B. N. KIRPAL, C. J.

( 1 ) EVEN more than two decades after the question first arose, the Counsel are still debating on the question as to what is a state, within the meaning of Article 12 of the Constitution of India. That is the principal contention raised in this appeal filed by a Public Limited company, challenging the judgment of the learned single Judge, who had allowed a writ petition filed by five er six employees, whose services had been terminated.

( 2 ) RESPONDENTS Nos. 2 to 6 were working with the appellant, which, inter alia, carries on the business of manufacture and sale of fertilizar, and that the terms and conditions of recruitment and service were regulated by the Service Rules framed by the appellant. Rule 44 contained a provision, which enabled the Company to discharge or determine services of an employee after his confirmation. The said Rule, inter alia, provided that after confirmation, an employee in Grade I or grade II may be discharged from service of the Company "for sufficient reasons by the Competent Authority", after giving him three months notice in writing in that behalf, or salary in lieu of such notice.

( 3 ) THE Managing Director of the company passed an order dated 6th of may 1984, discharging the said respondents from service under the said rule 44. Reasons for the discharge were recorded by the Managing Director, but the same were not communicated to the said respondents. The order of discharge merely stated that their services were being terminated under said Rule 44. The appeal filed by the said respondents, within the Company itself, being unsuccessful, they filed a writ petition, being Special Civil Application No. 5039 of 1984, challenging the said order of discharge.

( 4 ) BEFORE the learned single Judge, it was, inter alia, contended on behalf of the respondents that it was not possible for the Company to terminate the service merely by giving three months pay and without holding any enquiry and without recording any reasons.

( 5 ) THE appellant herein had submitted that it was not a state and, therefore, a petition under Article 226 of the constitution was maintainable. It was also submitted that the services of the respondents had been terminated under rule 44 and such termination was justifiable on the facts and in the circumstances of the case.

( 6 ) THAT petition was allowed by the learned single Judge, who came to the conclusion that the order of discharge, which was passed, was really by way, of punishment, and as the appellant was a state, within the meaning of Article 12 of the Constitution of India, the said respondents were entitled to be reinstated as their services could not have been discharged without following the principles of natural justice.

( 7 ) IT has been submitted by the learned advocate General that the learned single judge fell in error in holding that the appellant was a state. For the reasons, to which we shall presently revert to. the contention is that the appellant is not a state, and even if it be assumed that a writ petition under Article 226 is maintainable, even then, the relationship between the appellant and the respondents being purely contractual in nature, the relief of retirement should not have been granted. It was, of course, submitted that the order of discharge which was passed was wholly justified.

( 8 ) DEALING with the question whether the appellant is a state, the learned single Judge referred to the of-quoted judgment on the point in issue, viz. , those of R. D. Shetty v. The International airport Authority of India, AIR 1979 SC 1628 and Ajay Hasia v. Khalid Mujib, air 1981 SC 487, where the tests for determining whether a Corporation could be said an instrumentality or an agency of the Government had been culled out. The tests, which were summarised in Ajay hasias case, and which were referred to by the learned single Judge, are as follows:" (1) One thing is clear that if the entire share capital of the corporation is held by governme

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