NEED FOR REVIVING ‘PUBLIC FUNCTIONS TEST’: ANALYSING THE CASE OF RAJBIR SURAJBHAN V. IBPS

Authored by Kritika & Bhavpreet Singh Dhatt

The Constitution of India contains certain basic, natural and inalienable fundamental rights.[i] Their importance is evident from the fact that the ‘enforcement of these rights’ is itself a fundamental right. But these are enforceable only against the ‘State’ as defined in article 12. Under article 12,[ii] ‘State’ includes the Government and Parliament of India, the Government and the legislature of each of the States, all local authorities,[iii] or other authorities within the territory of India or under the control of the Government of India.

The courts have largely interpreted “other authorities” in article 12 to not include ‘private bodies performing public or governmental functions.’[iv] The authors argue that this interpretation is problematic, especially in light of the decreased role of the ‘State’ in recent years, and with private bodies increasingly performing functions earlier performed exclusively by the ‘State’. In order to prevent the disuse and misuse of fundamental rights[v] by these ‘private bodies performing public functions’, the scope of article 12 needs to be expanded.

The authors have attempted to provide an alternate approach to interpret “other authorities”. Beginning with a historical analysis of the term “other authorities”, the article attempts to explain the problems in the current interpretation by taking the example of the Institute of Banking Personnel (IBPS). The article argues the significance of the ‘Public Functions Test’ in interpreting “other authorities” and advocates for adopting an expansionist approach for keeping fundamental rights relevant in today’s times.

INTERPRETATION OF “OTHER AUTHORITIES”

The term “other authorities” has not been specifically defined anywhere and was judicially interpreted in various cases. Initially, when the term “other authority” came to be interpreted, the Supreme Court applied the principle of ejusdem generis, i.e., it must be confined to State-like entities.[vi] But this interpretation was rejected firstly in the case of Ujjammbai v. State of U.P.,[vii] wherein the court held that there is no common genus running through bodies mentioned in article 12 nor could these bodies be placed in one single category on any rational basis.

This test was more explicitly rejected in the case of Rajasthan Electricity Board v. Mohan Lal,[viii] where the Supreme Court held that “the expression “other authorities” in article 12 will include all constitutional or statutory authorities on whom powers are conferred by law.” Thus, the key test is a statutory connection between the government and the body in question, and the fact that the functions of the concerned body were commercial was irrelevant.[ix]

The two approaches to article 12 that developed after this case, can be categorised as the “legal approach” and the “functional approach”. The “legal approach” covers those entities that seem to bear a close family resemblance to the ‘State’. Thus, it includes entities that the government itself creates or seems to have near-complete control over. The “functional approach”, on the other hand, includes bodies that could affect an individual’s rights in a manner similar to that of the ‘State’.[x] Thus, as per the functional approach, the public or governmental function performed by the body is of prime importance and not the control exerted by the government over it.

In Sukhdev Singh v. Bhagatram,[xi]ONGC, Life Insurance Corporation, and Industrial Finance Corporation were held to be ‘State’ as these were controlled and managed by the Central Government. But Justice Mathew in his concurring judgment, did not solely on the control exerted by the government, but preferred a broader test that if the functions of the Corporation were of public importance and closely related to governmental functions, it should be treated as agency or instrumentality of government and hence as ‘State’.

The court in R.D. Shetty[xii]reiterated the approach of Justice Mathew in Sukhdev Singh and laid down the “instrumentality or agency test”. But this test as laid down by the court was a mix of both the legal and the functional approaches, that took into account financial and administrative control as well as the public function of the body.

The case of non-statutory bodies was elaborately discussed in the case of Ajay Hasia v. Khalid Mujib.[xiii] It was held that the concept of instrumentality or agency of the government as discussed in R.D. Shetty was not limited to a corporation created by a Statute but was equally applicable to a company or society. Though in R.D. Shetty, government control (which could be financial, administrative, or both) was treated as being equally important as the performance of a public function, but in Ajay Hasia, the public function performed by the body became one out of the six criteria laid down to determine “instrumentality or agency of the government.”[xiv]

The superiority of the legal test was established in the case of Pradeep Kumar Biswas v. Indian Institute of Chemical Biology,[xv] where it was categorically stated that the key factor to determine “instrumentality or agency of the government” is that the body is financially, functionally, and administratively dominated by or under the pervasive control of the Government.

