Fundamental rights mentioned under Part III of the Indian Constitution, are known as ‘Magna Carta’ of India. Article 12 defines the scope of the term ‘State’ and mentions that state includes: Government and Parliament of India, Government and legislature of each state, Local authorities and other authorities. The term ‘Local authorities’ in Article 12 is not precisely defined anywhere in the Constitution. Therefore, it is difficult to interpret.
According to Webster’s Dictionary, the term “Authority” means a person or body exercising power to command. Considering Article 12, the word authority means the power to make laws (or orders, regulations, bye-laws, notification etc.) which have the force of law. It also includes the power to enforce those laws. As per Section 3(31) of the General Clauses Act, 1897, the term ‘Local Authority’ can be understood as:
“Local Authority shall mean a municipal committee, district board, body of commissioner or other authority legally entitled to or entrusted by the Government within the control or management of a municipal or local fund.” 
Further, Article 367 of the Constitution lays down that unless the context otherwise requires, the General Clauses Act, 1897, subject to any adaptations and modifications, shall apply for the interpretation of the Constitution. In the context of Article 12, a public authority means an agency or cooperation having quasi-governmental power and is maintaining revenue-producing enterprise. It includes all authorities created by a statute to carry out governmental or quasi-governmental functions.
Today’s government performs a large number of functions and believes in the philosophy of a social welfare state. Governmental departments and officials discharge some functions while others are delegated to local bodies existing outside the central structure, such as District Boards, Municipal Corporations etc.
The term ‘Local Authority’ includes the following:
- Local government: According to Entry 5 of the List II of VII Schedule ‘local government’ includes a municipal corporation, improvement trust, district boards, mining settlement authorities and other local authorities for the purpose of village administration. In the case of Rashid Ahmed v. Municipal Board, Kairana, it was held that Municipal Board should be treated at a ‘Local Authority’ under Article 12.
- Village Panchayat in Rural areas: By a judicial decree it was held that village panchayat is also included within the meaning of the term local authority.
The test to determine ‘Local Authority’ was laid down in Mohammad Yasin v. Town Area Committee, the Supreme Court held that to be characterized as a ‘’Local Authority’ the authority concerned must:
- Have a separate legal existence as a corporate body
- Not be a mere government agency but must be legally an independent entity
- Function in a defined area
- Be wholly or partly, directly or indirectly, elected by the inhabitants of the area
- Enjoy a certain degree of autonomy (complete or partial)
- Be entrusted by statute with such governmental functions and duties as are usually entrusted locally (like health, education, water, town planning, markets, transportation, etc.)
- Have the power to raise funds for the furtherance of its activities and fulfilment of its objectives by levying taxes, rates, charges or fees.
An individual can seek remedy against authorities like Municipality, District Boards etc. because all of them come under the scope of local authorities. The bye-laws that are enforced by the Municipal Committee, all come under the definition of ‘Law’ in Article 13 and the same can be challenged on the basis of violation of a Fundamental Right.
Proper and careful scrutiny of Section 3(31) suggests that authority in order to be a ‘Local Authority’, must have similar nature and characters like a municipal committee, District Board or Body of Port commissioners. With the distinctive attributes of these bodies, an authority should also possess one essential feature i.e. it should be legally entitled to or entrusted by the government with the control and management of a local fund. Local authorities are under the elite control of the States, by temperance of entry of List II of the Seventh Schedule. That entry contains a list of some local authorities and the articulation incorporates a Municipal Committee; a Panchayat; a Port Trust. The municipality is a “State” inside the significance of Article 12, but it does not imply that these authorities are State Government or Central Government.
Determining the Scope of expression ‘Local Authority’ through Judicial Interpretations
The scope of local authorities keeps expanding and the ambit of the word ‘State’ keeps increasing and changing due to the intricate judicial pronouncements from time to time on various matters.
In case of Calcutta State Transport Corporation v. Commissioner of Income-tax, West Bengal, Supreme Court declined to characterize the corporation as a ’Local Authority’. The decision was so because the corporation just provided street transport benefits. Its forces and capacities bear no connection to the forces and elements of a municipal committee.
In the case of, Dr Dinesh Kumar v. Motilal Nehru Medical College, it was held that every municipal corporation is a local authority and thus, the term ‘State’ within the meaning of Article 12 will include within its ambit “medical colleges” run by municipal corporations.
In the case of Indian Banks’ Association, Bombay v. Devkala Consultancy Service, the Supreme Court of India held that Indian Banks’ Association and Banks which are created under the Parliamentary Acts or are nationalised in terms of the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 are ‘State’ within the meaning of Article 12 of the Constitution of India, 1950.
In Premji Bhai Panwar v. Delhi Development Authority (DDA), the Delhi Development Authority, which is a statutory body, has been held to be a ’Local Authority’. It was constituted for the particular reason of development of Delhi and its arrangement indicates an authority working in a municipal capacity. It has a significant level of autonomy and organization.
