TOPIC- PUBLIC CORPORATION AND PUBLIC UNDERTAKINGS

In administrative law, corporations and public undertakings play a significant role in the
functioning of a government’s economic and social policies. They serve as a bridge between
the public and private sectors, helping the government regulate and oversee industries
essential for national growth and public welfare. Here’s an in-depth look at their structure,
function, and legal frameworks.

1. Public Corporations and Public Undertakings: Definitions and Distinctions

 Public Corporations: Public corporations, also known as statutory corporations, are

entities created by a specific act of legislation. They are separate legal entities from
the government but are fully owned and controlled by it. Examples include national
airlines, postal services, and state-owned banks.

 Public Undertakings: Public undertakings refer to businesses or industrial activities

that the government owns, manages, and operates. These can include departments,
government-owned companies, and organizations tasked with providing essential
goods or services.

 Legal Distinction: Unlike private corporations, public corporations are set up by

government acts rather than general corporate laws. They are not fully subject to
private or market forces and, instead, aim to serve the public interest.

Public undertakings, also known as public enterprises or public sector undertakings (PSUs),
play a significant role in the socio-economic development of a country. In administrative law,
public undertakings refer to government-owned or government-controlled enterprises that are
created by a specific statute to perform public functions or provide services. These enterprises
are a hybrid between government departments and private business organisations, operating
with a degree of autonomy but still subject to government control and legislative oversight.

KEY CHARACTERISTICS OF PUBLIC UNDERTAKINGS INCLUDE:

 Government Ownership: Public undertakings are either wholly or partially owned

by the government. In India, the central or state governments hold a majority of the
shares in these enterprises.
  Statutory Creation: Public undertakings are often created by a special act of
Parliament or the state legislature, which defines their powers, functions, and scope of
operation. The statute serves as the “charter” of the corporation.

 Autonomy: While public undertakings enjoy a certain degree of autonomy in their

day-to-day management, they are still subject to government control and oversight,
particularly in policy matters.

 Public Accountability: These enterprises are accountable to the public and the
government. Their activities are subject to scrutiny by the Parliament, the Comptroller
and Auditor General (CAG), and the judiciary.

2. TYPES OF PUBLIC CORPORATIONS AND UNDERTAKINGS

 Statutory Corporations: Established by statute, these corporations operate

independently but within the confines of specific laws. Examples include the Postal
Service, national railways, and regulatory bodies like financial or electricity
commissions.

 Government Companies: These are companies registered under the Companies Act
and are controlled by the government. While they are subject to company law, they
also follow government norms.

 Departmental Undertakings: These are extensions of the government, such as the

postal department or railways, that provide essential public services. They operate
within the government structure rather than as separate legal entities.

 Public-Private Partnerships (PPPs): These are joint ventures between the

government and private sector entities. While not purely public corporations, PPPs
represent an intersection of public and private interests to achieve large infrastructure
projects or provide essential services.

CONTROL OVER DELGATED LEGISLATION

 Parliamentary Control

Parliamentary control over public undertakings is exercised through the submission of

annual reports and the auditing of their accounts by the CAG. Parliamentary
committees, such as the Public Accounts Committee (PAC) and the Committee on
 Public Undertakings (CPU), play a crucial role in scrutinising the performance of
these enterprises and ensuring that public funds are used appropriately.

 Government Control

The government exercises control over public undertakings through its power to
appoint key officials, approve budgets, and issue directives on policy matters.
Government control is particularly strong in financial matters, where public
undertakings must seek approval for major investments and borrowing. This control
ensures that public undertakings remain aligned with national economic and social
objectives.

 Judicial Control

Public undertakings are subject to judicial review under the Constitution. Courts can
intervene if a public undertaking violates constitutional provisions, engages in
unlawful activities, or acts beyond its statutory powers. The landmark case
of Rajasthan State Electricity Board v. Mohanlal (1967) established that public
undertakings are “other authorities” under art.12 meaning they are subject to
fundamental rights and judicial scrutiny

LIABILITIES OF PUBLIC CORPORATIONS-

Liability In Contract- a public corporation can enter into contract and can sue and can be
sued for breach thereof. A public corporation can enter into contract between public
corporation and private individual.

Liability In Torts- A public corporation is liable in torts like any other person. It will be held
liable for the wrong acts committed by its servants and employees to the same extent as a
private employer of full age and capacity would have been. A corporation may be held liable
for libel, deceit or malicious prosecution through it cannot be sued for tortuous acts of
personal nature, such as assault, personal defamation, etc. similarly, it can sue for tortuous act
of any person, such as libel, slander, etc.

