Administrative Law.docx

Q.1 Define administrative law. Answer: Administrative law is the law that governs the administrative actions. As per Ivor Jennings- the Administrative law is the law relating to administration. It determines the organization, powers and duties of administrative authorities. It includes law relating to the rule-making power of the administrative bodies, the quasi-judicial function of administrative agencies, legal liabilities of public authorities and power of the ordinary courts to supervise administrative authorities. It governs the executive and ensures that the executive treats the public fairly. Ivor Jennings in his "The law and the constitution, 1959" provided the following definition of the term "administrative law". According to him, "administrative law is the law relating to the administrative authorities". This is the most widely accepted definition, but there are two difficulties in this definition. a) It is very wide definition, for the law which determines the power and functions of administrative authorities may also deal with the substantive aspects of such powers. For example: - Legislation relating to public health services, houses, town and country plan etc. But these are not included within the scope and ambit of administrative law, and b) It does not distinguish administrative law from constitution law. Definition by Garner: According to Garner, administrative law may be described as "Those rules which are recognized by the court as law and which relates to and regulate the administration of government. Administrative law is a branch of public law. It deals with the relationship of individuals with the government. It determines the organization and power structure of administrative and quasi-judicial authorities to enforce the law. It is primarily concerned with official actions and procedures and puts in place a control mechanism by which administrative agencies stay within bounds. However, administrative law is not a codified law. It is a judge-made law which evolved over time. The growth of Administrative Law in India: The Mauryans and the Guptas of ancient India had a centralized administrative system. It was with the coming of the British that Administrative law in India went through a few changes. Legislations regulating administrative actions were passed in British India. After independence, India adopted to become a welfare state, which henceforth increased the state activities. As the activities and powers of the Government and administrative authorities increased so did the need for ‘Rule of Law’ and ‘Judicial Review of State actions’. Henceforth, if rules, regulations and orders passed by the administrative authorities were found to be beyond the authority’s legislative powers then such orders, rules and regulations were to be declared ultravires, unconstitutional, illegal and void. Evolution and Scope of Administrative law:-- Nature, scope and development of administrative law: Administrative law is a judge-made law which evolved over time. It is not a codified law. The need for it arose with the increase in administrative actions and its discretionary powers. Rule of law and administrative law: The concept of ‘rule of law’ is that the State should be governed by principles of law and not of men. Administrative laws ensure that ‘rule of law’ prevails despite the presence of discretionary powers vested in the administrators. Administrative law developed to restrict the arbitrary exercise of powers by subordinating it to well-defined law. Separation of Powers and its relevance: ‘Separation of power’ is one of the basics on which the State machinery works. However, with the increase in administrative actions/powers, it is seen that the doctrine cannot be practiced with rigidity. Every organ of the State is dependent on the other for smooth functioning, thus, the doctrine of separation of power cannot be exercised by placing the organs of the 1

State in watertight compartments. There has to be a flexible approach while ensuring that no organ encroaches upon the functions of another. The relationship between Constitutional law and Administrative law: As every law of the State must satisfy the Constitutional benchmark, it is essential to know the relationship between the Constitutional law and the Administrative law of the State. Constitutional law is the genus and administrative law its species, hence the judge-made law must comply with the constitutional provisions. Conclusion: Administrative law is the law governing the Executive, to regulate its functioning and protect the common citizenry from any abuse of power exercised by the Executive or any of its instrumentalities. It is a new branch of law which has evolved with time and shall continue to evolve as per the changing needs of the society. The aim of administrative law is not to take away the discretionary powers of the Executive but to bring them in consonance with the ‘Rule of law’. Q.2 what are the reason for the growth of administrative law? Answer: The term Rule of Law got from French phase ‘la principle de legalite’ which implies the principle of legality. It refers to an administration in view of standards of principles and not of man. Edward Coke is said to be the originator of this idea. Meaning of Administrative Law: Administrative law is the body of law that governs the activities of authoritative offices of the administration/government which include of rulemaking or legislation(when appointed to them by the Legislature as and when the need be),adjudication(to proclaim decisions while giving judgment on certain matters),implementation/enforcement of public policy. Reasons for growth: a) Rise in complexity quality justified treatment variable by the state authorities in order to provide functioning in that area with vital certainty and solutions. b) Industrial revolution that resulted in the coming up of urban communities and new types of economic transactions necessitated handling of affairs by government in order to facilitate production, supply and exchange of products and services. c) Technological developments and the increasing specialization has required for the increased need of particular treatment of undertakings by government authorities. d) To permit important adaptability in the authoritative system so that the challenges emerging because of social and economic factors could be tended to all the more adequately and efficiently. e) To permit experimentation with a specific order to ensure the application of best fit model in a given situation f) To permit participation of people in the administrative functioning to provide the necessary authority to the administrative officials so that they can address the challenges arising due to extraordinary circumstances or crisis circumstances. g) Changed relations of Authorities and Citizens: It can be seen from the present set up of the Administration that relations of the public authorities with the citizens have been deeply changed. Citizens were not directly involved in the administration in the earlier days. They were somewhat isolated from the sphere of Administration. There was a wide gap between the Administrative organs and the citizens. This is not the case today. Today in most of the states there is a democratic Administration of either type. It is therefore, the association of the people is found to be integral. The citizens are closely associated with the state Administration. In view of these changing 2

relations, the basic structure of the legal set up needs to be rearranged. The Administrative law, has therefore, developed. h) Origin of Welfare State Concept: During the period of 19th and 20th Century the concept of state was developed. According to the doctrine of welfare the basic objective of the State Administration is to achieve maximum Welfare of the masses. Each and every policy of the state should aim at maximum welfare of the people. It obviously added to the functions of state. The theory of increasing functions of the state has been accepted by almost all. Increase in functions of the states created several problems and complications. It was, therefore, thought necessary to solve the problems to enact separate Branch of Law and hence the branch known as the Administrative Law has been developed. i)

Inadequacy of the Legislations: At present there are several drawbacks in the present Legislations. It would have been, therefore, found very difficult to accommodate the new Administrative machinery in the existing legislations. In order to meet the expanding needs of changed social, economic characterized problems, the new branch of law, i.e. Administrative Law was necessary.

j)

