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22. Another pertinent issue, is the question of sovereign function. In the case Hindustan Construction Company (supra), the Supreme Court had clarified and held that in the application of the Code to government owned companies as defined under Section 2(45) of the Companies Act, 2013, and thus included within the definition of Section 3(7) of the IBC, of corporate person, such entities were amenable to the provisions of the IBC, but when the company performs non-delegable sovereign functions, it cannot be put to resolution nor be wound up under the IBC as allowing insolvency proceedings against such entities, would disrupt essential 2025:MLHC:1078 services or governmental functions. In the instant case, it has been strongly canvassed that the writ petitioner is functioning as an extended limb of the Government and performs governmental functions, which cannot be taken over by a resolution professional under the IBC, or any other corporate body. Strong emphasis has also been made that electricity is a fundamental right, which is the responsibility of the State and that the writ petitioner is the only entity owned 100% by the State Government which provides electricity and discharges a sovereign function. On this point it would be useful to refer to the judgment in the case of Balmer Lawrie & Company Limited & Ors. Vs. Partha Sarathi Sen Roy & Ors. reported in (2013) 9 SCC 345, wherein at Para-18 & 20 thereof, which is reproduced hereinbelow, it has been held as follows: -

"18. Often, there is confusion when the concept of sovereign functions is extended to include all welfare activities. However, the court must be very conscious whilst taking a decision as regards the said issue, and must take into consideration the nature of the body's powers and the manner in which they are exercised. What functions have been approved to be sovereign are the defense of the country, the raising the arms forces, making peace or waging war, foreign affairs, the power to acquire and retain territory, etc. and the same are not amenable to the jurisdiction of ordinary civil courts. (Vide N. Nagendra Rao & Co. v. State of A.P. (1994) 6 SCC 205: 1994 SCC (Cri) 1609: AIR 1994 SC 2663 and Chief Conservator of Forest v. Jagannath Maruti Kondhare (1996) 2 SCC 293: 1996 SCC (L&S) 500: AIR 1996 SC 2898)
20. Every governmental function need not be sovereign. State activities are multifarious. Therefore, a scheme or project, sponsoring trading activities may well be among the State's 2025:MLHC:1078 essential functions, which contribute towards its welfare activities aimed at the benefit of its subjects, and such activities can also be undertaken by private persons, corporates and companies. Thus, considering the wide ramifications, sovereign functions should be restricted to those functions, which are primarily inalienable, and which can be performed by the State alone. Such functions may include legislative functions, the administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon, etc. Therefore, mere dealing in a subject by the State, or the monopoly of the State in a particular field, would not render an enterprise sovereign in nature. (Vide Agricultural Produce Market Committee v.

Ashok Harikuni (2000) 8 SCC 61: AIR 2000 SC 3116, State of U.P. v. Jai Bir Singh (2005) 5 SCC 1: 2005 SCC (L&S) 642, Assam Small Scale Industries Development Corpn. Ltd., v. J.D. Pharmaceuticals (2005) 13 SCC 19: AIR 2006 SC 131 and Haryana State Industrial Development Corpn. V. Hari Om Enterprises (2009) 16 SCC 208: AIR 2009 SC 218)

23. A perusal of the above extract would show that sovereign functions are those functions which are primarily inalienable and which can be performed by the State alone, and as such mere dealing in a subject by the State in a particular field would not render an enterprise sovereign in nature. However, it is noted in this judgment, the question was whether the appellant company which was a government company, would come within the meaning of 'State' as per Article 12 of the Constitution, and the degree of Governmental control such as its objectives, functions, management and control, financial aid received by it, functional and administrative were examined, to determine as to whether it would be amenable to writ jurisdiction. The finding in this case at Para-34 thereof, was that there was 2025:MLHC:1078 nothing on record to show that the Central Government provided any financial or budgetary support to the company, which met its own working capital requirements which is unlike the present situation where admittedly the Scheme was wholly financed by the Government. As such therefore, in the considered view of this Court, in the realm of sovereign function though every governmental function need not be sovereign, the same has to be examined on the circumstances pertaining to a particular case or situation. In the instant case, as noted earlier, it has been categorically advanced that the alleged debt is not due or payable in terms of the IBC, and that further, the writ petitioner does not exercise functional autonomy or did it possess financial autonomy for disbursal of the funds. This Court notes also a question that remains unanswered, is whether in these circumstances, it can be held that the writ petitioner company was unable to pay the debts due to financial distress, or that the same was not due and payable by the writ petitioner company. Another question that has arisen, is whether the NCLT has jurisdiction on payments which were subject to funds being released by the Central or State Government, which in turn subject to fulfillment of certain terms and conditions. It is noted that a ground has also been taken that the State Government has put an embargo on the payment of dues, which is a question which also has to be gone into as to its veracity.