Liabilities For Crime- a public corporation can may be held vicariously liable for offences
committed by its servant in the course of employment. Libel, fraud, nuisance, etc. however, it
is an artificial person it cannot be held liable for any offence which can be committed only by
a natural person.

Liability For Pay Tax- In the absence of grant of immunity in a statute, a public corporation
is subject to payment of tax or other duties like any person under the relevant laws. The fact
that the corporation is wholly owned or controlled by the government or the property in
possession of the corporation belongs to the government does not ipso facto exempt the
corporation from the payment of taxes.
TOPIC- LIABILITIES OF GOVERNMENT FOR WRONGS-

The liability of the government for wrongs under administrative law deals with when and
how a government can be held accountable for harm caused by its actions or by the actions of
its employees.

1. Concept of Government Liability and Sovereign Immunity

 Sovereign Immunity: Historically, the doctrine of sovereign immunity protected

governments from being sued without their consent. This principle originates from the
English legal doctrine that “the king can do no wrong.” It means that, traditionally,
governments were not liable for their actions.

 Erosion of Absolute Immunity: Most modern states have recognized the unfairness
of absolute immunity, and they have enacted statutes or case laws that limit it. Today,
many countries permit government liability in certain cases, especially when dealing
with non-sovereign (commercial or operational) functions.

 Restricted Immunity: Governments typically retain immunity for "sovereign acts" or

acts that involve core government functions, like legislation, defense, and certain
regulatory actions. In contrast, they are often liable for "non-sovereign acts" or
operational activities, such as running public services or engaging in commercial
enterprises.

2. Government Liability in Contract Law

 Binding Contracts: Governments can enter into contracts just like private parties. If a
government entity breaches a legally binding contract, it can be held liable for
damages or specific performance, depending on the nature of the contract.

 Implied Contracts: In some cases, courts recognize implied contracts where the
government’s actions indicate an agreement, even if no formal contract exists.
Breaching an implied contract can lead to government liability.

 Exceptions and Limitations: Certain contracts involving sensitive government

functions may have immunity clauses limiting liability. This can include contracts
related to national defense or international diplomacy, where breaching a contract
might not be liable under normal contract law principles.
3. Government Liability in Tort Law

 Negligence and Duty of Care: When a government agency or official’s negligent

actions harm individuals or property, the government may be held liable in tort. This
includes failures in duty of care, such as poorly maintained public roads, negligent
medical services in government hospitals, or unsafe public facilities.

 Vicarious Liability: The government is often vicariously liable for wrongful acts
committed by its employees in the course of their official duties. For instance, if a
government driver causes an accident while on duty, the government can be held
liable for the resulting damages.

 Strict Liability for Hazardous Activities: If the government undertakes hazardous or

dangerous activities (such as running nuclear power plants or chemical facilities), it
may be held strictly liable for any harm caused, even without negligence. Strict
liability holds the government responsible simply due to the inherently dangerous
nature of the activity.

4. Distinguishing Sovereign and Non-Sovereign Functions

 Sovereign Functions: These are core government functions, including legislative

acts, judicial decisions, law enforcement, and national defense. Courts generally do
not hold governments liable for harm arising from these functions, as they are
essential to state sovereignty and public administration.

 Non-Sovereign or Commercial Functions: When the government engages in

activities that could also be undertaken by private entities, such as running transport
services, factories, or hospitals, it is often liable for wrongs resulting from these
activities. Non-sovereign functions have fewer immunity protections.

 Gray Areas and Judicial Interpretation: The distinction between sovereign and
non-sovereign functions can vary across jurisdictions, and courts often interpret these
terms case by case. Some cases, like public healthcare or emergency services, may
overlap categories, creating legal complexities in liability decisions.

5. Constitutional Tort Liability

 Violation of Fundamental Rights: Government liability in administrative law

extends to constitutional torts, where an individual's fundamental rights are violated
 due to government actions. For instance, wrongful detention, abuse of police power,
or violation of freedom of speech can make the government liable.

 Public Law Remedies: Courts may issue writs such as habeas corpus, mandamus, or
certiorari against government actions violating constitutional rights, holding the
government accountable. Additionally, courts can award compensation for harm
caused by unconstitutional actions.

 Protecting Civil Liberties: Constitutional tort liability ensures the government

cannot act arbitrarily or infringe on personal freedoms without accountability. This
also reinforces the judiciary's role in maintaining checks and balances over
government power.
Topic- CIVIL SERVICES IN INDIA-

In a democracy, the civil services play an extremely important role in the administration,
policy formulation and implementation, and in taking the country forward towards progress
and development.

