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The main thrust of submission for either side is, one trying to bring the functions of the appellant-committee within sovereign functions and the other stretching it out of it. The submission for the appellant is the power of the government and functions of the committee, namely, notifying the intention of the government to regulate the marketing of specified agricultural produce within specified area under Section 3, declaration of market area under Section 4, establishment of market under Section 7, payment of Secretary and technical staff under Section 58, absorption of staff of market c*ommittee in government services under Section 59, appointment of other staff under Section 61, levy of market fees under Section 65, grant of license under Section 72, de-notification of market area under Section 143, and amalgamation of market committees under Section 144 are all sovereign in nature and hence it could not be construed to be an industry. On the other hand, learned counsel for the respondent submits sovereign functions are restricted to legislative, maintenance of law and order, administration of law and legal system. Hence, other functions, to which the appellant case falls, cannot be construed to be a sovereign function.

In relation to what are "sovereign" and what are "non-sovereign" functions, this Court in Chief Conservator of Forests and Anr. vs. Jagannath Maruti Kondhare and Ors., 1996 (2) SCC 293, holds:

"We may not go by the lebels. Let us reach the hub. And the same is that the dichotomy of sovereign and non-sovereign functions does not really exist - it would all depend on the nature of the power and manner of its exercise, as observed in para 23 of Nagendra Rao case. As per the decision in this case, one of the tests to determine whether the executive function is sovereign in nature is to find out whether the State is answerable for such action in courts of law. It was stated by Sahai, J. that acts like defence of the country, raising armed forces and maintaining it, making peace or war, foreign affairs, power to acquire and retain territory, are functions which are indicative of external sovereignty and are political in nature. They are, therefore, not amenable to the jurisdiction of ordinary civil court inasmuch as the State is immune from being sued in such matters. But then, according to this decision the immunity ends there. It was then observed that in a welfare State, functions of the State are not only the defence of the country or administration of justice or maintaining law and order but extends to regulating and controlling the activities of people in almost every sphere, educational, commercial, social, economic, political and even martial. Because of this the demarcating line between sovereign and non-sovereign powers has largely disappeared.
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 of 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."

So, sovereign function in the new sense may have very wide ramification but essentially sovereign functions are primary inalienable functions which only State could exercise. Thus, various functions of the State, may be ramifications of `sovereignty' but they all cannot be construed as primary inalienable functions. Broadly it is taxation, eminent domain and police power which covers its field. It may cover its legislative functions, administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon. So, the dichotomy between sovereign and non-sovereign function could be found by finding which of the functions of the State could be undertaken by any private person or body. The one which could be undertaken cannot be sovereign function. In a given case even in subject on which the State has the monopoly may also be non-sovereign in nature. Mere dealing in subject of monopoly of the State would not make any such enterprise sovereign in nature. Absence of profit making or mere quid pro would also not make such enterprise to be outside the ambit of "industry" as also in State of Bombay & Ors. case (Supra).