Inadequacy of Courts: As it is quite known to us that the present courts are overburdened with the huge work, it is almost impossible for the present set of courts to solve the ever crowded problems of Administration along with its own. It is therefore, proposed that there should be separate Branch of Law for the problems of Administration and hence this new Branch has been developed.

k) Technical Experts are with Administrative Organs: At present all the technical experts are with the Administrative organs. In case it is attempted to shift the legal job of Administration to the present judiciary and the present legislations, the same will be handicapped due to lack of technical knowledge. Thus in order to utilize and use the talent of the technical experts which are at present with the Administrative organs it is really wise creating new and coordinating branch of law i.e. Administrative law. And lastly, we can say that they act as an impartial arbitrator, and hence there is a need of separate Administrative Law. l) Union of both Administrative & Judicial Function: As per the Principle of separation of powers these organs of Administration have been proposed and created. The Executive, the Legislative and Judiciary are these three organs which are functioning separately. But in order to co-ordinate both Administrative Law for Administrative Organs. m) The Judicial System Proved Inadequate: To decide and settle all the disputes. It was slow, costly inexpert, complex and formalistic. It was already over-burdened, and it was not possible to expect speedy disposal of even very important matters. e.g. Disputes between employers and employees, lock-outs, strikes etc. Therefore industrial tribunals and labour courts were established which possessed the techniques and experts to handle these complex problems. In simple words, the reason behind the growing importance of Administrative law is the assumption by the Administrative authorities of very wide powers including legislative and judicial which was the result of the social welfare state. Since Administrative law is primarily concerned with the control over the exercise of their powers, i.e. to prevent Administrative authorities from abuse and misuse of powers, it has become a subject of growing interest. Q. 3 Natural Justice Answer: bias - definition legal - an operative prejudice, whether conscious or unconscious, as result of some preconceived opinion or predisposition, in relation to a party or an issue. 3

Dictionary - anything which tends a person to decide a case other than on the basis of evidences. Principle of natural justice: Natural Justice (NJ) is a principle that intended to ensure law with fairness and to secure justice. Fairness and justice should vest the manner of arriving of decisions by judicial process. The IC as the mechanism of arbitrating industrial dispute when dealing with matters referred to it. Two essential elements of NJ: a) The rule against bias b) That of hearing both sides ("audi alteram partem“) A) The rule against bias: The rule against bias requires the adjudicator to be neutral between the disputing parties and appear to be above board. This principle is based on two requirements: i. No man should be a judge in his own cause ("nemo judex in cause sua“) and ii. Justice must not only be done, but manifestly and indubitably be seen to be done The rule against bias has 2 main features: 1) The administrator exercising adjudicatory powers must have not have any personal or proprietary interest in the outcome of the proceedings. 2) There must be a real likelihood of bias. Real likelihood of bias is a subjective term which means either actual bias or a reasonable suspicion of bias. – Difficult to prove the state of mind of person. Therefore, the courts see is whether there is a reasonable ground for believing that the deciding factor was likely to have been biased Forms of bias: o Personal bias - It arises out of the personal or professional relationship of friendship or hostility between the authority and the parties. It’s the human nature that we try to give favorable decision to our friends or relatives, whereas use the same as a weapon against the enemies. o

Pecuniary bias - Any financial interest howsoever small it may be is bound to vitiate the administrative action.

o

Subject-matter bias - The situations where the deciding officer is directly or indirectly in the subject matter of the case.

o

Departmental bias - The problem of departmental bias is something which is inherent in the administrative process, and if it is not effectively checked, it may negate the very concept of fairness in the administrative proceeding.

o

Pre-conceived notion bias - Bias arising out of preconceived notions is a very delicate problem of administrative law.

o

Bias on account of obstinacy - The word Obstinacy implies unreasonable and unwavering persistence and the deciding officer would not take ‘no’ for an answer. This new category of bias was discovered in a situation where a judge of the Calcutta High Court upheld his own judgment while sitting in appeal against his own judgment.

B. The Rule of Hearing Both Sides This rule is expressed through 2 maxims: i. Hear the other side and ii. No man should be condemned unheard (give opportunity to be heard) 4

i. hear the other side : The adjudicator (judge) must act in good faith and fairly listen to both sides, for that is the duty of the adjudicator who decides anything. They can obtain information in any way they think best. They must always give opportunity to those who are parties in the controversy for correcting any relevant statement. Any proceedings commenced must with prior notices to the parties in order to avoid vitiate the resulting decision. Therefore, the person should be given adequate notice of the proceedings so that they may be able to: o Effectively prepare their case and to answer the case of the opponent. o Make their representations and o Appear at the hearing. ii. Opportunity to be Heard: The parties involve must have a reasonable opportunity of being heard in their defence. Three requirements of fair or reasonable opportunity: o The adjudicator should receive all the relevant material, which a party wishes to produce in support of its case. o The evidence of the opponent, whether oral or documentary, should be taken in his presence. o Each party should have the opportunity of rebutting the evidence of the other by cross- examination or explanation. Conclusion: 1. The rules of NJ are not inflexible principles – flexibility is allowed however, they may vary in their content in the circumstances of each case and in their ambit in the context of their application. For example: The concept of fair hearing, particularly, varies significantly in different contexts such as whether it is a sophisticated full-fledged hearing or a brief and minimal one; hearing prior to the decision or post decisional hearing. i.e. depending on the circumstances of each particular case, this rule, in its application is flexible enough to range from minimum to rigorous standards 2. Flexibility of the rules of NJ is emphasized it should be noted that their fundamental importance should be stressed. For example: As long as notices were produced to the appellant or the disputing parties – the fundamental of adequate, clear, certain and unambiguous notice should be stressed. A vague notice is not a proper notice. 3. While it is important for administrative bodies to conform to natural justice in their proceedings, a mere fetish of those principles will not justify the interference by the review court. “ A breach of procedure, whether called a failure of NJ, or an essential administrative fault, cannot give him a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court does not act in vain”. Case: Tanjong Jaga Vs. Minister of Labor (1987) 1MLJ33. Tanjong Jaga argued that it was a nightclub and as such the NU of HB&R workers not the competent union to represent its workers. It challenged the unilateral decision of the Registrar to the contrary, complaining that he failed to give an opportunity to be heard on this contention. The Supreme Court held that the Registrar in this case was satisfied that the major business of the nightclub was in the operation of the bar – S.C. Judge Abdool Cadeer – ‘allowing a hearing to the night club would not have wide any difference’. 4. There is the emerging concept of fairness, which is larger in context than the rules of natural justice. Fairness – the duty to act fairly – does not mean it to be a substitute for NJ – the administrative bodies in exercising their discretion owe a constitutional duty to perform it fairly and honestly to the best of their ability -–rather than to use the phrase as NJ – the procedure must be fair to all those who have an interest in the decision. 5