Democracy is an egalitarian principle in which the governed elect the people who govern
over them. There are three pillars of modern democracy:

1. Legislature

2. Executive

3. Judiciary

The civil services form a part of the executive. While the ministers, who are part of the
executive, are temporary and are re-elected or replaced by the people by their will (through
elections), the civil servants are the permanent part of the executive.

 The civil servants are accountable to the political executive, the ministers. The civil
services are thus, a subdivision under the government.

 The officers in the civil services form the permanent staff of the various governmental
departments.

 They are basically expert administrators.

 They are sometimes referred to as the bureaucracy or also the public service.

FUNCTIONS OF CIVIL SERVICES

 Basis of Government: There can be no government without administrative

machinery.

 Implementing Laws & Policies: Civil services are responsible for implementing
laws and executing policies framed by the government.

 Policy Formulation: The civil service is chiefly responsible for policy formulation as
well. The civil service officers advise ministers in this regard and also provides them
with facts and ideas.
 Stabilising Force: Amidst political instability, the civil service offers stability and
permanence. While governments and ministers can come and go, the civil services is a
permanent fixture giving the administrative set up a sense of stability and continuity.

 Instruments of Social Change & Economic Development: Successful policy

implementation will lead to positive changes in the lives of ordinary people. It is only
when the promised goods and services reach the intended beneficiaries, a government
can call any scheme successful. The task of actualising schemes and policies fall with
the officers of the civil services.

 Welfare Services: The services offer a variety of welfare schemes such as providing
social security, the welfare of weaker and vulnerable sections of society, old-age
pensions, poverty alleviation, etc.

 Developmental Functions: The services perform a variety of developmental

functions like promoting modern techniques in agriculture, promoting the industry,
trade, banking functions, bridging the digital divide, etc.

 Administrative Adjudication: The civil services also perform quasi-judicial services

by settling disputes between the State and the citizens, in the form of tribunals, etc.
Topic- CENTRAL VIGILANCE COMMISSION (CVC)
Central Vigilance Commission (CVC) is an apex Indian governmental body created in
1964 to address governmental corruption.

It has the status of an autonomous body, free of control from any executive authority,
charged with 1. monitoring all vigilance activity under the Central Government of India,
and 2. advising various authorities in central Government organizations in planning,
executing, reviewing and reforming their vigilance work. It was set up by the Government
of India in February, 1964 on the recommendations of the Committee on Prevention of
Corruption, headed by Shri K. Santhanam, to advise and guide Central Government
agencies in the field of vigilance.

Role of CVC
The CVC is not an investigating agency, and works through either the CBI or through the
Departmental Chief Vigilance Officers. The only investigation carried out by the CVC is
that of examining Civil Works of the Government which is done through the Chief
Technical Officer. Corruption investigations against government officials can proceed only
after the government permits them. The CVC publishes a list of cases where permissions
are pending, some of which may be more than a year old The CVC has also been publishing
a list of corrupt government officials against which it has recommended punitive action.

Appointment of CVC
The Central Vigilance Commissioner and the Vigilance Commissioners are appointed by
the President after obtaining the recommendation of a Committee consisting of the Prime
Minister as Chairperson and the Home Minister and the Leader of the Opposition in the Lok
Sabha as members.

Removal of CVC
The Central Vigilance Commissioner or any Vigilance Commissioner can be removed from
his office only by order of the President on the ground of proved misbehaviour or
incapacity after the Supreme Court, on a reference made to it by the President, has, on
inquiry, reported that the Central Vigilance Commissioner or any Vigilance Commissioner,
as the case may be, ought to be removed. The President may suspend from office, and if
deem necessary prohibit also from attending the office during inquiry, the Central Vigilance
Commissioner or any Vigilance Commissioner in respect of whom a reference has been
made to the Supreme Court until the President has passed orders on receipt of the report of
the Supreme Court on such reference.

