The main legal point established in the judgment is the application of tests from various Supreme Court decisions to determine the status of an entity as an instrumentality or agency of the State, and its qualification as 'state' under Article 12 of the Constitution.

( 1 ) ON 24-6-1991, a Division Bench of this Court has referred the question whether the Karnataka Dairy Development corporation Ltd. , is 'authority' under Article 12. The learned counsel appearing tor the Appellant and Respondents submitted that the Karnataka dairy Development Corporation Limited (First Respondent) was a Company incorporated under the Companies Act and the assets and liabilities of the said Company have been taken over by Karnataka Co-operative milk Producers' Federation Limited (Second Respondent herein, hereinafter referred to as the 'federation) and that while making the reference, due to a typographical error, the reference has been made in regard to Karnataka dairy Development Corporation Ltd , instead of Karnataka Cooperative milk Producers' Federation Ltd The use of the words 'a Co-operative ture', by the Division Bench, while describing the entity in regard to which reference is made, makes it evident that reference relates to the Federation which is registered under the Karnataki Co-operative Societies Act, 1959 (hereinafter referred to as the 'act' ). Hence by consent the question referred as follows :"whether the Karnataka Co-operative Milk Producers' Federation ltd. is 'state' as defined under Article 12 of the Constitution of India. "

( 2 ) THE appellant was an employee of the Federation and his services were terminated by an order of dismissal dated 16-3-1987. The petitioner challenged the order of dismissa in W. P. No 10273 of 1987 on assumption that the Second respondent is 'state' as defined under Article 12. Doddakale Gowda, J. who heard the matter, dismissed the writ petition. by order, dated 31-7-1989 on the ground that the Federation is not 'state', relying on his earlier decision in Sri Arunodava. Agencies v. The Karnataka co-operutive Milk Producers' Federation W. P No 12074 of 1989, DD : 20-7-1989. In the said decision, he held that the Milk Producers' Unions which were the Members of the Federation were not 'state' within the meaning of Article 12 and a Federation of such Milk Producers unions cannot have a higher status than its members and therefore, the federation, cannot beheld to be'state'. He also held that none of the criteria laid down to determine whether an authority is a 'state', were satisfied in regard to the Federation. The said dismissal of the W. P No. 10273 of 1987, was challenged by the Appellant on the ground that the federation was a 'state' and that question has been referred to a Full Bench.

( 3 ) AT this stage, it is necessary to refer to the circumstances leading to the incorporation of the Federation Earlier, a company known as karnataka Dairy Development Corporation Ltd , was incorporated to be in-charge of dairy Development of Karnataka. The State Government was keen on implementing 'operation Flood-II' Dairy Development Programme in karnataka. The Indin Dairy Corporation/national Dairy Development Board (hereinafter referred to as IDC) which had been nominated by the Central government as the Project Authority for the operation Flood-ll Programme that suggested the State Government should adopt the'anand Pattern' cooperatives as the basic policy for future dairy development programmes in Karnataka. The Central Government also requested the State Government to examine the said suggestion and enter into an agreement with IDC for implementation of operation Flood-II. IDC suggested the creation of the post of a spscial Secretary by State Government to coordinate the operation Flood-ll activities and creation of a Milk Producers Co-operative Federation. The Central Government also emphasised that implementing of World bank aided dairy development project through the Karnataka Dairy development Corporation, it was visualised that in course of time, the said corporation would get re-placed by a Cooperative Federation which would own the various processsing and marketing facilities. By letter dated 13-5-1981, the State Government agreed to crea