Public Corporation their types, characteristics, and control

1. PUBLIC CORPORATION
DR.MRS.P.G.CHAVAN
ASSISTANT PROFESSOR
SHRI SHIVAJI LAW COLLEGE
PARBHANI

2. INTRODUCTION
• The participation of the government in the enterprise, may be total or
partial, direct or indirect. The enterprise may, therefore, take the form of a
departmental organisation, Government company or statutory
corporation. However, the core features, is the intervention of the
government in the affairs of enterprise.
• It may be active, recommendatory, supervisory or advisory
• This development has been facilitated by certain constitutional provisions.
Under directive principle of state policy
• Article 298 of the Constitution, extends the executive power of the union
and of each State “to the carrying on of any trade or business and to the
acquisition, holding and disposal of property and the making of contract
for any purpose”
• Article 19(ii) enables state “to carry on any trade business, industry or
service”

3. MEANING AND DEFINITION OF PUBLIC
CORPORATION
A Public Corporation is a Corporation created by the government for political
purposes, and having subordinate and local powers of legislation
Public Corporation or Public undertaking or Public Enterprises means an activity of
business character, managed and owned, by the Government, Central, State or
Local providing goods/services for a price.

4. PROF. WADE, DEFINE
The Public Corporation is hybrid
organism, showing some of the
features of a government
department and some of the
features of a business company,
and standing outside the ordinary
framework of Central and Local
Government.

5. OBJECT
A public corporation form of
organization facilitates
autonomy in its day-to-day
administration and provides
freedom from political
influences
To achieve the economic
regeneration of the country,
as well as to improve socio-
economic well-being of the
people, the government
resort to economic planning
on large scale
It provides for a healthy mix of
commercial efficiency of a private
enterprise with public
accountability of a government
department and provides
freedom from unsuitable rules,
regulations and controls of the
government.
The corporation pattern
facilitates a high degree of
financial flexibility and
personal mobility and serves
as a valuable instrument for
social control of economic
life.
Is to set up in India a socialist
pattern of society.

6. PUBLIC
CORPORATION
EMPLOYEES OF P.C. ARE CIVIL
SERVANTS & ARE RECURITED &
REMUNERATED UNDER TERMS
& CONDITIONS WHICH THE
CORPORATION ITSELF
DETERMINES
THEY CAN
BE LIABLE
FOR
BREACH
OF
CONTRACT
HAS COMMON
SEAL
THEY CAN ENTER
INTO CONTRACT
IT IS LIKE
THEY CAN BE
SUE AND SUED
ON THEIR OWN
NAME
IT CAN BE GOVERNMENT
COMPANY OR BY UNDERTAKING
BY PUBLIC SECTOR
CREATED UNDER
STATUTE
ARTIFICIAL CREATURE
OF LAW
IT IS AUTONOMUS IN
FINANCE
MANAGEMENT. IT HAS
FUNDS OF ITS OWN
PERPETUAL SUCESSION
AND CAN ACQURE ,HOLD
AND DISPOSE OF THEIR
OWN PROPERTY
CONTRAL AND
MANGEMENT CAN BE
LARGELY REGULATED BY ITS
OWN RULES IN
IT LAYS DOWN
RIGHTS & DUTIES
SEC. 80 OF THE CPC, 2
MONTHS NOTICE
BEFORE FILING A CASE
AGAINST P.C.
IT CAN MAKE RULES,
REGULATIONS & OTHER KINDS
OF DELEGATED LEGISLATION
A STATUTORY CORPORATION IS
A STATE WITHIN DEFINITION
OF ART.12 & THEREFORE
SUBJECT TO WRIT U/ART. 32 &
226

7. CLASSIFICATION OF
PUBLIC CORPORATION
5) DEVELOPMENTAL
CORPORATION:-
E.g.; DAMODAR VALLEY
CORPRATION, NATURAL RESEARCH
DEVELOPMENT CORPORATION Ltd;
REHABILITATION HOUSING
CORPORATION Ltd; WAREHOUSING
CORPORATION.
3) WELFARE ACTIVITIES
CORPORATION:-Eg; EMPLOYEEES
STATE INSURANCE CORPORATION,
HOUSING BOARD.
4) COMMODITIES CONTROL
CORPORATION:
E.g.; TEA BOARD, RUBBER
BOARD, ONGC, FOOD
CORPORATION OF INDIA.
1) COMMERCIAL
CORPORATIONS
EXAMPLE-AIR INDIA,INDIAN AIR
LINES,STATE TRADING
CORPORATION, HINDUSTAN
2) FINANCIAL CORPORATION
Eg; LIFE INSURANCE
CORPORATION, RESERVE BANK
OF INDIA, STATE BANK OF INDIA,
INDUSTRIAL FINANCE
CORPORATION.

