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"But to use the corporate methodology is not to liberate the State from its basto obligation to obey Part III. To don the mantle of company is to free the State from the inevitable constraints of governmental slowmotion, not to play truant with the great rights. Otherwise, a cunning plurality of corporations, taking over almost every State business - the Post and the railroad, TV and the Radio. Every economic ministry's activity, why, even social welfare work, will cheat the people of Part III rights by the easy plea : 'no admission for the bill of rights; no State here'. From Indian Posts and Telegraphs limited to Indian Defence Manufacturers limited; from Social Welfare Board to Backward Classes Corporation, the nation will be told that 'the State has ceased to be, save for the nonnegotiable sovereign functions'; and fundamental rights may suffer eclipse only to be viewed in museum glass-cases ..."

21. We may mention that in the light of clarification No. (iii), the argument of the learned counsel for respondents, based on certain observation in the earlier part of the judgment Krishna Iyer, J., that a Corporation to be an instrumentality or agency of the State, must have the "ability to affect legal relationship be virtue of power vested in it by law", is liable to be rejected.

22. We may in this context point out the inherent dangers in taking the other view canvassed by the learned counsel for the respondents. Until about 1974-75 the milk-wing in the Animal Husbandry Department of the Andhra Pradesh Government was carrying on the activity of collecting milk from producers and supplying it to the consumers, mainly in the cities and big towns in the State. There was a Milk Commissioner in charge of the activity. Then, the State created the Andhra Pradesh Dairy Development Corporation, and transferred the said activity and even the employees working in the milk-wing to the Corporation. Instead of Milk Commissioner, the Corporation has a Managing Director. The Corporation is not a statutory Corporation, but one incorporated under the Indian Companies Act. If we are to say that no writ lies against such a Corporation, it may well result in disastrous consequences. If tomorrow the Corporation says that it will give employment only to the sons and daughters of the milk-producers in a particular district or area of the State and to none else, are the Courts to refuse to interfere on the plea that it is only a Company incorporated under the Companies Act and, therefore, not subject to part III of the Constitution, nor amenable to the writ jurisdiction of this Court ? The instances can be multiplied. Suppose, tomorrow the Government creates a Corporation for maintaining the public parks and gardens, suppose, such Corporation says it will not allow members of a particular religion or community into those parks and gardens; are the Courts to remain dumb bystanders ? Further, as repeatedly pointed out by several Judges, there is no such thing as a "governmental function" and a "non-governmental function" under our Constitution. Every activity that the Government undertakes is a governmental activity. Now, defence is undoubtedly, one of the "sovereign and inalienable" functions of the State. No one will dispute that it is a true governmental function. But then, is the production of arms and equipment for the defence personnel a sovereign function, or should it be treated as a private function ? Should Hindustan Aeronautics Ltd., which manufactures aeroplanes and other equipment for our Armed Forces but which is a company incorporated under the Companies Act, be characterized as a Corporation performing a sovereign function, or should it be called a Corporation carrying on a commercial activity ? It may well be argued that in some countries, like the United States of America, even the defence equipment is manufactured in the private sector and sold to the Government. Thus, it is not the form that matters but the reality, and the tests aforementioned are the tests designed to ascertain the reality, ignoring the mask or the form, or the screen.