C. V. Das – Administrative Law & the Citizen, MLJ No.1981 the principles of NJ do not apply to administrative bodies when the Nature of function they discharge is not analogous to judicial or when the nature of complaint does not fit into any of the recognized rules of NJ. Case: The management receives a complaint on 6 workers for misconduct. The immediate respond is to suspend the allege workers for 1 week. Then the mgmt. Call for a meeting of the representative of the workmen in the CO’s employment to decide future fate of there 6 suspended colleagues. Based on the discussions/arguments as well as giving the rep. Opportunity to voice their opinion the mgmt decided a judgement to be passed on the 6 workers to be terminated. – Suspension of the 6 workers from work for one week was within the ambit of IR practice. – To hold domestic inquiry – to determine cause for the co. to order suspend the employee – whether there are just & proper – to determine what further action should be taken natural justice and executive authorities : Shamsiah Bte Ahmad Sham V. Public Services Commission (1990) 3 MLJ – illustrates how a disciplinary authority could be violating the principles of natural justice when it is perfectly entitled to take into account the employee’s record of past conduct in considering her guilt or the appropriate punishment. Shamsiah was a book binder in the Government Printing Department, who was dismissed by the Public Services Commission after she had been found guilty of negligence and dereliction of duty. She applied to the High Court for a declaration that her dismissal was null and void. Her application was dismissed by the High Court, and she appealed. The core of the complaint in the Supreme Court was that the Public Services Commission, in arriving at its decision to dismiss her from service, had taken into account extraneous matters, namely the record of her past conduct, which had been entered in her record of service and produced by her departmental head to the Public Services Commission without giving her an opportunity to explain or controvert her record of service, which played a part in influencing its decision to impose the severest punishment under the relevant regulations. Natural justice and industrial court: Section 23A of IRA 1967 – a person is qualified for appointment as president or chairman of the IC only if, for the seven years preceding his appointment, he has been an advocate and solicitor… or a member of the judicial or legal service of the Federation or of the legal service of the state . The professional background of the presiding officers of the IC in Malaysia makes them keenly aware of the need for the quasi- judicial bodies to observe the principles of natural justice in their proceedings. The IC allows legal presentations to the parties and the representatives must facilitate the observance of natural justice during the proceedings in the IC. Case: Minister of Labor, Malaysia V. National Union of Journalist, Malaysia (1991) 1 MLJ 24 Minister of Labour(MOL) refused to refer a dispute to the IC – The IC strictly observe and support the view of rules of fairness. Yaqzid Othman, a reporter of Utusan Melayu, who was dismissed for misconduct, the MOL refused to refer the dispute to the IC though he was well aware that no domestic enquiry was done. However, the Minister listed in his affidavit several facts and circumstances he took into account in arriving at his decision. The Supreme Court allowed the Union ‘s application for an order of certiorari to quash the decision of the Minister and an order to refer the dispute to the IC Industrial Court : Yazid Othman was not give the opportunity of being heard in his own defence . Ordered his reinstatement with back wages Case: Minister of Labor, Malaysia V. National Union of Journalist, Malaysia (1991) 1 MLJ 24 6

Minister of Labour(MOL) refused to refer a dispute to the IC – The IC strictly observe and support the view of rules of fairness. Yaqzid Othman, a reporter of Utusan Melayu, who was dismissed for misconduct, the MOL refused to refer the dispute to the IC though he was well aware that no domestic enquiry was done. However, the Minister listed in his affidavit several facts and circumstances he took into account in arriving at his decision.The Supreme Court allowed the Union ‘s application for an order of certiorari to quash the decision of the Minister and an order to refer the dispute to the IC. Industrial Court: – Yazid Othman was not give the opportunity of being heard in his own defence – Ordered his reinstatement with back wages Benefits of complying with the Principles of NJ: Natural justice can benefit the decision maker as well as the person or organization whose rights or interests may be affected in the following ways. o Assists the decision maker in reaching the correct and preferable decision; o Provides the decision maker with relevant information, evidence or interpretation of legislation or policy which he/she has not considered; o Provides a useful avenue for the decision maker to ensure that the facts or information that he/she is relying on is correct; o Exposes any weaknesses in the decision-making process, information or evidence on which a decision is to be based, which avoids later embarrassment, including the need to re-make the decision; o The comments or submissions made by the person or organization may provide advance warning of the basis on which the decision is likely to be challenged. Q.4 Explain the concept of Administrative tribunal with reason for the growth of administrative tribunal. Answer: Defnition : Administrative tribunalsare bodies established under a statute (Act of Parliament), outside theordinary court system, to hear and settle disputesbetweengovernmentagencies and individuals or citizens, employers andemployees, landlords and tenants, buyers and sellers or between other individuals. -Peter Johnson Other defnitions are:"Administrative tribunals are bodies established to decide various quasijudicial(separa kehakiman) issues in place of ordinary courts . ~ Takwani Thakker "An Administrative tribunal may be referred to as a person or body of persons or an administrative agency not forming part of the judiciary with limited statutory powers to determine disputes and pass binding decisions between individuals or individuals and o cials in a government department." ~ Jaba Shadrack Characteristics of Administrative Tribunals a. They are authorities outside the ordinary court system. b. They interpret and apply the laws when acts or decisions of public administration are challenged or questioned in formal suits or complaints. c. They are agencies created by specific Acts of Parliament to adjudicate (menghakimi) upon disputes that may arise in the course of implementation of the provisions (peruntukan). d. They are independent bodies and are only required to follow the procedure prescribed by the relevant law and observe (mematuhi) the principles of 'Natural Justice.' e. They hear evidence, make findings of fact and apply established policy. f. Their decisions are reviewable by a superior court in limited circumstances. g. They are not bound by the elaborate rules of evidence or procedures governing the ordinary courts. h. They are not a court nor are they an executive body. Rather they are a mixture of both. They are judicial in the sense that they have to decide facts and apply them impartially, without considering executive policy. They are administrative because the reasons for preferring them to the ordinary courts of law are administrative reasons. 7

i. They are free from administrative (government) interference in the discharge of their functions. j. The composition, functions and powers of administrative tribunals are stated in the statute establishing them. k. They deal with disputes relating to immigration, social security, taxation, land, rent, unfair dismissal, employment, etc.