The President may, by order, remove from office the Central Vigilance Commissioner or
any Vigilance Commissioner if the Central Vigilance Commissioner or such Vigilance
Commissioner, as the case may be:

1. is adjudged an insolvent; or
2. has been convicted of an offence which, in the opinion of the Central Government,
involves moral turpitude; or
3. engages during his term of office in any paid employment outside the duties of his office;
or 4. is, in the opinion of the President, unfit to continue in office by reason of infirmity
of mind or body; or
5. has acquired such financial or other interest as is likely to affect prejudicially his
functions as a Central Vigilance Commissioner or a Vigilance Commissioner

Limitations of CVC
The following are the limitations of CVC:

1. CVC is only an advisory body. Central Government Departments are free to either
accept or reject CVC's advice in corruption cases.
2. CVC does not have adequate resources compared with number of complaints that it
receives. It is a very small set up with a sanctioned staff strength of 299. Whereas, it is
supposed to check corruption in more than 1500 central government departments and
ministries.
3. CVC cannot direct CBI to initiate inquiries against any officer of the level of Joint
Secretary and above on its own. Such a permission has to be obtained from the concerned
department.
4. CVC does not have powers to register criminal case. It deals only with vigilance or
disciplinary cases
5. CVC has supervisory powers over CBI. However, CVC does not have the power to
call for any file from CBI or to direct CBI to investigate any case in a particular manner.
CBI is under administrative control of Department of Personnel and Training (DoPT).
Which means that, the powers to appoint, transfer, suspend CBI officers lie with DoPT.
6. Appointments to CVC are indirectly under the control of Govt of India, though the
leader of the Opposition (in Lok Sabha) is a member of the Committee to select CVC and
VCs. But the Committee considers candidates put up before it. These candidates are
decided by the Government. As a result, although CVC is relatively independent in its
functioning, it has neither resources nor powers to inquire and take action on complaints of
corruption that may act as an effective deterrence against corruption.

LOKAYUKTA

Problems of Redressal of Citizens Grievances is the subject on which the Administrative

Reforms Commission headed by Late Shri. Morarji Desai, who later became the Prime
Minister of India gave its first report. It is that report which recommended for the
establishment of Lokpal and Lokayukta institutions at the Central and State level
respectively for redressal of citizens grievances by investigating into administrative actions
taken by or on behalf of Central Government or State Government or certain public
authorities. These institutions were intended to serve as institutions independent of the
Government concerned and as institutions to supplement the judicial institutions headed by
Chief Justices or Judges of Supreme Court of India or High Court of the State. The
recommendation for appointment of Lokayuktas at the States level, as indicated in that
report, was made to improve the standards of Public Administration, by looking into
complaints against administrative actions, including cases of corruption, favouritism and
official indiscipline in administrative machinery. It is the said recommendation which made
the Karnataka State Legislature to enact the Karnataka Lokayukta Act, 1984 for
investigating into allegations or grievances in respect of administrative actions relatable to
matters specified in List II or List III of the VII Schedule to the Constitution of India

LOKPAL
The term Lokpal is the Indian version of Ombudsman. In 1966 the then President Dr.
Radhakrishnan set up the Administrative Reforms Commission headed by Morarji Desai
which recommended enacting a law for the establishment of a Lokpal.

Between 1968 and 2001 eight times Bills were introduced in the Parliament to enact a law
relating to the Lokpal. Every time the Bill lapsed or was allowed to lapse. In the first four
Bills the Prime
Minister was not included within the jurisdiction of Lokpal while the last four Bills
included the Prime Minister within the jurisdiction of Lokpal.

Below is a list of Lokpal Bills indicating whether the Prime Minister was included or
excluded in the Lokpal’s jurisdiction in the different Bills introduced since 1968.

PM not Included: The Lokpal and Lokayuktas Bills of 1968 and 1974, The Lokpal Bills of
1977 and 1985. PM included:

The Lokpal Bills of 1989, 1996, 1998 and 2001.

The scheme of the Lokpal under the 1977 Bill prepared by the Janata Government was
materially different in many important respects from the earlier Bills.

1. Unlike the 1968 and 1971 Bills, the Lokpal Bill, 1977, did not talk about the
Lokayukta; it provided instead for the appointment of ‘Special Lokpals’ for the
expeditious disposal of cases.
2. It included the Prime Minister also in its ambit whereas the other Bills did not
include him. 3. While the earlier Bills covered both “allegations of misconduct” and
“grievances”, the 1977 Bill excluded the latter from its jurisdiction. It defined the word
“misconduct” in wider terms.
4. Unlike the earlier Bills, the 1977 Bill embraced Ministers and Members of
Parliament but excluded bureaucracy from its purview.
5. While earlier Bills provided for consulting the Leader of the Opposition in the
appointment of Lokpal, the 1977 Bill was silent about it.

