma science and technology, not engaged in functions fundamental to governance or economic regulation of the country.
Though governed by a Council populated largely by ex‐officio and nominee members of the Department of Atomic Energy, the control of the Government is regulatory rather than pervasive.
Funding by the Central Government was not shown to constitute the majority of IPR’s budget in the manner of the CSIR in Biswas.
No notification under Section 14 of the Administrative Tribunals Act brings IPR within the definition of a “Government‐controlled society.”
Accordingly, IPR is not amenable to writ jurisdiction under Article 226 on the basis of being a “State.”

Analysis

1. Precedents Cited

Ajay Hasia v. Khalid Mujib Sehravardi (1981 SCC HL): The foundational test for determining “State” under Article 12—whether the body is under “functional, financial and administrative control” of the Government.
Pradeep Kumar Biswas v. Indian Institute Of Chemical Biology & Ors. (2002 5 SCC 111): Applied Ajay Hasia to CSIR, holding that pervasive State control (70% funding, ex‑officio Prime Minister as President, CAG audit, notification under Administrative Tribunals Act) rendered CSIR a “State.”
Board of Control for Cricket in India v. Cricket Association of Bihar (2015 3 SCC 251): Autonomy of a body does not preclude it from being a “State” if it performs public functions under pervasive governmental control.
M.P. State Cooperative Dairy Federation Ltd. v. Rajneshkumar Jamindar (2009 15 SCC 221): Even non‑commercial bodies may be “State” if their activities are directed towards public welfare under government control.
Virendra Kumar Srivastava v. U.P. Rajya Karmachari Kalyan Nigam & Anr. (2005 1 SCC 149): Emphasized “brooding presence of Government” as indicium of Article 12 applicability.
Various Gujarat High Court decisions on grant‑in‑aid and aided bodies for comparative analysis of regulatory versus pervasive control (e.g., C.A. Shah v. Gujarat Cancer & Research Institute, Army Welfare Education Society v. Sunil Kumar Sharma, et al.).

2. Legal Reasoning

The Court applied the three‑fold Ajay Hasia test in light of Biswas:

Functional Control: IPR’s mandate is fundamental research in plasma physics, not a public or regulatory function central to governance or economic policy.
Financial Control: Unlike CSIR’s 70% grant from Government of India, IPR’s funding structure was not shown to be dominantly State‑sourced. IPR’s memorandum allows grants, donations, service charges, and CAG inspections, but no mandatory grant ratios or Parliamentary audit similar to CSIR.
Administrative Control: The Department of Atomic Energy appoints certain ex‑officio and nominee members to the Governing Council, but has no power to review or override day‑to‑day decisions. Bye‑laws permit managerial autonomy subject only to general policy guidelines (“regulatory” rather than “pervasive”).

Because the control remained at the level of framing guidelines and financial assistance, without the sweeping powers of appointment, budgetary diktat or policy reversal seen in Biswas, the Court concluded that IPR falls outside Article 12.

3. Impact

This decision clarifies that:

Research institutes, even when substantially aided by Government of India, will not automatically become “State” unless the control is pervasive in all three dimensions.
Grant‑in‑aid or ex‑officio representation alone is insufficient—courts will examine actual funding trends, audit mechanisms and overriding powers.
Other specialized bodies (e.g., defense labs, universities, cooperatives) must assess their governance structures if challenged under Articles 12 or 226.
Legislatures and administrators must be precise when granting autonomy or imposing oversight to avoid unintended writ jurisdiction.

Complex Concepts Simplified

Article 12 (“State”): Expands the definition of “State” beyond government departments to include bodies where Government wields pervasive control.
Functional vs. Regulatory Control: “Functional” means the body carries out public/state‑like tasks (e.g., policing, regulation). “Regulatory” means the Government issues broad policies or guidelines but does not run day‑to‑day affairs.
Ex Officio Membership: Appointment by virtue of holding another office. E.g., Secretary of Atomic Energy sits on IPR’s Council because of rank, not special nomination.
Section 14 Administrative Tribunals Act Notification: Designates certain bodies as “owned or controlled by Government,” making them amenable to Administrative Tribunal jurisdiction.
Pervasive Control: When Government can hire, fire, amend budgets, overturn decisions, audit and table accounts in Parliament—an all‑encompassing grip.

Conclusion

The Gujarat High Court’s ruling in Himanshu Parekh v. IPR reinforces that autonomous research bodies, even if largely funded and partly overseen by Government departments, do not automatically become “State” for Article 12 purposes. The decisive factor remains whether the Government’s involvement transcends mere regulation or assistance and becomes pervasive—functional, financial and administrative. By distinguishing IPR from the hallmark Pradeep Kumar Biswas case, this judgment offers clear guidance to public and private institutions on preserving autonomy without attracting constitutional writ jurisdiction.