Reasons for the Growth of Administrative Tribunals Some of the most important reasons for the rapid development of administrative tribunals in the modern state may be stated as follows: i. Vast expansion of governmental functions following the industrial revolution and the emergence of the welfare state concept (where the state plays a key role in the protection and promotion of the economic and social interests and well-being of its citizens) contributed to the growth of administrative tribunals in a country. ii. With the development of collective control over the conditions of employment, manner of living and the basic necessities of the people, there has arisen a need for a technique of adjudication better suited to the social requirements of the time than the elaborate and costly system of decisionmaking provided by the ordinary courts of law. iii. In view of the rapid rapid growth and expansion of industry, trade and commerce, ordinary law courts are not in a position to cope with the heavy workload. As a result, inordinate delay in deciding cases either way, takes place. iv. Therefore, a number of administrative tribunals have been established in several countries, which can do the work more quickly, more cheaply and more efficiently than the ordinary courts. v. The law courts, on account of their elaborate procedures, rules of evidence, legalistic forms and attitudes can hardly do justice to the parties concerned, in technical cases. Judges, brought up in the tradition of law and jurisprudence, are not capable enough to understand technical problems, which crop up in the wake of modern complex economic and social processes. Only administrators having expert vi. Knowledge can tackle such problems judiciously. To meet this requirement, a number of administrative tribunals have come into existence. Differences between Administrative Tribunals and the Ordinary Courts Administrative tribunals differ from the ordinary courts in many respects as follows: o Administrative tribunals are part of the administrative machinery whereas the ordinary courts are part and parcel of judiciary and are quite independent of the Executive. o Unlike the regular courts, the administrative tribunals are not bound to observe the usual rules of evidence and judicial precedents (duluan kehakiman) in adjudicating disputes. They use much more simplified and informal procedures than the ordinary courts do. o The ordinary courts have unlimited powers to adjudicate, but tribunals have limited adjudicative powers. o An administrative tribunal may initiate most of its own cases, but the ordinary courts must wait for cases to come to them. o Ordinary courts handle disputes objectively, while tribunals deal with disputes subjectively and they have wide discretion (budi bicara). o Ordinary courts can decide the constitutionality/ legality/ fairness of a legislation/ law, but tribunals cannot do so. o Ordinary courts are presided over by officers trained in law (judges) whereas most of the tribunals are chaired and composed of administrative officials and technical experts.

Advantages of Administrative Tribunals The advantages of administrative tribunals may be stated as follows: 8

 





  

Administrative tribunals settle disputes/cases more quickly, more cheaply and more efficiently than ordinary courts. They possess greater technical knowledge/ expertise (in fields such as law, medicine, taxation, business, industry, health, engineering, land, etc) than the courts of law and hence they can effectively deal with technical and socio-economic problems arising out of administrative action. They could decide cases according to the requirements of different circumstances. In other words, they possess flexibility. Unlike the regular courts, the tribunals are not bound by precedents (duluan kehakiman) in deciding cases; they can even go against the existing precedents if the circumstances warrant so. Administrative tribunals ensure inexpensive (cheap) and speedy justice. The procedure in the law courts is long and cumbersome and litigation is costly. It involves payment of huge court fees, engagement of lawyers, but most administrative tribunals do not require huge fees. Their procedures are simple and informal and can be easily understood by a layman (orang biasa). Moreover, the aggrieved party (pihak yang bertikai) need not employ a lawyer to fight a case; a complainant (pengadu) can represent himself at the tribunal. They help to relieve the heavy workload of the ordinary courts of law which are already overburdened with legal suits and a backlog of cases (lantukan kes). Tribunals help in the efficient conduct of public administration and promote a policy of social development. Tribunals are usually local by nature, and can therefore acquaint themselves with local conditions and carry out inspections of property and sites (particularly in the case of lands tribunal, rent tribunal, consumer and housing tribunals) where this would assist them in their decisions.

Disadvantages of Administrative Tribunals o They violate (mencabuli) the principles of the rule of law and natural justice. o Administrative tribunals, with their separate laws and procedures often made by themselves, put a serious limitation on the concept of equality before law for everybody and the supremacy of ordinary law. o They also violate the theory of the separation of powers because they sometimes exercise administrative as well as quasi-judicial or judicial functions. o They cannot act in a judicial spirit as they are staffed by administrators and not by trained judges. o In the case of some tribunals, appeals to the courts against their decisions are not provided. This is regarded as quite unfair. o They do not follow uniform procedures and precedents. This would lead to arbitrary ( sembarangan) and inconsistent decisions by the tribunals. o Some tribunals are not obliged to give reasons for their decisions. This could cause some problems for the aggrieved party (pihak yang terkilan). o No legal aid is available for persons appearing before tribunals, and they may therefore not be properly represented at the hearing. o Some tribunals meet in private. Holding a tribunal in private and the lack of openness and transparency ( ketelusan) can lead to suspicion about the fairness of the decisions. o They are not always independent of the Government. There is a possibility of political interference by the government, preventing the tribunal from giving an impartial decision. o The investigation of facts of a case are of poor quality as strict rules of evidence are not observed by the tribunals. o Administrative tribunals are manned by administrators and technical personnel who may not have the background of law or training in judicial work. Some of them may not possess the independent outlook of a judge.

