STATUTORY PUBLIC CORPORATIONS

A statutory corporation is a body corporate

formed by a special act of parliament or by the
central or state legislature. It is fully financed by
the government. Its powers, objects, limitations
etc. are also decided by the act of the legislature. It
is also called” public corporation”.
Characteristics of statutory public corporations
◦ It is a creature of a statute which lays down its rights, duties and obligations.
◦ It has a separate legal entity, can sue or be sued in its corporate name.
◦ Depending upon the provisions of the statute of its creation it is largely
autonomous in finance and management.
◦ It is a “State” within the definition of Art. 12 of the Constitution and it is
subject to the writ jurisdiction under Art. 32 & 226
◦ Corporation is not a citizen within the meaning of part II of the Constitution, is
outside the purview of the Citizenship Act 1955 [Sec. 2 says ‘Person’ shall
not include any company, association or body of persons whether incorporated
or not.]
TELCO vs State of Bihar, held that a corporation was not a citizen within the
comprehension of Art. 19 and therefore couldn’t complain of denial of
fundamental freedoms guaranteed under Art. 19 to a citizen.
◦ Without the statutory immunity, the activities of a corporation are liable to tax.
Classification of statutory public corporations

Commercial and Financial [Air India Corporation, RBI, Industrial Finance

Corporation]
Social [Welfare activities of the State Employees’ State Insurance Corporation]
Commodity [Development of a commodity ONGC, Tea, Coffee and Silk Board]
Developmental [ Developmental corporations like Damodar Valley corp ]
Control of statutory corporations
◦ Parliamentary control
Through laying technique all the rules, regulations, financial statements and audit reports
will be scrutinized by the parliament.
Before Estimates committee and Public Accounts Committee were doing the work of
scrutinizing the functioning of Corporations. But in 1964, on the recommendation of the
Menon Committee, a separate committee known as public undertakings committee was
established fro this purpose.
Public Undertakings Committee
15 members [10 from loksabha and 5 from Rajya Sabha– Minister cannot be its member]
Appointed for 1 year period
Examination of the reports and accounts of the corporation and auditor general on Public
undertakings
Government control
Power of dissolution, removal & appointment [ RBI Act 1934 Governor of the Bank can
be removed from the Bank]
Power to issue directions
Power to control finances
Power to institute enquiries
Judicial control
Public control
Mass Media
Consumer org , redressal forums& councils
Lokpal and Lokayuktas under the Lokpal and Lokayukta Act, 2013
◦ The Lokpal and Lokayukta Act, 2013 mandated for the establishment of Lokpal
at the Union level and Lokayukta at the State level.
◦ Lokpal and Lokayuktas are statutory bodies and these do not have any
constitutional status.
◦ It is an efficacious mechanism that can protect a person from administrative
faults.
◦ These institutions perform the function and role of an “Ombudsman” (an
official appointed to investigate individuals’ complaints against a company or
organization, especially a public authority). [To correct the administrative faults]
◦ They inquire into allegations of corruption against certain public
bodies/organizations and for other related matters.
Origin and History
◦ The concept of ombudsman originated in 1809 with the official
inauguration of the institution of Ombudsman in Sweden.
◦ Great Britain adopted the institution of the Ombudsman in the year 1967,
on. the recommendations of the Whyatt Report of 1961
◦ In India, the former law minister Ashok Kumar Sen became the first
Indian to propose the concept of constitutional Ombudsman in
Parliament in the early 1960s.
◦ Further, Dr. L. M. Singhvi coined the term Lokpal and Lokayukta.
◦ Later in the year 1966, the First Administrative Reform Commission
passed recommendations regarding the setting up of two independent
authorities at the centre and at the state level.
The commission, headed by M.N. Venkatachaliah, was also set up, in the
year 2002 to review the working of the Constitution and this Commission
recommended the appointment of the Lokpal and Lokayuktas.
The commission also recommended that the Prime Minister ought to be
kept out of the ambit of the Lokpal.
Later in 2005, the Second Administrative Reforms Commission chaired by
Veerappa Moily came up with the recommendation that the office of
Lokpal needs to be established without delay.
The “India Against Corruption” movement was led by Anna Hazare to
exert pressure on the United Progressive Alliance (UPA) government at the
Centre. The movement resulted in the passing of the Lokpal and Lokayukta
Bill, 2013, in both the Houses of Parliament.
Composition of the Lokpal

