In S.R. Bommai Case, the supreme court of India had the occasion to consider the scope of article 356 that provide for presidential rule in the state. While discussing the scope of Article 356, the court referred the report of Sarkaria Commission on Centre State Relations and showed the agreement with some of its part. That part extracted here as below-
What does constitute a Constitutional Failure?
A failure of constitutional machinery may occur in a number of ways. Factors which contribute to such a situation are diverse and imponderable.
It is, therefore, difficult to give an exhaustive catalogue of all situations which would fall within the sweep of the phrase, ‘the Government of the State cannot be carried on in accordance with the provisions of this Constitution’. Even so, some instances of what does and what does not constitute a constitutional failure within the contemplation of this article, may be grouped and discussed under the following heads:
(a) Political crises.
(b) Internal subversion.
(c) Physical breakdown.
(d) Non-compliance with constitutional directions of the Union Executive.
It is not claimed that this categorisation is comprehensive or perfect. There can be no watertight compartmentalisation, as many situations of constitutional failure will have elements of more than one type. Nonetheless, it will help determine whether or not, in a given situation it will be proper to invoke this last-resort power under Article 356.
The Report then goes on to discuss the various occasions on which the political crisis, internal subversion, physical breakdown and noncompliance with constitutional directions of the Union Executive may or can be said to, occur.
Suffice it to say that we are in broad agreement with the above interpretation given in the Report, of the expression “the Government of the State cannot be carried on in accordance with the provisions of this Constitution”, and are of the view that except in such and similar other circumstances, the provisions of Article 356 cannot be pressed into service.
What does not constitute a Constitutional Failure?
It will be convenient at this stage itself, also to illustrate the situations which may not amount to failure of the constitutional machinery in the State inviting the Presidential power under Article 356(1) and where the use of the said power will be improper. The examples of such situations are given in the Report in paragraph 6.5.01.
“(i) A situation of maladministration in a State where a duly constituted Ministry enjoying majority support in the Assembly, is in office. Imposition of President’s rule in such a situation will be extraneous to the purpose for which the power under Article 356 has been conferred. It was made indubitably clear by the Constitution framers that this power is not meant to be exercised for the purpose of securing good Government.
(ii) Where a Ministry resigns or is dismissed on losing its majority support in the Assembly and the Governor recommends, imposition of President’s rule without exploring the possibility of installing an alternative Government enjoying such support or ordering fresh elections.
(iii) Where, despite the advice of a duly constituted Ministry which has not been defeated on the floor of the House, the Governor declines to dissolve the Assembly and without giving the Ministry an opportunity to demonstrate its majority support through the ‘floor test’, recommends its supersession and imposition of President’s rule merely on his subjective assessment that the Ministry no longer commands the confidence of the Assembly.
(iv) Where Article 356 is sought to be invoked for superseding the duly constituted Ministry and dissolving the State Legislative Assembly on the sole ground that, in the General Elections to the Lok Sabha, the ruling party in the State, has suffered a massive defeat.
(v) Where in a situation of ‘internal disturbance’, not amounting to or verging on abdication of its governmental powers by the State Government, all possible measures to contain the situation by the Union in the discharge of its duty, under Article 355, have not been exhausted.
(vi) The use of the power under Article 356 will be improper if, in the illustrations given in the preceding paragraphs 6.4.10, 6.4.11 and 6.4.12, the President gives no prior warning or opportunity to the State Government to correct itself. Such a warning can be dispensed with only in cases of extreme urgency where failure on the part of the Union to take immediate action, under Article 356, will lead to disastrous consequences.
(vii) Where in response to the prior warning or notice or to an informal or formal direction under Articles 256, 257, etc., the State Government either applies the corrective and thus complies with the direction, or satisfies the Union Executive that the warning or direction was based on incorrect facts, it shall not be proper for the President to hold that ‘a situation has arisen in which the Government of the State cannot be carried on in accordance with the provisions of this Constitution’. Hence, in such a situation, also, Article 356 cannot be properly invoked.
(viii) The use of this power to sort out internal differences or intra-party problems of the ruling party would not be constitutionally correct.
(ix) This power cannot be legitimately exercised on the sole ground of stringent financial exigencies of the State.
(x) This power cannot be invoked, merely on the ground that there are serious allegations of corruption against the Ministry.
(xi) The exercise of this power, for a purpose extraneous or irrelevant to the one for which it has been conferred by the Constitution, would be vitiated by legal mala fides.”
 S.R. Bommai vs Union Of India, 1994 AIR 1918, 1994 SCC (3) 1