9

Q.5 Explain the nature and concept of PIL in India. Answer: In Indian law, public interest litigation means litigation for the protection of the public interest. It is litigation introduced in a court of law, not by the aggrieved party but by the court itself or by any other private party. It is not necessary, for the exercise of the court’s jurisdiction, that the person who is the victim of the violation of his or her right should personally approach the court. Public interest litigation is the power given to the public by courts through judicial activism. However, the person filing the petition must prove to the satisfaction of the court that the petition is being filed for a public interest and not just as a frivolous litigation by a busy body. Such cases may occur when the victim does not have the necessary resources to commence litigation or his freedom to move court has been suppressed or encroached upon. The court can itself take cognizance of the matter and proceed suo motu or cases can commence on the petition of any public-spirited individual. Origin & Development: The seeds of the concept of public interest litigation were initially sown in India by Krishna Iyer J., in 1976 in Mumbai Kamagar Sabha vs. Abdul Thai (AIR 1976 SC 1455; 1976 (3) SCC 832) and was initiated in Akhil I3/taratiya Sos/ail Karnuu:hari Sangh (Raihvaiy vs, Union of India, wherein an unregistered association of workers was permitted to institute a writ petition under Art.32 of the Constitution for the redrcssal of common grievances. Krishna lyer J., enunciated the reasons for liberalization of the rule of Locus Standi in Fertilizer Corporation Kamgar vs. Union of India (AIR 1981 SC 149; 1981 (2) SCR 52) and the ideal of ‘Public Interest Litigation’ was blossomed in S.F. Gupta and others vs. Union of India, (AIR 1982 SC 149). Public Interest Litigation and Judicial Activism: Public interest litigation or social interest litigation today has great significance and drew the attention of all concerned. The traditional rule of “Locus Standi” that a person, whose right is infringed alone can file a petition, has been considerably relaxed by the Supreme Court in its recent decisions. Now, the court permits public interest litigation at the instance of public spirited citizens for the enforcement of constitutional o- legal rights. Now, any public spirited citizen can move/approach the court for the public cause (in the interests of the public or public welfare) by filing a petition: 1. in Supreme Court under Art.32 of the Constitution; 2. in High Court under Art.226 of the Constitution; and 3. in the Court of Magistrate under Sec.133, Cr. P.C. Justice Krishna layer fertilizer Corporation Kamgar Union vs. Union of India, (1981) enumerated the following reasons for liberalization of the rule of Locus Standi:1. Exercise of State power to eradicate corruption may result in unrelated interference with individuals’ rights. 2. Social justice wan ants liberal judicial review administrative action. 3. Restrictive rules of standing are antithesis to a healthy system of administrative action. 4. “Activism is essential for participative public justice”. Therefore, a public minded citizen must be given an opportunity to move the court in the interests of the public. In order to ensure that FRs did not remain empty declarations, the founding fathers made various provisions in the Constitution to establish an independent judiciary. Provisions related to FRs, DPs and independent judiciary together provided a firm constitutional foundation to the evolution of PIL in India. The founding fathers envisaged ‘‘the judiciary as a bastion of rights and justice’’. An independent judiciary armed with the power of judicial review was the constitutional device chosen to achieve this objective. The power to enforce the FRs was conferred on both the Supreme Court and the High Courts—the courts that have entertained all the PIL cases. 10

Merits:  In Public Interest Litigation (PIL) vigilant citizens of the country can find an inexpensive legal remedy because there is only a nominal fixed court fee involved in this.  Further, through the so-called PIL, the litigants can focus attention on and achieve results pertaining to larger public issues, especially in the fields of human rights, consumer welfare and environment. Demerits: o The genuine causes and cases of public interest have in fact receded to the background and irresponsible PIL activists all over the country have started to play a major but not a constructive role in the arena of litigation. Of late, many of the PIL activists in the country have found the PIL as a handy tool of harassment since frivolous cases could be filed without investment of heavy court fees as required in private civil litigation and deals could then be negotiated with the victims of stay orders obtained in the so-called PILs. o The framers of Indian constitution did not incorporate a strict doctrine of separation of powers but envisaged a system of checks and balances. Policy making and implementation of policy are conventionally regarding as the exclusive domain of the executive and the legislature.Vishaka v State of Rajasthan which was a PIL concerning sexual harassment of women at work place.The court declared that till the legislature enacted a law consistent with the convention on the Elimination of All Forms of Discrimination Against Women which India was a signatory, the guidelines set out by the court would be enforceable. o The flexibility of procedure that is a character of PIL has given rise to another set of problems. It gives an opportunity to opposite parties to ascertain the precise allegation and respond specific issues. o The credibility of PIL process is now adversely affected by the criticism that the judiciary is overstepping the boundaries pf its jurisdiction and that it is unable to supervise the effective implementation of its orders. It has also been increasingly felt that PIL is being misused by the people agitating for private grievance in the grab of public interest and seeking publicity rather than espousing public cause. Steps necessary: With the view to regulate the abuse of PIL the apex court itself has framed certain guidelines (to govern the management and disposal of PILs.) The court must be careful to see that the petitioner who approaches it is acting bona fide and not for personal gain, private profit or political or other oblique considerations. The court should not allow its process to be abused by politicians and others to delay legitimate administrative action or to gain political objectives. There may be cases where the PIL may affect the right of persons not before the court, and therefore in shaping the relief the court must invariably take into account its impact on those interests and the court must exercise greatest caution and adopt procedure ensuring sufficient notice to all interests likely to be affected. At present, the court can treat a letter as a writ petition and take action upon it. But, it is not every letter which may be treated as a writ petition by the court. The court would be justified in treating the letter as a writ petition only in the following casesi. It is only where the letter is addressed by an aggrieved person or ii. a public spirited individual or iii. a social action group for enforcement of the constitutional or the legal rights of a person in custody or of a class or group of persons who by reason of poverty, disability or socially or economically disadvantaged position find it difficult to approach the court for redress. Even though it is very much essential to curb the misuse and abuse of PIL, any move by the government to regulate the PIL results in widespread protests from those who are not aware of its abuse and equate any form of regulation with erosion of their fundamental rights. Under these circumstances the Supreme Court 11

of India is required to step in by incorporating safe guards provided by the civil procedure code in matters of stay orders /injunctions in the arena of PIL. Conclusion: Public Interest Litigants, all over the country, have not taken very kindly to such court decisions. They do fear that this will sound the death-knell of the people friendly concept of PIL. However, bona fide litigants of India have nothing to fear. Only those PIL activists who prefer to file frivolous complaints will have to pay compensation to then opposite parties. It is actually a welcome move because no one in the country can deny that even PIL activists should be responsible and accountable. In any way, PIL now does require a complete rethink and restructuring. Anyway, overuse and abuse of PIL can only make it stale and ineffective. Since it is an extraordinary remedy available at a cheaper cost to all citizens of the country, it ought not to be used by all litigants as a substitute for ordinary ones or as a means to file frivolous complaints.