8. CLASSIFICATION OF PUBLIC
CORPORATION
PUBLIC CORPORATION:- IS A BODY
CREATED BY OR UNDER A STATUTE &
ENTRUSTED WITH VARIOUS FUNCTIONS
OF PUBLIC IMPORTANCE & OWNED OR
CONTROLLED BY THE STATE. THEY
CREATED THROUGH AN ACT MADE BY
PARLIAMENT, PUBLIC CORPORATIONS
INCLUDE LIFE INSURANCE CORPORATION
OF INDIA, DAMODAR VALLEY
CORPORATION ETC.
GOVERNMENT DEPARTMENT UNDERTAKING
IS THE UNDERTAKING WHICH IS COMPLETELY OWNED &
CONTROLLED BY THE GOV. THE MINISTER IS ITS HEAD. THIS
CATEGORY OF PUBLIC UNDERTAKING INCLUDES RAILWAYS, POSTS &
TELEGRAPH TELEPHONE, RADIO & TELEVISION
GOVERNMENT COMPANY:- IS REQUIRED TO BE REGISTERD
UNDER THE COMPANIES ACT 1956. IT IS A NON-STATUTORY PUBLIC
UNDER TAKING SEC. 617 OF THE ACT PROVIDES THAT “FOR THE
PURPOSE OF THIS ACT, “ GOV. COMPANY” MEANS ANY COMPANY IN
WHICH NOT LESS THAN 50% OF THE PAID-UP SHARE CAPITAL IS
HELD BY THE CENTRAL GOV. OR STATE THE STATE GOV. OR PARTLY
BY THE CENTRAL GOV. & PARTLY BY ONE OR MORE STATE GOVS. &
INCLUDES A COMPANY WHICH IS SUBSIDIARY OF A GOV. COMPANY
Eg. HINDUSTAN STEEL Ltd. STEEL AUTHORITY OF INDIA

9. FEATURES
GOVERNMENT DEPARTMENT
UNDERTAKING
Under complete control of one of
the ministries of government
Finance from annul budget of the
government:--e.g bullet train budget
have to be decided
No separate entity
Employees are recruitments, Salary
paid and compensated as per the
rules of civil servants.
It is staff by civil servants and is
liable for contracts and torts to
the extent laid down under
Article 299 and 300 respectively.
No Bord of Directors it is managed
by government only
They can be sued in the same
manner as one can file against
government.

10. Demerits
Delay in action
Inflexibility:--
Political interference
Lack of initiative
Lack of motivation:--work have
be done according to order no
application of mind as it is
required in private sector
Completely controlled by
Government
Lack of finance:-- though you
see money is available but you
cant use as per you wants in
development needs but in
private you can apply your mind
MERITS
Easy formation
Effective control.
Public revenue:-- e.g. railways and
postal collection is considered as
Public revenue it is deposited in
government treasury account
Secrecy:--All law are prepared by
government so they very well know
that what thing public should know
and what not , so to maintain
secrecy
Public Confidence:--
Railways, postal service is
secure job
even defence related activity
have to be keep in secrecy to
maintain nationality of India
Accountability to Government

11. STATUTORY CORPORATION OR
PUBLIC CORPORATION
Example Indian Airlines, S B I, F I C.
etc.
It is a body corporate formed by a
special act of parliament or by the
central or state legislature.
Its powers, objects and limitations
are also decided by the Act of
legislature.
It has separate legal existence.

12. FEATURES
STATUTORY CORPORATION OR PUBLIC
CORPORATION
Under control of government
Managed by bord of director nominated
by governmentCreated by act of Parliaments.
Has its own rules regulation.
Power, objectives and limitation are
decided by Act only.
Separate legal entity:-- if any case is
sued SBI OR Indian Airline so
government will not responsible but it
self will be responsible e.g SBI OR
Indian airlines
Enjoy administration autonomy
It has to submits its
annul report of working

13. MERITS
Efficient staff
Administrative Autonomy
Quick decision.:-- no interference
of government so there is quick
decision
Service motive:-- main motive to
provide service than to earn profits
Professional management:-- it is
manged by BOD
DEMERITS
Lack of initiative:-- where ever
this is service motive there is less
initiative, why you are working
because you are getting salary
but if you do more or some
different work than you must get
some extra money
Autonomy on paper only:--
rules and regulation and
administration is of corporation
BUT it will run and control by
Government, it is interference
of government in all this
structure because BOD are
appointed by government
It have private structure
and have government
power

14. GOVERNMENTAL COMPANIES
They are governed and ruled by the
provisions of companies Act, like any other
registered company
It means any company in which at least 51
percent of the paid-up share capital is held
by the central or state government. What
ever capital e.g thousand cores that have to
Example:-- Steel Authority of India,
Hindustan machine tools, BHEL ( Bhartia

15. FEATURE OF
GOVERNMENT COMPANY
Registration under
companies Act 2013 Separate legal entity
Wholly or partly owned by
government Financial Autonomy
Manged by BOD.
Efficient staff
Ministerial control
Accountable to the ministry
or concered department

16. MERITS
Administrative
autonomy
Efficient Staff
Collaboration
Greater flexibility
DEMERITS
Autonomy on paper
only
Bord packed with government
representatives
Political interference

17. LIABILITY OF PUBLIC
CORPORATION
LIABILITY UNDER
TORT
LIABILITY UNDER INDIAN
CONSTITUTION
LIABILITY UNDER
CONTRACT
CROWN PRIVILEGES
LIABILITY UNDER CRIMINAL
LAW.
LIABILITY TO PAY TAX