The public functions test was expressly done away with in the case of Zee Telefilms v. Union of India.[xvi] This case held that even if a body is performing public functions, that will not be sufficient to categorise it as “other authorities” and the control exerted by the government over the body would be of prime importance.

This approach of the courts is problematic as it leaves a large number of ‘private bodies performing public functions’ outside the ambit of article 12. The serious repercussions that such an approach could have on fundamental rights of the citizens are explained in greater detail in the next part of the article with the example of IBPS.

INSTITUTE OF BANKING PERSONNEL SELECTION

The Institute of Banking Personnel Selection (IBPS) is a premier institute in the country in the field of personnel selection. The predecessor of IBPS i.e. NIBM originated during the times of the Nationalisation of Banks when these banks were not able to handle their selection process. As the demand for services offered by NIBM increased, it firstly created a small Personnel Selection Service (PSS) unit which was later converted into the Institute of Banking Personnel Selection (IBPS).[xvii]

Powers Conferred on IBPS

IBPS plays a significant role in recruitment to public sector banks as it conducts preliminary and mains examinations for recruitment to these banks. The IBPS originated in times when banks were facing issues in “managing the crucial activity of selecting the right people for the right jobs.” IBPS is led by its Governing Body constituted entirely of officials from various public sector banks.[xviii] The notification[xix] released by IBPS for the recruitment of Probationary officers/Management Trainees for vacancies of 2022-23 mentions that IBPS has the following powers in the recruitment process:

● IBPS reserves the right to change any of the criteria, method of selection, Provisional allotment, etc.

● The decision of IBPS in all matters regarding the procedure of selection will be final and binding on the candidate.

● IBPS reserves the right to cancel, reallot Bank-wise allocation/change the process depending upon exigencies or otherwise.

● In cases of some problem in the administration of the examination, the conduct of a re-exam is at the absolute discretion of IBPS and candidates will not have any claim for a re-test.

IBPS conducts common recruitment exams for multiple banks and several posts therein. It plays a prominent role in the entire selection process of banking personnel, starting from declaring vacancies and releasing advertisements up to the process of conducting interviews. The court recently held in Rajbir Surajbhan Singh[xx] that IBPS was not ‘State’ under article 12.

Critique of Rajbir Surajbhan Singh v. Institute of Banking Personnel Selection

In Rajbir Surajbhan Singh, the appellant challenged his disqualification from the selection process. The Supreme Court affirmed the High Court judgment and held that IBPS is not ‘State’ as it was not constituted under statute, neither did it receive any funds from the government, nor was there any deep and pervasive control over IBPS by the Government of India.

In this case, the emphasis was laid on the legal test, and the important function performed by the body was neglected. The court held that “conducting recruitment tests for appointment in banking and other financial institutions, is not a public duty.” But no detailed reasoning was put forth behind taking such a stand.

As noted above, the IBPS enjoys wide powers and authority in the process of recruitment of candidates. In a hypothetical situation, if IBPS changes the selection criteria midway through the selection process or allots fewer marks to deserved candidates, then such candidates can’t approach the court against IBPS for violation of fundamental rights by IBPS (which would not be the case had these appointments been made by these public sector banks themselves). An identical was taken in Sunil Kumar v. The Indian Institute of Bankers,[xxi] wherein the appellant who was arbitrarily removed from the selection process had no legal remedy for violation of his fundamental right as the Indian Institute of Bankers was not held to be ‘State’ (on the same reasoning that the Institute in conducting the examination was not performing public functions and hence not ‘State’). The IBPS was made to formulate a fair, impartial, and effective method to select only those candidates who are most suitable for the job[xxii] but a writ petition for a fundamental rights violation would not lie against IBPS for any transgressions.