Q.6 what do you mean by Rule of Law. Answer: Introduction: The term ‘Rule of law’ is a phrase that is very commonly used whenever law is being studied. It is derived from the French phrase ‘la principe de legalite’ which means the ‘principal of legality’. It refers to ‘a government based on principles of law and not of men’. In other words, the concept of ‘la Principe de legalite’ is opposed to arbitrary powers. ‘Rule of Law’ as defined by Dicey, means “the absolute supremacy or predominance of regular law as opposed to the influence of arbitrary power and excludes the existence of arbitrariness, of prerogative, or even wide discretionary authority on the part of the government.” The concept of rule of law is a very dynamic concept, capable of interpretations to enable the successful working of a democracy. In simple terms, Rule of Law is the restriction on the arbitrary exercise of power by subordinating it to well-defined and established laws. Law should govern the nation and not the arbitrary decisions by individuals. Thus, Rule of Law embodies the doctrine of supremacy of law. Origin of Rule of Law: Rule of Law is as old as civilization. Times and society have changed the perceptions of various authors resulting in different and varied definitions and approaches to Rule of Law. Many accounts of the rule of law identify its origins to classical Greek thought, quoting passages from Plato and Aristotle. Greek ideas with respect to the rule of law are therefore best understood in the form of exemplary models, providing inspiration and authority for later periods. The Roman contribution to the rule of law tradition was negative as well as positive, with the negative tradition being of much greater consequence. Dicey’s concept of Rule of Law had its advantages and disadvantages. Rule of Law imposed and helped in imbibing a sense of restraint on administration. The government was bound to work within the legal framework. Further, by stating that the law is supreme, he made every law made by the legislature supreme, thus, promoting parliamentary supremacy. There cannot be self-conferment of power as even an ordinary law is supreme. All laws, public or private, are being administered by the same set of independent and impartial judiciary. This ensures adequate check on the other two organs. Nonetheless, on the other hand, Dicey completely misunderstood the real nature of the French droit administratif. He thought that this system was designed to protect officials, but the later studies revealed that in certain respects it was more effective in controlling the administration than the common law system. The reality is that French Conseil d’ Etat is widely admired and has served as model for other countries as well as for court of justice for European communities. He also did not realize the need for codification of laws which could lead to more discretion, thus hampering Rule of Law. Rule of Law in India: The concept of Rule of Law permeates into the Indian Legal System through the Constitution. Part III of the Constitution of India acts as a restraint on the various organs exercising powers. While conferring the rights on the citizens, it imposes restrictions on the power that can be 12

exercised. Under our Constitution, we have adopted the British System of Rule of Law. Absence of arbitrary power is the first essential of Rule of Law upon which our whole constitutional system is based. Governance must be by rule, and not arbitrary, vague and fanciful. Under our Constitution, the Rule of Law pervades over the entire field of administration and every organ of the state is regulated by Rule of Law. The concept of Rule of Law cannot be upheld in spirit and letter if the instrumentalities of the state are not charged with the duty of discharging their function in a fair and just manner. Judiciary and Rule of Law: The Indian Judiciary has played an instrumental role in shaping Rule of Law in India. By adopting a positive approach and dynamically interpreting the constitutional provisions, the courts have ensured that the Rule of Law and respect for citizens’ rights do not remain only on paper but are incorporated in spirit too. In Bachhan Singh v. State of Punjab, it was held that the Rule of Law has three basic and fundamental assumptions. They are:a. Law making must be essentially in the hands of a democratically elected legislature; b. Even in the hands of the democratically elected legislature, there should not be unfettered legislative power; and c. There must be independent judiciary to protect the citizens against excesses of executive and legislative power. In the case of Maneka Gandhi v. Union of India, the Hon’ble Supreme Court established the Rule of Law that no person can be deprived of his life and personal liberty except procedure establish by law under Article 21 of the Constitution. Thus, Article 21 requires the following conditions to be fulfilled before a person is deprived to his life and liberty: o That there must be a valid law. o The law must provide procedure. o The procedure must be just, fair and reasonable. o The law must satisfy the requirement of Article 14 and 19. In India, the meaning of rule of law has been expanded. It is regarded as a part of the basic structure of the Constitution and, therefore, it cannot be abrogated or destroyed even by Parliament. The ideals of the Constitution- liberty, equality and fraternity have been enshrined in the preamble. Constitution makes the supreme law of the land and every law enacted should be in conformity to it. Any violation makes the law ultra vires. Rule of Law is also reflected in the independence of the judiciary. The Darker Side of Rule of Law: The case of ADM Jabalpur Shivakant Shukla is one of the most important cases when it comes to rule of law. In this case, the question before the court was ‘whether there was any rule of law in India apart from Article 21’. This was in the context of suspension of enforcement of Articles 14, 21 and 22 during the proclamation of an emergency. The answer of the majority of the bench was in negative for the question of law. However Justice H.R. Khanna dissented from the majority opinion and observed that “Even in absence of Article 21 in the Constitution, the state has got no power to deprive a person of his life and liberty without the authority of law. Without such sanctity of life and liberty, the distinction between a lawless society and one governed by laws would cease to have any meaning…” The majority judges could not take a firm stand and interpreted the supremacy of law to mean supremacy of the law of the land and not supremacy of the constitutional spirit which is rule of law. The question of encroachment of the judiciary over the other organs of the government in the name of activism always persists. The extent to which the courts can limit the exercise of other organs is to be pondered upon. The principle of Rule of Law does not also allow the self- conferment of power by the judiciary. The court’s interpretation and judgments are never solely adequate to ensure the observance of Rule of Law. Corruption, fake encounters, unfair policies all undermine rule of law. 13

