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(b) Notwithstanding the previous clauses, sovereign functions, strictly understood, alone qualify for exemption, not the welfare activities or economic adventures undertaken by government or statutory bodies.

(c) Even in departments discharging sovereign functions, if there are units which are industries and they are substantially severable, then they can be considered to come within Section 2(j).

(d) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby.

7. As per the Bangalore Water-Supply case sovereign functions "strictly understood" alone qualify for exemption; and not the welfare activities or economic adventures undertaken by the Government. This is not all. A rider has been added that even in the departments discharging sovereign functions, if there are units which are industries and they are substantially severable, then they can be considered to be an industry. As to which activities of the Government could be called sovereign functions strictly understood, has not been spelt out in the aforesaid case.

11. As to which function could be, and should be, taken as regal or sovereign function has been recently examined by a Bench of this Court, to which one of us (Hansaria, J.) was a party. This was in Nagendera Rao and Co. v. The State of Andhra Pradesh , in which case Sahai, J. Speaking for the Bench examined this question in detail in the background of the stand of the respondent-State pleading absence of vicarious liability because of the doctrine of sovereign immunity. This aspect has been dealt in paras 21 to 24, Para 21 opens by saying that the old and archaic concept of a sovereignty does not survive as sovereignty now vests in the people. It is because of this that in the aforesaid Australian case the distinction between sovereign and non-sovereign functions was categorised as regal and non-regal. In some cases the expression used is State function, whereas in some Governmental function.

13. The aforesaid shows that if we were to extend the concept of sovereign function to include all welfare activities as contended on behalf of the appellants, the ratio in Bangalore Water-Supply case would get eroded, and substantially. We would demur to do so on the face what was stated in the aforesaid case according to which except the strictly understood sovereign function, welfare activities of the State would come within the purview of the definition of industry; and, not only this, even within the wider circle of sovereign function, there may be an inner circle encompassing some units which could be considered as' industry if substantially severable.