The question of whether housing boards can be considered as ’Local Authority’ came before the Supreme Court in many cases. The Courts encountered difficulty in holding an authority as State even if it performs important public functions. In Housing Board of Haryana v. Haryana Housing Board Employees Union, the Supreme Court held that the Housing Board was not a ’Local Authority’ and denied the applicability of Payment of Bonus Act,1965 over employees of Haryana Housing Board. The reason was that it did not enjoy a ‘local fund’ and the members were not elected like in other local authorities like panchayats & municipalities. Also, it was not an autonomous body as there was governmental control in the functions performed by it. The legislature had given it the status of ‘local authority’ for the purpose of Land Acquisitions Act, 1984 but the Court held that the status is given only for a limited purpose. It was also denied classification as ‘other authority’ under Article 12, by the Supreme Court.
Further, in M/S Andhra Pradesh Housing Board v. Department of IT, the question was whether the Andhra Pradesh Housing Board is a government agency or not. Unlike the former case, in the instant case, the independent character of the Housing Board was upheld. Both the Housing Boards were not declared as ‘other authorities.’ In the previous case, it was due to a lack of government control and in the current one, it was due to its autonomous functioning. The fact was overlooked by the Apex Court that in both cases was that the Housing Boards were performing imperative government functions. Thus, it can be witnessed that the tests or criteria’s in determining whether a body falls under the term `State’ or not is more important than the nature of the activity performed by the authority.
Though, in the cases like Budha Veerinaidu v. State of Andhra Pradesh & Anr., it is to be noticed that the Agricultural Market Committee working under Andhra Pradesh Agricultural Produce and Live Stock Markets Act, 1966 was held to be a ’Local Authority’. On observation, it was found that the Market Committee was depended on the Government for the administration of “Local Fund”.
In the question of Board of Control for Cricket in India (BCCI) being a part of the state, Court held that the Board was not created by statute, the Government provided no financial assistance nor held any shares, no monopoly was conferred, exercised no pervasive control, and had not transferred a government-owned corporation. Consequently, Article 12 was not applicable. Even assuming that there is some element of public duty involved in the discharge of the Board’s functions, it would not suffice for bringing the Board within the net of ’Local Authority’ for the purpose of Article 12.
The Constitution of India gives the fundamental right to the citizens of India. There is a duty on the state to ensure that the fundamental rights are protected. A ’Local Authority’ is legally entitled to or entrusted by the government with the control and management of a local fund. An individual can file a suit against a ’Local Authority’ on the basis of violation of a Fundamental Right. The court through its interpretations has widened the scope of the term ‘State’ to include a variety of local bodies under its umbrella. But it has also rejected inclusion in the term ‘State’ to any authority that fails to pass the criteria, irrespective of the fact that it performs imperative government function. For example, giving education is a main substance of the government, still, unaided Schools are excluded from the ambit of State. There is an isolating line between a State venture and a non-State undertaking in a majority rule government Thus, with the help of judicial decisions and the tests laid down, it is feasible to determine if a body comes within the ambit of Article 12 or not.
 Durga Das Basu, Human rights in constitutional law (1994)
 The Constitution of India
 The dictionary by Merriam-Webster (1828)
 The General Clauses Act, 1897
 The constitution of India
 Legal Services India, “Article 12 of The Constitution of India”, Sep 3, 2018, available at http://www.legalservicesindia.com/law/article/1062/10/Definition-of-State-under-Article-12 (last visited on April 23, 2020)
 1950 AIR 163
 Ajit Singh v. the State of Punjab, AIR 1967 SC 856 (866)
Monika, “State Under Article 12 of The Constitution Of India”, March 6, 2017, available at https://www.legalbites.in/law-notes-constitution-state-article-12/ (last visited on April 23, 2020)
 AIR 1952 SC 115
 State of Gujarat v. Shantilal, AIR 1969 SC 634 (643)
 Ajit Singh v. the State of Punjab, AIR 1967 SC 856 (866)
 R.I. Handicraft Manufacturing Association v. Kottayam Municipality, AIR 2000 Ker 30
 Natwarlal Khodidas Parmar v. Dist. Panchayat, Jamnagar, AIR 1990 Guj. 142
 AIR 1996 SC 1316 : (1996) 8 SCC 758
 AIR 1985 SC 1415
 AIR 2004 SC 2615
 AIR 1980 SC 738 (1980) 2 SCC 129
1996 (1) SCC 95
 1331 of 2000
 1983 (143) ITR 1021
 Zee Telefilms Ltd. V. Union of India(2005) 4 SCC 649:AIR 2005 SC 2677
 Gautam Bhatia, “What is the State – V: Zee Telefilms, the Death of the Functional Approach, and an Alternative”, August 19, 2014, available at https://indconlawphil.wordpress.com/2014/08/19/what-is-the-state-v-zee-telefilms-the-death-of-the-functional-approach-and-an-alternative/ (last visited on April 23, 2020).