18. PUBLIC CORPORATION
LIABILITY UNDER CONTRACT
SECTION 80 OF CIVIL PROCEDURE DO
NOT APPLY
ARTICLE 299 CAN NOT
APPLY
CAN SUE AND BE SUED FOR THE
BREACH OF CONTRACT
CAN ENTER INTO CONTRACTPUBLIC CORPORATION IS NOT
DEPARTMENT OF GOVERNMENT
FOR FILLING A SUITS

19. PUBLIC CORPORATION
LIABILITY UNDER TORT
VICARIOUS LIABILITY
WHILE DISCHARHING HIS DUTIES
IF THE ACT IS COMMITTED BY ITS
SERVANT OR EMPLOYEE
STATUTE CREATED
SEPARATE LEGAL ENTITY
LIABILITY UNDER TORT AS ANY OTHER
PERSON CONFERED
IT GIVES IMMUNITY
ANY ACT DONE IN GOOD FAITH BY
SERVANT OR EMPLOYEE

20. TYPES OF CONTROL
PUBLIC CONTROL
JUDICIAL CONTROL
GOVERNMENT CONTROL
PARLIAMENT CONTROL

21. PARLIAMENT CONTROL
(b) Adjournment motions
(e) Parliamentary committees
especially the CPU.
(c) Parliamentary debates
unsystematic haphazard and
ineffective. It operates through
the instrumentalities of:’
(a) Question hour
(d) Discussions on reports

22. GOVERNMENT CONTROL
BY PARENT ACT
GOVERNMENT CAN INSTITUTED
INQUERY OR INVESTIGATION ON
WORKING OF P.C.
The government has the authority
to frame rules and regulations
CANNOT EXCEED AUTHORITY OR
ABUSE POWER CONFERRED ON
THEM
CREATED BY STATUTE
FINANCIALY DEPENDS ON
GOVERNMENT
lay down procedures and even
prescribe the activities to be
undertaken.
The government stands
empowered to appoint the
chairman and members of the
board of management and the
managing director.
The government can remove from
office any member of the
management
fails to carry out the purposes for
which it was created or if it fails to
carry out the directives issued by
the government.
if any dispute arises between the
Central government and the
corporation, the decision of the
Central government shall be final
and binding.
Usually, the audit of accounts is
done by the auditors appointed by
the government.
THEY CAN BE ABLOISH OR
SUPERSED OR DISSLOVE
The government also controls the
fixation of prices of goods produced by
the enterprises as well as the quantum
and rate of payment for services
rendered.

23. PUBLIC CORPORATION
UNDER JUDICIAL
CONTROL
CAN NOT CLAIM CROWN
PRIVILEGES
IS DEFINED UNDER ARTICLE
12 AS STATE IN INDIAN
CONSTITUTION
IT IS AS PRIVATE COMPANY
OR PUBLIC COMPANY
AGRIVED PERSON CAN FILE A
SUIT UNDER ARTICLE 226
AND 32
THEY ARE ANSWERABLE IN
COURT
CAN BE SUED UNDER
BREACH OF CONTRACT
CAN BE SUED FOR TORT
COMMITED BY HIS SERVANT
OR EMPLOYEES
AGANIST

24. PUBLIC CORPORATION UNDER
PUBLIC CONTROL
THEY ARE ACCOUNTABLE TO THE PEOPLE
WITH WHOES FUNDS THEY DEAL & TO
WHOSE WELFARE THEY CLAIM TO CATER.
MASS MEDIA:-
IT NOT ONLY REFLECT PUBLIC OPINION
BUT ALSO CREATES PUBLIC OPINION. IT
IS CHECK ON FUNCTIONONG OF PUBLIC
ENTERPRISE BY EXPOSING POLITICAL OR
OTHER INTERFERENCE, CORRUPTION &
INEFFENCIENCY PREVAILING IN THE
MANAGEMENT & FUNCTIONING OF P.C.
INTERESTED REPRESENTATION:-
IN ORDER TO MAKE PUBLIC UNDERTAKING DIRECTLY
RESPONSIVE TO THE CONSUMERS, IT IS DESIRABLE THAT
THEY MUST HAVE SOME SAYS IN THE AFFAIRS OF SUCH
BODIES BY NOMINATING LOCAL AUTHORITIES & OTHER
INTERES ORGANISATION IN THE FUNCTIONS OF THE
PARTICULAR CORPORATION
CONSUMER COUNCILS
THEY ARE UNDER THE CONTROL OF
CONSUMER PROTECTION ACT 1986
CONSUMER COUNCIL IS ESTABLISHED
UNDER THIS CPA AT CERTRAL AND
STATE LEVEL THE OBJECT OF THE
COUNCIALS IS TO PROMOTE &
PROTECET THE RIGHTS OF THE
CONSUMER. & CONTROL PUBLIC
ENTERPRISES
PUBLIC MAY
INFLUENCE
THROUGH
DIFFERENT
CHANNELS