Lokpal is a multi-member body consisting of one chairperson and a maximum of 8

members.
The person to be appointed as the chairperson of the Lokpal must be either:
The former Chief Justice of India; or
The former Judge of the Supreme Court; or
An eminent person with impeccable integrity and outstanding ability, who must possess
special knowledge and a minimum experience of 25 years in matters relating to:
Anti-corruption policy;
Public administration;
Vigilance;
Finance including insurance and banking;
Law and management.
The maximum number of members must not exceed eight. These eight members must constitute:
Half members to be judicial members;
Minimum 50% of the Members should be from SC/ ST/ OBC/ minorities and women.
The judicial member of the Lokpal must be either:
A former Judge of the Supreme Court or;
A former Chief Justice of the High Court.
The non-judicial member of the Lokpal needs to be an eminent person with flawless integrity and outstanding
ability. The person must possess special knowledge and an experience of a minimum of 25 years in matters
relating to:
Anti-corruption policy;
Public administration;
Vigilance;
Finance including insurance and banking;
Law and management.
Term and appointment to the office of Lokpal
Lokpal Chairman and the Members can hold the office for a term of 5 years or
till they attain the age of 70 years, whichever is earlier. The members and the
chairman of Lokpal are appointed by the president on the recommendation of a
selection committee.
The selection committee consists of:
The Prime Minister of India[Chairperson]
The Speaker of Lok Sabha;
The Leader of Opposition in Lok Sabha;
The Chief Justice of India or any Judge nominated by Chief Justice of India;
One eminent jurist.
Jurisdiction and powers of Lokpal
The Jurisdiction of Lokpal extends to:
◦ Prime Minister, Ministers,
◦ Members of Parliament,
◦ Groups A, B, C and D officers,
◦ Officials of Central Government.
The Jurisdiction of the Lokpal extends to the Prime Minister, except in the cases of
allegations of corruption relating to:
◦ International relations;
◦ Security;
◦ The public order;
◦ Atomic energy and space.
The jurisdiction of the Lokpal does not include ministers and members of Parliament in
the matter relating to:
◦ Any speeches delivered in the Parliament or;
◦ For a vote cast in the Parliament.

Lokpal’s jurisdiction also includes:

◦ Every person who is or has been in charge (director/ manager/ secretary) of a body or a
society set up by the act of central government,
◦ Any society or body financed or controlled by the central government,
◦ Any person involved in act of abetting,
◦ Bribe giving or bribe-taking.
Central Vigilance Commission
The Indian Government created the Central Vigilance Commission in 1964 in order to
curb the corruptive practices in the administration. It was done on the recommendations of
the Committee on Prevention of Corruption, headed by Shri K. Santhanam Committee,
to advise and guide Central Government agencies in the field of vigilance.
The Commission shall consist of:
A Central Vigilance Commissioner - Chairperson;
Not more than two Vigilance Commissioners - Members;
The commission aimed at preventing the corrupt practices by the officials by bringing out
reports on the failure of system which eventually lead to corruption.
Jurisdiction
◦ The Vigilance Commission has advisory jurisdiction and powers in respect of matters to which the executive power
of the Centre extends.
◦ It can undertake any inquiry into any transaction in which a public servant is suspected or alleged to have acted for an
improper or corrupt purpose; or cause such an inquiry or investigation to be made into any complaint of corruption, gross
negligence, misconduct, recklessness, lack of integrity or other kinds of mal-practices or misdemeanours on the part of a
public servant.
The following categories of employees come within the commission’s purview:
◦ (a) Gazetted Central Government officials;
◦ (b) Board level appointees in the public sector undertakings of the Central Government;
◦ (c) Officers of the rank of Scale-III and above in the public sector banks;
◦ (d) Officers of the rank of Assistant Manager and above in the Insurance Sector (covered by LIC and GIC); and
◦ (e) Officers in autonomous bodies/local authorities or societies comparable in status to that of the Gazetted Central
Government officials.
◦ It can have its jurisdiction over the employees of public sector undertakings, statutory corporations, and port trusts etc.
But these departments have to pass a formal resolution accepting the commission’s jurisdiction.
Functions
◦ The commission’s main concern is matters regarding corruption, misconduct,
lack of integrity or other kinds of malpractices from the side of the
Government servants.
◦ The commission has only advisory jurisdiction.
◦ It cannot perform adjudicatory functions.
◦ The commission cannot investigate or enquire into complaints of corruption
except to a limited extent.
◦ Give directions to the Delhi Special Police Establishment (CBI) for
superintendence insofar as it relates to the investigation of offences under the
Prevention of Corruption Act, 1988.
◦ To inquire or cause an inquiry or investigation to be made on a reference by
the Central Government
◦ To inquire or cause an inquiry or investigation to be made into any complaint received
against any official belonging to such category of officials specified in Sec. 8 (2) of the
CVC Act, 2003.
◦ Review the progress of investigations conducted by the DSPE into offences alleged to
have been committed under the Prevention of Corruption Act, 1988 or an offence
under the Cr.PC
◦ Review the progress of the applications pending with the competent authorities for
sanction of prosecution under the Prevention of Corruption Act, 1988
◦ Exercise superintendence over the vigilance administrations of the various Central
Government Ministries, Departments and Organizations of the Central Government.