The central legal point established in the judgment is the criteria for determining whether a company qualifies as an instrumentality of the State under Art.12 of the Constitution, emphasizing ownership, control, nature of functions, and financial influence.

Balakrishnan, J.

In an earlier decision reported in Thomas v. Cochin Refineries Ltd. (1982 KLT 553 = AIR 1982 Kerala 248) it was held that the Cochin Refineries Ltd. is not an "instrumentality of the State' within the meaning of Art.12 of the Constitution. These Original Petitions were filed under Art.226 of the Constitution challenging the administrative action of the Cochin Refineries Ltd. The petitioners seek re-consideration of the view taken in Thomas v. Cochin Refineries Ltd. (1982 KLT 553 = AIR 1982 Kerala 248) and they contend that the Cochin Refineries Ltd. is an instrumentality of the State under Art.12 of the Constitution. The learned single judge before whom these petitions came up for consideration was pleased to refer the matter to the Division Bench,

2. Petitioners in these Original Petitions contend that the view taken by the learned judge in Thomas' case is not correct in view of the various decisions of the Supreme Court on the point and also due to the subsequent change of ownership of shares of the respondent company.

3. The Cochin Refineries Ltd. is a Company incorporated under the Companies Act. The Company is engaged in refining petroleum products. As far as the shareholding pattern of the Company is concerned, 61.17% of shares are held by Union Government, 5.08% by the State of Kerala and some shares are held by the State owned Corporations and other authorities such as L.I.C., Unit Trust etc. 16.03% shares are held by public. Formerly, 26% of the shares were held by Philips Petroleum Company of United States of America. The shares held by Philips Petroleum Company were distributed among other sharers and for the time being the shares of the respondent Company are not held by any foreign company. The members of the Director Board are appointed by the Government of India and in all policy matters the final decision is taken by the Government of India ie., to secure repayment of borrowings, to undertake works involving capital expenditure exceeding Rupees Fifty lakhs, to invest money in securities, to set apart any part of profits to provide fund to provide pensions, gratuities etc. The Board of Directors can elect one of them as Managing Director. Respondent Company is a Government Company as defined under S.617 of the Companies Act which says that the Government company means any company in which not less than fifty one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by Central Government and partly by one or more State Governments and includes a company which is a subsidiary of the Government company as the case may be.

4. Art.12 defines the expression, "the State". This definition is used in relation to the fundamental rights guaranteed under Part III of the Constitution and Directive Principles of State Policy contained in Part IV of the Constitution. A large number of authorities were cited to show how the Courts interpreted the expression "the State" in Art.12 of the Constitution. Counsel for the respondent company contended that the decision in Thomas' case does not call for any re-consideration and a view similar to this was taken in Tekraj v. Union of India (AIR 1988 SC 469). That is in respect of the Institute of Constitutional and Parliamentary Studies (ICPS) registered under the Societies Registration Act 1860. The Supreme Court held that the objects of the Society were not governmental business but were certainly the aspects which were expected to equip members of Parliament and the State Legislatures with the requisite knowledge and experience for better functioning. Though the annual contribution from the Government has been substantial it was not the main source of funding. It was in this background the Supreme Court held that ICPS was not a "State" within the meaning of Art.12. We do not think that this decision has any application to the facts in the present case.

5. In another decision reported in Chan