Introduction

The landmark case Sukhdev Singh & Ors vs Bagatram Sardar Singh Raghuvanshi & Anr (1975) addressed crucial questions regarding the legal status of statutory corporations and whether their employees enjoy constitutional protections under Article 12 of the Indian Constitution. The Supreme Court ruled that statutory corporations such as the Oil and Natural Gas Commission (ONGC), Life Insurance Corporation (LIC), and Industrial Finance Corporation (IFC) are instrumentalities of the State, bringing them under the ambit of “State” as per Article 12. This decision had a significant impact on employment rights within public sector undertakings (PSUs) and government-controlled corporations.

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Facts of the Case

The case involved employees from three statutory corporations—ONGC, LIC, and IFC—who challenged their termination, arguing that it was contrary to the statutory regulations governing their employment. They contended that their service conditions were protected by statutory regulations, giving them a legal status beyond that of private-sector employees. The corporations, on the other hand, claimed that their employees were governed by contractual obligations and that their dismissal could only be challenged based on contract law principles, not constitutional law.

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Issues of the Case

The Supreme Court deliberated on two key legal questions:

1. Do the service regulations framed by statutory corporations have the force of law?
2. Are statutory corporations “State” under Article 12, making them subject to fundamental rights provisions such as Articles 14 (right to equality) and 16 (equality of opportunity in public employment)?

These issues were pivotal in determining whether employees of statutory corporations could challenge their termination under constitutional law, or whether their remedies were limited to contractual disputes.

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Arguments of the Parties

Petitioners (Employees):

• The statutory regulations governing their service conditions had the force of law since they were framed under the authority of statutes.
• Their termination, being in violation of these regulations, was unlawful.
• Statutory corporations, being government-controlled entities, were “State” under Article 12 and must adhere to constitutional protections.

Respondents (Statutory Corporations):

• The employment of workers was governed by contract law, not constitutional law.
• Regulations issued by corporations were merely administrative instructions and did not have statutory force.
• The corporations, despite government ownership, functioned as independent entities and were not “State” under Article 12.

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Judgment

The Supreme Court, in a majority ruling, held that:

1. Statutory corporations such as ONGC, LIC, and IFC are “State” under Article 12, as they are created by statutes, controlled by the government, and perform public functions.
2. Regulations framed under statutory provisions have the force of law, meaning that any dismissal or removal of employees in violation of these regulations is void.
3. Employees of such corporations have a “statutory status”, distinguishing them from private employees, and they can claim constitutional remedies if dismissed unfairly.
4. The principles of natural justice and fundamental rights apply to employment matters within statutory corporations, ensuring fairness in hiring, termination, and disciplinary actions.

Justice Mathew, in a concurring opinion, emphasized that in a welfare state, government functions are often carried out through corporations, making it necessary to extend constitutional protections to their employees.

Justice Alagiriswami dissented, arguing that statutory corporations did not exercise sovereign functions and should not be equated with “State” under Article 12.

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Conclusion

The Sukhdev Singh case significantly expanded the interpretation of “State” under Article 12, bringing statutory corporations within the purview of fundamental rights protections. This ruling reinforced employment security for public sector employees, ensuring that their dismissal is subject to legal scrutiny and must comply with statutory regulations. The decision remains a cornerstone in Indian administrative and constitutional law, shaping how courts view the intersection of public employment and fundamental rights.

By establishing that statutory corporations are instrumentalities of the State, the Supreme Court ensured greater accountability and protection for employees working in government-controlled entities. This precedent has influenced numerous subsequent rulings concerning the rights of employees in public sector undertakings.

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