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7. It is obvious from the cause title of the memo of appeal that appellant No. 1 is a Government Company having its registered office at New Delhi. Section 617 of the Companies Act defines 'Government Company' as any Company in which not less than fifty-one per cent. of the paid-up share capital is held by the Central Government, or by any State Government of Governments, or party by the Central Government and party by one or more State Government and includes a Company which is a subsidiary of a Government Company as thus defined. Appellant No. 1 Company has an authorised share capital of Rs. 4.13 crores divided into 41,300 equity shares of Rs. 1,000/- each. The respondent avers that the Food Corporation of India, Delhi Administration, Gujarat, Kerala, Maharashtra, Tamilnadu and West Bengal respectively hold one share each whereas the remaining shares are held by the Government of India, State Government and other statutory Corporations controlled by the Government of India. There are no private shareholder of the Company. Thus, according to the respondent more than 99% of the shares are held by the Government of India, the State Government and statutory Corporations controlled by the Government of India, It is further averred that the Directors of the Company are nominated by the Central Government, complete financial control lies with the Central Government and all decisions of the Company are controlled by the Central Government. These averments have remained uncontroverted. The Memorandum and Articles of Association of the Company are subscribed by the President of India and by R. Balasubramanian, Joint Secretary to the Government of India, Ministry of Food & Agriculture (Department of Food), New Delhi. Clause (b) of Art. 3 lays down that any invitation to the public to subscribe for any shares in or debentures of the Company is prohibited. Article 6 provides is that subject to the provisions of the Act and the Articles and to the rights of the President, the shares shall be under the control of the Directors who may allot or otherwise dispose of the same on such terms and conditions as they may think fit. Article 7 provides that any increase in the capital of the Company shall be subject to the approval of the President. Article 9 lays down that approval of the President is necessary for reduction of capital and Art. 10 provides for the approval of the President for the sub-division and consolidation of shares of the Company. These Articles, therefore, show that public subscription to the shares in or debentures of the Company is totally prohibited and the President exercise control over the increase or reduction in share capital of the Company, even as regards the subdivision or consolidation of shares. By virtue of Art. 62 the issue of debentures is also made subject to the approval of the President. The President is given a right by Art 72 to appoint any person as his representative at all or any of the meetings of the Company. The person so appointed is to be deemed to be a member of the Company with all the rights and powers including the right to vote by proxy. The power to appoint Directors is conferred on the President by Art. 96 which inter alia provides that the President shall have the power to remove any Director from office at any time in his absolute decoration and fill the vacancy by fresh appointment. Article 106(1) empowers the President to appoint Chairman of the Board of Directors or Managing Director or Managing Directors of the Company. The first Chairman of the Board of Directors was the Secretary to the Government of India, Ministry of Food and Agriculture (Department of Food), Art. 106(2) empowers the President to entrust to and confer upon the Chairman, Managing Director(s) and General Manager such powers as are exercisable by the Directors subject to such terms and conditions as he may think appropriate to impose. The powers of the Directors are enumerated in Art. 119 of the Memorandum and Articles of Association of the Company. It is obvious from the above Articles that the appointment and removal of the Directors of the Company is with the President, so also the President is empowered to appoint the Chairman of the Board of Director as well as Managing Directors of the Company. The President can confer upon the Chairman, Managing Directors and General Managers such powers as he may consider appropriate as are exercisable by the Director of the Company. Thus, the control of the Company is clearly with the President who has the right to appoint or remove the Directors, the Chairman of the Board of Directors and Managing Directors of the Company.

In view of the above observations of the Supreme Court, we are of the opinion that the said decision is not an authority for the proposition canvassed by Mr. Bhatt as it turns on the facts of that case and does not lay down any principle or test for the purpose of deciding the application of Art. 12.

12. The appellant No. 1 Company, being a Government Company under Section 617 of the Companies Act and having been incorporated under the said statute, is engaged in the manufacture of cheap and nutritious bread for consumption by the community. Ninety-nine per cent. of its share holding is with the Central Government, State Governments and statutory Corporations controlled by the Central Government. There is a total prohibition to the members of the public subscribing for shares or debentures of the Company. Therefore, practically the entire share capital of the Company is held by the Government and that is a factor which goes a long way towards indicating that the Company is an instrumentality or agency of the Government, more so when we read it in the context of the directive principle contained in Art. 12 of the Constitution. The Company discharges the obligation cast on the State to raise the level of nutrition of the people and contribute towards improvement of public health. The financial control is of the Government and the accounts are to be audited under the supervision of the Comptroller and Auditor General of India. Increase or reduction in share capital is subject to approval by the President. The payment or repayment of money borrowed is also subject to approval by the President. Without approval of the President, the Company is not entitled to issue debentures. All these provisions found in the Memorandum and Articles of Association go to show the extent of financial control exercised by the Government of India. Similarly, the Government exercises considerable control over the management of the Company through the Directors/Managing Directors to be appointed by the President. The Chairman of the Board of Directors is also appointed by the President. Article 72 empowers the President to appoint any person as his representative at all or any meetings of the Company and the person so appointed is deemed to be a member of the Company with all the rights and powers including right to vote by proxy. A capital expenditure exceeding Rupees two crores must receive the approval of the President. The declaration of dividend to share holders, the grant of bonus or any other ex gratia payment to the members of the staff etc. are also made subject to the approval of the President. It will thus be seen from the above provisions that considerable control is exercised by the Government in the matter of management of the Company and that is yet another indication that the Company is the instrumentality or agency of the Government. The provisions in the Memorandum and Articles of Association when read in conjunction show existence of deep and pervasive control of the Central Government over the Company. We are, therefore, of the opinion that the learned single Judge was right in reaching the conclusion that appellant No. 1 Company was an instrumentality or agency of the Central Government and, therefore, 'other authority' within the meaning of Art. 12 and hence 'the State'. We must, therefore, answer the first question in the affirmative.