SIGNIFICANCE OF ‘PUBLIC FUNCTIONS TEST’ AND THE NEED FOR ITS REVIVAL

The case of IBPS is a good example to demonstrate the problems in doing away with the public functions test and laying excessive importance on governmental control over the body.

The fundamental rights were exclusively enforceable against the ‘State’ which has greater power to influence the lives of individuals.[xxiii] But in today’s world, private bodies are increasingly performing public or governmental functions which were traditionally performed by ‘State’, which provides them with considerable power and authority. If 'State' is under an obligation to act in conformity with fundamental rights, then the same reasoning and accountability standards must apply to ‘private bodies performing public functions’. A constitutional law scholar also proposed that the term other authorities “within the territory of India” as used in article 12, be read as covering the private bodies not under the control of the government but performing governmental functions.[xxiv] Fundamental Rights aim at establishing a government of laws and not of men’.[xxv] But the current judicial interpretation of article 12 runs contrary to this aim since it gives a much more free hand to these private bodies.

The courts must adopt an expansive interpretation of article 12 by including private bodies like IBPS within its ambit, primarily because of the nature of functions performed by these bodies. Otherwise, in the contemporary modern mixed economy, the rights of individuals could be held hostage by ‘private bodies performing public functions.’[xxvi]

[i] M.P. Jain, Indian Constitutional Law 1174 (8th ed. 2018). [ii] Article 12 of the Constitution of India. [iii] Union of India v. R.C. Jain, (1981) 2 SCC 308. [iv] Anubha Shrivastava, Position of Fundamental Rights In The World of Privatization, Globalization and Industrialization, http://www.legalservicesindia.com/article/1525/Position-of-Fundamental-Rights-In-The-World-of-Privatization,-Globalization-and-Industrialization.html. [v] Id. [vi] University of Madras v. Shantha Bai, AIR 1954 Mad. 67. [vii] Ujjammbai v. State of U.P., AIR 1962 SC 1621. [viii] Electricity Board, Rajasthan v. Mohan Lal, AIR 1967 Pat. 3. [ix] Gautam Bhatia, What is the State-II: Two Approaches to Interpreting Article 12, INDIANCONLAWPHIL (July 5, 2014), https://indconlawphil.wordpress.com/2014/07/05/what-is-the-state-ii-two-approaches-to-interpreting-article-12/. [x] Id. [xi] Sukhdev Singh v. Bhagatram, AIR 1975 SC 1331. [xii] Ramana Dayaram Shetty v. The International Airport Authority of India, AIR 1979 SC 1628. [xiii] Ajay Hasia v. Khalid Mujib, AIR 1981 SC 487. [xiv] Id. [xv] Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111. [xvi] Zee Telefilms Ltd. v. Union of India, AIR 2005 SC 2677. [xvii] https://www.ibps.in/. [xviii] Id. [xix] Common Recruitment Process for Recruitment of Probationary Officers/Management Trainees in Participating Banks (CRP PO/MT-XI for Vacancies of 2022-23), https://www.ibps.in/crp-po-mt-xi/. [xx] Rajbir Surajbhan Singh v. Institute of Banking Personnel Selection, (2019) 14 SCC 189 [xxi]Sunil Kumar v. Indian Institute of Bankers, 2000 SCC OnLine Pat 270. [xxii] https://www.ibps.in/. [xxiii] Gautam Bhatia, What is the “State”? Article 12 and Constitutional Obligations, INDIANCONLAWPHIL (April 26, 2014), https://indconlawphil.wordpress.com/2014/04/26/what-is-the-state-i-article-12-and-constitutional-obligations/. [xxiv]. Id. [xxv] Vishnu S Warrier, Re-defining the Definition of "State" Under Article 12 of the Indian Constitution, 1.2 CALQ 39, 39 (2013). [xxvi] Shrikrishna Upadhyay, Expanding Article 226-Public Functions Test: Zee Telefilms v. Union of India and Aftermath, 4.1 CALQ 32, 47 (2018).