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Counsel contends that there is no longer any compartmentalization of the functions of the State as "sovereign" and "non-sovereign" and the modern system of jurisprudence does not support the attribution of sovereign power or functions on a State. Counsel relies on N. Nagendra Rao Vs. State of A.P. reported in (1994) 6 SCC 205, where the Supreme Court drew a distinction between the executive function of a State being sovereign in nature where the State is answerable for such actions in courts of law and other functions from which the State cannot claim any immunity. Counsel relies on Agricultural Produce Market Committee Vs. Ashok Harikuni and another reported in (2000) 8 Supreme Court Cases 61, where it was held that all functions of the State cannot be construed as Sovereign and that the sovereign functions would broadly cover taxation, police power, legislative function, internal and external security and maintenance of law and order. Counsel submits that as opposed to the sovereign functions enumerated in Agricultural Produce, in the instant case, the State had floated a tender for the contract where the plaintiff as the successful bidder had been awarded the contract. The contract was purely commercial in nature and did not involve the State exercising its sovereign function in the nature of a welfare action as has been argued on behalf of the defendant. Since the contracts were purely commercial in nature, leave had been prayed for and obtained under Clause 12 of the Letters Patent since the defendant was carrying on business at Writers' Building, within the jurisdiction of this court at the time of commencement of the suit.

"In as much as the defendant had and has its principal seat and office at Writers' Building within the aforesaid jurisdiction as stated in paragraph 4 herein and in as much as work was carried out and the contract was executed as mentioned in various paragraphs of the plaint outside the jurisdiction aforesaid the plaintiff prays leave under Clause 12 of the Letters Patent."

13. The contention of the defendant that the leave is liable to be revoked by reason of the fact that the State cannot be said to "carry on business" at Writers' Building, has to be tested on the nature of the contract which forms the subject matter of the suit. For understanding the relevance of delving into the nature of the work which the contract envisaged and the role of the defendant State in the performance of the said contract, an overview of the decisions cited should briefly be mentioned. The case law relied on by learned counsel for the defendant proceeds on the basis that there is a fundamental distinction between the sovereign functions of a State and transactions/enterprises to which a State is a party but which involves a commercial angle. The approach of the courts in elevating certain functions of the State as emanating from a "Sovereign" can be found from Doya Narain Tewary Vs. The Secretary of State for India in Council [(1886) ILR 14 Cal 256]; Rodricks Vs. Secretary of State for India; [(1913) ILR 40 Cal 308], R.J. Wyllie and Co. Vs. Secretary of State [AIR 1930 Lah 818]; Binani Borthers (P) Ltd. Vs. Union of India [ILR 1975 II Delhi 196]; Gupta Sanitary Stores Vs Union of India [AIR 1985 Delhi 122]; (confirming Binani Brothers); M/s Bakhtawar Singh Bal Kishan Vs. Union of India [(1988) 2 SCC 293]; Kiran Singh Vs. Chanam Paswan [AIR 1954 SC 340], where it was held that the expression "carry on business" cannot apply to the State or the Government of India as the business of governing the country is not "business within the meaning of the Letters Patent" (Doya Narain Tewary). This view was reinstated in Rodricks, R.J. Wyllie and Binani Brothers. In Gupta Sanitary Stores, a three-Judge bench of the Delhi High Court, while examining whether "carries on business" within the meaning of Section 20 of The Code of Civil Procedure, 1908 can apply to the Union of India proceeded further to hold that the mode of business as contemplated under Section 20 is that it is commercial in character and that sovereign functions of the State are outside the purview of "business". A departure in this approach was made in Union of India Vs. Ladulal Jain reported in AIR (1963) SC 1681 where the Supreme Court rejected the argument that running of Railways ceases to be a business when it is run by the Government and held that the nature of the activity defines its character and the fact as to who runs the business and with what motive cannot affect the nature of the activity. The Supreme Court further opined that profit element is not a necessary ingredient for carrying on business and held that the Union of India carries on the business of running Railways and can be sued in a court of the Subordinate Judge of Gauhati within whose territorial jurisdiction the Head-quarters of one of the Railways run by the Union is situated.

"32. So, sovereign function in the new sense may have very wide ramification but essentially sovereign functions are primary inalienable functions which only the 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 on subjects 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."

21. The above cases show that not only has the demarcation between sovereign and non-sovereign functions emanating from a State disappeared with reference to judicial scrutiny of State action but further that the nature of the power and the manner of its exercise will have to be seen in the context of the particular facts of each case. The facts in the present case, as pleaded in the plaint (the dismissal of which is being sought in the present application), involves the plaintiff, an individual, who upon successfully participating in a tender floated by the defendant, State of West Bengal, entered into contract with the defendant for construction of a dispensary building and primary Health Centre at Chaipat, Midnapore. The plaintiff claims breach of the terms of the contract by the defendant which led to the plaintiff being prevented from completing the work within the stipulated time and incurring additional costs causing loss and damage to the plaintiff. The subject-matter of the plaint and the relief claimed therein is therefore the transaction between the contractor plaintiff and the State. Although, the end product of the contract happens to be a dispensary building, the subject-matter and the suit is a transaction between two contracting parties simpliciter. The nature of the project, namely, construction of a dispensary building/primary Health Centre cannot, in the view of this court, transform the nature of the dealing into more than what it simply is; or in other words, elevate the role of the defendant State to that of a sovereign exercising its functions for public welfare. The situation may have been different if the defendant State had taken the work of construction of a public Healthcare Centre upon itself and been responsible for the actual execution of the work. By selecting the plaintiff as the successful bidder for the proposed project, the State donned the robes of a contracting party who is equally bound by the terms of the contract as that of the private individual/plaintiff. The entire argument made on behalf of the defendant proceeds on the basis that where the activity undertaken by the State is in exercise of its sovereign functions, as distinguished from commercial ventures, the court where the cause of action arose would have the territorial jurisdiction to entertain the civil suit instituted by a plaintiff. There are two answers to this argument. First, the statements made in the plaint do not reflect that the State entered into the contract with the plaintiff in aid of any sovereign or welfare functions and second, there is also no evidence from the pleadings that the dispensary building was a non-commercial enterprise. Further, to an individual, who has entered into the transaction involving valuable consideration for performance of work under the terms of a contract, the dealing is imbued with the flavour of a commercial venture. It would matter little to the individual whether the contracting party at the other end is the State of West Bengal, the Union of India or any instrumentality of the State declaring the work concerned to be an expression of its sovereign function. At this point, it may be useful to re- visit Kamal Kumar Goswami where the Supreme Court held that a court under Clause 12 of the Letters Patent has jurisdiction to receive, try and determine a suit against the Union of India if the Union of India carries on business within its jurisdiction at the time of commencement of a suit against it irrespective of the question as to where the cause of action relating to such a suit has arisen.