The Executive, Statutory Authorities and Public Corporations
Chapter Five
Syllabus topic 1, "Concepts and Agencies"
Pages 14 to 16 of 430
In one line
These are the three bodies a citizen actually sues, and each of them is created in a different way, which is why each is controlled differently.
In the wording a student can write in an exam: the executive acts through departments which have no separate legal personality and whose acts are the acts of the Union or the State; statutory authorities are corporate bodies created by an Act which derive their powers from that Act; and public corporations are commercial undertakings created either by a special statute or by incorporation under the Companies Act with government shareholding.
Why the law has this at all
A citizen with a grievance has to name a respondent. That is not a technicality: the correct respondent decides whether the petition is maintainable, whether the Government has to be given notice under section 80 of the Code of Civil Procedure before a suit, and whether the body can be told that its own regulations bind it. This chapter is about getting that right.
The executive
How it acts. Article 53 vests the executive power of the Union in the President and Article 154 vests that of a State in the Governor, in each case to be exercised directly or through officers subordinate to them. Article 77 and Article 166 provide that all executive action shall be expressed to be taken in the name of the President or the Governor, and authorise rules for the more convenient transaction of business, which are the Rules of Business under which files actually move.
What follows for a litigant. A department is not a legal person. The petition and the suit run against the Union of India or the State of Maharashtra, through the department, and Article 300 provides that the Government may sue and be sued in its own name.
What follows for review. An order expressed in the name of the Governor is presumed to have been validly made, and a person alleging otherwise has to displace the presumption. But the Rules of Business allocate functions, and an order made by an officer to whom the function was never allocated is made without authority.
Statutory authorities
How they are created. By an Act that says a body corporate is constituted, gives it perpetual succession and a common seal, and lists its powers. The University of Mumbai, the Maharashtra Housing and Area Development Authority, a Municipal Corporation and a State Electricity Board are all of this kind.
Why they matter to administrative law. Three reasons. Their powers are limited by the Act, so the doctrine of ultra vires applies directly. The regulations they frame under the Act have the force of law, so an act contrary to a regulation is void and not merely a breach of contract, which is what Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, AIR 1975 SC 1331, decided.
The Executive, Statutory Authorities and Public Corporations
Facts. Employees of the Oil and Natural Gas Commission, the Industrial Finance Corporation and the Life Insurance Corporation were removed in breach of the regulations framed under the Acts constituting those bodies. The questions were whether a removal contrary to the regulations gave a declaration of continuance in service or only damages, and whether such corporations are authorities within Article 12.
Held. These statutory corporations are authorities within the meaning of Article 12 and are therefore bound by Articles 14 and 16. The regulations framed under their constituting Acts have the force of law and are not internal instructions, so an employee removed in breach of them is entitled to a declaration that the removal is void and that he continues in service.
Why it matters here. It is the case that converts a statutory body's own rulebook into law, which is the practical difference between suing a statutory authority and suing a company.
The third reason is that they are almost always the State under Article 12, so the fundamental rights operate directly against them.
Public corporations and government companies
The two forms. A statutory corporation is created by its own Act. A government company is registered under the Companies Act with the Government holding all or most of the shares. The difference in creation produces a difference in almost everything else.
The advantage of the corporate form. It separates the commercial undertaking from the department: the corporation has its own funds, its own staff, its own board, and its losses do not appear directly on the Government's books. That autonomy is why the form was adopted for railways, insurance, airlines, ports and heavy industry.
The problem it created for administrative law. A body doing what a department used to do, with public money and public purposes, but wearing the clothes of a company. If it is not the State, the fundamental rights do not run against it and no writ lies. The answer the Supreme Court gave is the instrumentality doctrine, which is the subject of the next chapter.
A worked example
Three orders are made on the same morning. The Secretary, Department of Higher Education, Government of Maharashtra, refuses a college permission to start a new course. The Vice-Chancellor of a State University disaffiliates a college. A public sector bank, registered under the Companies Act with the Union holding the majority of the shares, dismisses a clerk contrary to its own service regulations.
The first is challenged by a petition against the State of Maharashtra through the Secretary; if a Rules of Business point arises, the question is whether that Secretary was allocated the function. The second is challenged against the University, a statutory authority, and its own Act and statutes bind it. The third is challenged against the bank; whether it is the State depends on the instrumentality test, and if its regulations are statutory then Sukhdev Singh gives the clerk a declaration rather than damages.
The Executive, Statutory Authorities and Public Corporations
What this does NOT mean
It does not mean a government company is beyond a writ. Even a body which is not the State under Article 12 may be reached under Article 226 if it discharges a public duty.
It does not mean the Rules of Business are secret law. They allocate business; they do not confer power. A power conferred by a statute on a named officer cannot be exercised by another because the Rules of Business assign the file to him.
It does not mean a statutory authority can do whatever its Act does not forbid. It has only the powers the Act gives, expressly or by necessary implication. That is the doctrine of ultra vires in its simplest form.
Quick revision
The department acts in the name of the President or Governor under Articles 77 and 166 and has no separate personality; the Union or the State is the party under Article 300. A statutory authority is a corporate body created by an Act, with powers limited by the Act and regulations that have the force of law, which is Sukhdev Singh. A public corporation may be created by statute or registered as a company, and the corporate form is what made the Article 12 question necessary. Naming the right respondent is the first step of every petition.
Test yourself
1. Why is a department not sued in its own name? Because it has no separate legal personality. Article 300 makes the Union or the State the party, and the department is described in the cause title.
2. What is the practical consequence of regulations having the force of law? An action taken in breach of them is void and can be declared so, rather than being a breach of contract sounding only in damages: Sukhdev Singh.
3. Why was the public corporation form adopted at all? To give a commercial undertaking autonomy from the department: its own funds, board and staff, and freedom from day-to-day departmental control.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.