A company can be classified as 'State' under Article 12 of the Constitution if it operates significantly under government control and serves public functions.

1 The above appeals have been filed by the Mysore Paper Mills Ltd. (hereinafter referred to as the "Appellant Company", against the judgment of a Full Bench of the High Court of Karnataka dated 12.8.98 in W.A. Nos. 1242-4243, insofar as it was held therein that the appellant company is "State" within the meaning of Art.12 of the Constitution of India, though, their appeals against the order of the Single Judge came to be allowed on the ground that impugned order of transfer against the 2nd respondent was not shown to be vitiated by malafides or by any extraneous considerations and that the respondents have no legal right to challenge the said order of transfer made on administrative grounds, when plea of alleged malafides and vindictiveness has not been substantiated.

2 The second respondent, said to be a Post-Graduate in Chemistry joined the services of the appellant company on 10.8.91 as Management Trainees and after successive career prospects came to be promoted as senior Superintendent (D.M. Plant) which came to be redesignated as Assistant manager (D.M. Plant) on 7.9.91. By a memorandum bearing reference No. FPA/TRF/97/384 dated 27.11.97 he was transferred to the regional office Calcutta. The said order came to be challenged as vitiated by malafides and illegality and one made with a view to victimize and prevent him from functioning as an Executive Member of the M.P.M. Officers' Association. Certain allegations to support such a claim were also, and it is not necessary to advert to all those details, in view of certain subsequent developments and turn of events, in the Writ Petition filed by the respondents a learned Single Judge of the High Court by an order dated 4.3.98 granted stay of the order of transfer dated 27.11.97 confirming thereby the ex parte interim order of stay earlier granted on 24.2.98 and rejecting the application of the appellant company for vacating the same. Before the Division Bench, at the time of initial hearing of the appeals the two grounds of challenge urged were:
(i) The Writ Petitions filed were not maintainable against the appellant company, since it is not a 'State or other authority' within the meaning of Art.12 of the Constitution of India and
(ii) the order of transfer was quite in accordance with the terms and conditions of contract of service as well as Officers Service Rules and necessitated on account of the exigencies of work and the interests of business of the appellant company and therefore not vitiated due to any malafides or other extraneous considerations, as alleged. Since, in certain earlier decisions of the Division Bench, the appellant company was held to be not "State" within the meaning of Art.12 and it was considered to require reconsideration in the light of certain decisions of this Court, the matter was referred to a Full Bench for consideration.

3 Before the Full Bench, the following question were taken up for consideration:
(1) Whether the Mysore Paper Mills which is a company incorporated under the Companies Act, 1956 , and which is a Government Company as defined in S.517 of the Companies Act falls within the meaning of the word "State", as defined in Art.12 of the Constitution of India?
(2)Whether the action taken by the appellant company transferring the 2nd respondent to Calcutta under the memo bearing No. FPA/TRF/384 dated 27.11.97 is vitiated by malafides and whether it is arbitrary and illegal ?

4 On a review and consideration of the case law on the subject, the Full Bench, in the judgment under challenge, noticed the various tests laid down by this Court and proceeding to consider the status of the appellant company in the light of those tests and adverting as well to the memorandum of Association and Articles of Association of the appellant company and the day-to-day administration of its affairs, held as hereunder:
"(a) That the appellant company is a government company as per S.617 of the Companies Act, 1956 .
(b) The declared objects of the company viz