The main characteristic of the concept of rule of law is ‘equality’. This itself has been criticized widely. The government possesses the inherent authority to act purely on its own volition and without being subjected to any checks or limitations. Total equality is possible to prevail in general conditions, not only in India but in any country for that matter. For e.g.: no case can be filed against the bureaucrats and diplomats in India and the privileges enjoyed by the members of parliament with respect to legal actions against them. Conclusion: The Hon’ble Supreme Court of India has expanded Article 21 to include in its broad interpretation right to bail, the right to a speedy trial, immunity against cruel and inhuman punishment, the right to dignified treatment in custodial institutions, the right to legal aid in criminal proceedings and above all the right to live with basic human dignity. It has also established new doctrines, such as, public trust doctrine, doctrine of promissory estoppel, doctrine of absolute liability, and host of principles such as polluter’s pay principle, etc. and offered guidelines in cases where no there were no legislations, i.e, sexual harassment at work places, and most importantly laid down the foundation of Public Interest Litigation. The vast jurisprudence that has been developed by the courts is to ensure that state is bound by its welfare functions and the rights of none are abridged by a tyrant hand. Any act, inaction or abuse of such powers by one organ calls for interference of the other organ. The judges are not to act upon the laws which are against humanity or based on unreasonable classification or are arbitrary in nature or are against the moral principles; even if such laws are passed by the Parliament. They are to bring in interpretations of laws that are in tune with the principles enshrined in the Constitution. However, there have been instances of the judiciary being marred by corruption and to tackle judicial corruption; it is needed to keep judiciary out of the influence and control of the Legislative or executive. There is also the need for a speedy justice delivery system. Similarly, Parliament is to keep in mind that the laws made by it are not against the rule of law, or against the Constitution or public moral and humanity. It should also from time to time keep an eye on the social changes and scientific advancement so that the laws meet the demands of the time. Article 105(2) of the Constitution must be amended because it promotes and protects the corruption or Horse trading in Parliament which is against the notion of democracy and Rule of Law. The Executive should also refrain from executing the laws which are against natural justice or in violation of the rights, liberties and freedom of common man or is against the state or constitution in particular. This is the doctrine of Self -Restraint, whereby, all the organs try to fulfill the aspirations of the nation and uphold the rule of law, without interfering into the domain of the other. The Constitution must in all circumstances be considered supreme, and the laws made by the legislature should pass the test of reasonableness and the objectives of the Constitution. If any organ of the Government crosses its limits or encroaches upon the powers of the other organs or exceeds its jurisdiction, the act shall be considered as invalid and any abuse of law or any action shall be termed as void ab initio; and the principle of checks and balance will come into play to ensure the sustenance of the principle of Rule of Law.

14

Q. Explain the exceptions to the principal of rule of law. Answer: Meaning of the Rule of Law: The Rule of Law is an important contribution of the British Constitution. It means that in the eyes of the law all persons, whether big or small, the highest government official or ordinary citizen, a big capitalist or a poor man, are equal. It also means that in the eyes of law, there is no privileged class. Irrespective of his or her social status. Everybody will be equally punished for the violation of law. Secondly, nobody is punished in England until his guilt is proved in a law court. Thirdly, there is only one type of laws ordinary laws for deciding disputes between the citizens and the government and there are only one type of courts-Ordinary Courts. On the contrary, there are separate courts and laws to decide disputes among the citizens, and between the citizens and the government. In France, there are ordinary courts for deciding the disputes between the citizens and there are Administrative Laws and Administrative Courts for deciding disputes between the citizens and the government. In England, the people attach a great importance to the fact that in their country everybody is equal in the eyes of law and there are equal laws for all the people and no body or class of the people is given any special privilege in this regard. Even the Queen cannot violate any law because nobody is above the law, but everyone is bound by the law. In England the people have secured this right after a long struggle against the absolute Kings. First of all the people obtained a charter from King John. This charter is called Magna Carta. Later, people opposed the Kings who violated the rights of the people. During the regime of Charles I, Civil War broke out in England and consequently the Parliament protected these rules. After the Glorious Revolution and during the regime of Queen Victoria these rules were firmly established. There is no list of Fundamental Rights in the British Constitution and the rights of the people are protected through these rules. Dicey has given three meanings of the rule of law. According to him, “It means in the first place, the absolute supremacy or predominance of regular laws as opposed to the influence of arbitrary power and excludes the existence of arbitrariness, of prerogatives or even of wide discretionary authority on the part of the Government. Englishmen are ruled by the law and by the law alone a man may be punished for a breach of law but he can be punished for nothing else no man is punishable or can be lawfully made to suffer in body or in goods except for a distinct breach of law established in the ordinary legal manner before the ordinary courts of the land.” Further Dicey writes, “It means again equality before the law or the equal subjection of all classes to the ordinary law of the land administered by the ordinary law courts.’ Dicey continues that, “Not only that with us no man is above the law but (what is a different thing) that here every man, whatever be his rank or condition is subject to the ordinary law of the realm and amenable to the jurisdiction of the ordinary tribunals.” Prof. Dicey while elaborating the equality of all before law, says, “With us every official, from the Prime Minister to a constable or a collector of taxes, is under the same responsibility for every act done without legal justification as any other citizen”. Thirdly, according to Dicey, the Rule of Law may be used as a formula for expressing the fact that with us the law of the constitution, the rules which in foreign countries, naturally form part of the constitutional 15

code, are not the sources but the consequences of the rights of individuals as defined and enforced by the courts….. It means that the main principle of the constitution, such as the right to personal or of public meeting, has been set up on the foundation of the old common law and not as things derived from any general Constitutional Theory. Rights in brief, do not flow from the constitution but from judicial decisions as in the famous Wilkes, case. It is, therefore, clear that the British are not governed by any individual arbitrarily but by the Rule of the law. The criminal has the right to defend himself. Nobody will be punished without his crime being proved against him. Exceptions or Limitations to the Rule of Law: When in 1885 ‘Law of the Constitution’ by Dicey was published for the first time, the primary functions of the state were the maintenance of law and order, defence and foreign relations. But today, since welfare state has been established in Great Britain, the functions of the state and its Discretionary Powers have been increased. Dicey himself felt in 1915 that there was a new danger to the Rule of Law because at that time the First World War was being fought and the British Government was using many discretionary powers. Since then many limitations have arisen which are as under: (1) Delegated Legislation: Today the British Parliament has no time to go into the details of the law, because the number of laws which are introduced in the Parliament, is very high. Secondly, the parliament lacks technical knowledge which is needed for the formulation of complicated laws. Therefore, the parliament only discusses the outlines and the main principles of the Bills and passes them. The responsibility for framing detailed rules and regulations lies with the cabinet or the executive. This system is called Delegated Legislation. The ministers, with the help of their permanent secretaries, make many rules and regulations for every law. These rules and regulations remains in operation till they are declared illegal by the courts. Therefore, the power of making rules and regulations for each and every law is a great limitation on the Rule of Law, because this system gives many discretionary powers to the executive, and the citizens very rarely challenge these rules and regulations in the law courts. (2) Administrative Adjudication: In England many departments have been given judicial powers. Certain officers are given legal rights under which they decide the departmental disputes or the disputes of the citizens. Administrative officers have been given judicial powers through the parliamentary laws, such as Factory Act, Trade Board Act, Public Health Act, Town and Country Planning Act, etc. These officials decide many cases in the interest of the citizens and no appeal can be brought into the courts against their decisions. These officers do not follow any legal procedure at the time of deciding such cases. The people, who are affected by the decisions mentioned above, sometimes do not get the opportunity of producing evidence in support of their cases. In this way the Administrative Adjudication is a great hindrance in the way of the Rule of Law. (3) Lack of Equality before Law: Many critics are of the view that the principle of equality before law has become a myth in England. They say that in 1947 Crown Proceedings Act, was passed and in spite of that Act, the public servants enjoy certain privileges and immunities. For example, we can quote the Public Authorities Protection Act, 1893. This Act was amended through Section 21 of the Limitation Act, 1939. In this Act, the provision was made that in case a private citizen brings in allegations against the highhandedness of any government servant, the matter will be heard within six months. Otherwise, no action will be taken in the matter. Secondly, if a citizen fails to win a case against a government servant, that citizen will have to pay a huge sum of money as expenses of the suit, to the government. Therefore, the citizens do not like to file suit against the government servants. 16