1985 Bill was, again, different in certain respects from the earlier Bills 10. Mal
Administration

179

1. The Prime Minister and members of Parliament were excluded from the purview of this
Bill.

2. The all-inclusive nature of the definition of ‘corruption’ given in the 1977 Bill, was done
away with the scope of complaints was restricted to the relevant provisions of the
Prevention of Corruption Act and the Indian Penal Code.
3. Prosecution on allegations held unproved or false by the Lokpal was barred. The fifth
Bill, introduced on 29 December 1989 in the Lok Sabha, aimed at curbing corruption at
the higher political levels, as claimed in its Statement of Objects and Reasons.

This Bill made many departures from those brought forward previously in terian important
respects.

1. The Prime Minister once again was brought within the purview of the Lokpal.
2. The competent authority to whom the Lokpal was to forward his report in the 1989 Bill
in relation to Prime Minister was the House of the People and about a public functionary,
other than the Prime Minister, was the Prime Minister.
In contrast, the Lokpal Bill, 1985, provided that the competent authority to whom the report
would be sent by the Lokpal was the Prime Minister.

The 1985 Bill empowered the President to appoint as Lokpal “a person who is or has been
or is qualified to be a Judge of the Supreme Court”, while the 1989 Bill said that the
President would appoint persons who are or have been Judges of the Supreme Court as the
Chairman and members of the Lokpal.

Besides, unlike all the previous Bills, the 1989 Bill proposed to set up a threeMember
Lokpal with a Chairman and two Members.

Like the Lokpal Bill 1989, the Lokpal Bill 1996 also proposed to set up a threemember
Lokpal.

However, the Lokpal was to be appointed by the President on the recommendation of the

Committee consisting of seven members viz.,

1. The Prime Minister who will be the chairman of the committee

2. The Speaker of the Lok Sabha
3. 3. Minister-in-charge of the Ministry of Home Affairs
4. 4. Minister-in-charge of the Ministry of Personnel Public Grievances and Pensions 5. 5.
and 6. The Leaders of the Opposition in the Rajya Sabha and the Lok Sabha 6.7. The
Deputy Chairman of the Rajya Sabha.
Upon perusal of all eight Government Bills, one finds that there is perceptible shift in the
central focus of the legislation from the issue of redressal of public grievances to
corruption at high places.

This radical departure can be observed from the Lokpal Bill, 1977 and Bills introduced
thereafter have no provision for redressal of citizens’ grievances and thereby stripped off
Lokpal its intrinsic concept.

In the first two Bills (Lokpal and Lokayuktas Bill, 1968 and Lokpal and Lokayktas Bill,
1971) clause 2 contained definition of the terms ‘grievance’ and ‘maladministrations’ which
were conspicuously missing in the proposed legislations introduced from 1977 onwards.

Rest of the Bills in their clause 2 had inter-alia the definition of the terms ‘complaint’ or
‘corruption’ instead of ‘grievance’ or ‘maladministration’.

Therefore, it is evident that over the years Parliament’s concern appears to have been
growing more with matters relating to corruption than with the citizens’ grievances.

While in the first two Bills (1968 and 1971) the emphasis was on ‘complaints’ and

‘grievances’ of mal-administration against public servants, in the latter Bills of 1977,

1985, 1989, 1996, 1998 and 2001 the emphasis had shifted to ‘ allegations of corruption’
against ‘ public functionaries’.

ARBITRATION
Arbitration is another means of alternative remedy. Though normally this a remedy left to
the option of the parties, and parties have a choice to approach Courts or arbitration tribunal
at their option, some statutes make it compulsory to refer certain disputes arising under
those statutes between an individual and government to the arbitration. Sec. 7-B of the
Telegraph Act provides that any dispute concerning a telegraphic appliance/ apparatus/line
between the telegraph authority and a licensee (for whose benefit the line, appliance or
apparatus is, or has been provided) shall be determined by arbitration by an arbitrator
appointed by the Central Government.
OMBUDSMAN

‘Ombudsman’ means ‘a delegate, agent, officer or commissioner.’ A precise definition of

‘Ombudsman’ is not possible, but Garner rightly describes him as “an officer of Parliament,
having as his primary function, the duty of acting as an agent for Parliament, for the
purpose of safeguarding citizens against abuse or misuse of administrative power by the
executive.” The Ombudsman inquires and investigates into complaints made by citizens
against abuse of discretionary power, maladministration or administrative inefficiency and
takes appropriate actions. For that purpose, very wide powers are conferred on him. He has
access to departmental files. The complainant is not required to lead any evidence before
the Ombudsman to prove his case. It is the function and duty of the Ombudsman to satisfy
himself whether or not the complaint was justified. He can even act suo motu. He can grant
relief to the aggrieved person as unlike the powers of a civil court, his powers are not
limited.