Thirdly, no legal proceedings can be initiated in any law court in England against the judges, whether their decisions are right or wrong. No action can be taken against the judges even if they go beyond their jurisdiction knowingly or unknowingly. Fourthly, the foreigners and their property have been exempted to some extent in England. It means that diplomats and Embassies, foreign rulers, recognized international Institutions and their staff have been granted certain immunities. It means that they are governed only by the law of their country and not by that of England. Fifthly, according to Trade Disputes Act of 1906 no action can be taken by anybody against the Trade Union for violation of any legal duty. Sixthly, the Armed Forces personnel are governed by only Military rules, and they can be tried only in Military Courts and not in ordinary courts. Seventhly, the Bishops are governed by the Church rules and the doctors remain under the rules made by the General Medical Council. (4) Discretionary Powers: Today the administration cannot be run smoothly without giving certain discretionary powers to the government officers. It is in the discretion of the Home Secretary whether to give a certificate of citizenship to a foreigner or not. In case a foreigner is considered an undesirable person, the Home Secretary can order him to leave the country. In England, the executive issues Passports, but in case of the refusal to issue Passports, no suit can be filed in the court against the authorities. (5) Rights do not emanate from the judicial decisions alone: According to Dicey fundamental rights and liberties emanate from the judicial decisions. But this is a one-sided view. The reason for this is that in England the people have got many rights through the laws of the Parliament and the Charters issued by the monarchs. For instance, the right to Unemployment Insurance has been given to the people under the Parliamentary Acts. Dicey has ignored the rights based on the common Law. For example, the famous Habeas Corpus Act was based on the Common Law but later, it was made effective under the Habeas Corpus Acts of 1679 and 1816. Similarly the Libel Act of 1888 gave certain special rights to the press. In 1936 an important Act, i.e. the Public Order Act, was passed in respect of Public Meetings. Ordinary and Administrative Courts: In France and some other European countries there are two types of courts and laws: i. Ordinary courts and laws. ii. Administrative courts and laws. When there is a dispute between the citizens, the matter is brought before ordinary courts and the courts decide such disputes according to ordinary laws. Secondly, if there is a dispute between a citizen and a government official, the matter is brought in the Administrative courts and not in ordinary courts, and the judges decide the case according to Administrative law. The reason for this is that in France and in some other European countries the basis of the law is the Roman Law. In the eyes of the Roman Law, the state was an end and the individual was a means to achieve that end. Therefore, according to that law the government servants had a special position as compared to ordinary 17

citizens and they had special privileges. Thus, when they committed a crime in their official capacity, they were not tried in ordinary courts. Real Nature of Administrative Law: There is a great controversy among the students of Political Science regarding the real nature of administrative law. The main reason for this is that the definition of the administrative law given by Dicey is quite confusing. Dicey considered the administrative law as a body of rules for the protection of officials who have committed abuse of power against the citizen. Good-now defines administrative law as that part of the public law which fixes the organization and determines the competence of the administrative authorities, and indicates to the individual the remedies for the violation of his rights. Strong writes, “Administrative law is the body of rules which regulate the relations, of the administrative authority towards private citizens and determine the position of State officials, the rights and liabilities of private citizens in their dealings with these officials as representatives of the state and the procedure by which these rights and liabilities are enforced.” W.B. Munro defines administrative law, as a system of jurisprudence which on the one hand relieves public officials from amenability to the ordinary courts for acts, performed in their official capacity and on the other hand, sets up a special jurisdiction to hold them accountable.” Munro further says, “The Administrative law deals not only with the liability of the state and its subordinate division for injuries done to private individuals or their property, but with the rules relating to the validity of administrative decrees. It also deals with the methods of granting redress when public officials exceed their legal authority, the awarding of damages to private individuals for injuries which result from acts of omission or commission of the public servants, the distinction between the official and the personal acts on the part of public officers and many kindred matters.” The definitions relating to the administrative law given above make it clear that through this law the government servants are made free of the responsibility towards ordinary courts and action can be taken against them for lapses in administrative courts. In the administrative law, distinction is made between the functions performed by the government servants in their individual capacity and in their official capacity. Through this law the relations between the government servants and the private individuals are defined and the rights and duties of the government officials are settled. Through this law the private citizens get an opportunity for getting redress against the excesses of the government officials. Q. Characteristics and reason for the growth of public corporation. Answer: Public Corporations are those institutions, which are established through separate Acts of the legislature. Therefore, they are also known as statutory corporations. The functions and powers of the corporations are clearly defined in the Acts through which they are established. This form of organization has its origin in the Great Britain. All the political parties in Britain accept this form of organization as an appropriate instrument for operating the state owned-undertakings. Meaning and Definition of Corporations Basically, a public corporation is an extended idea of the form of joint stock companies. A public corporation can be defined as a corporate body specially created by a legislative enactment with clearly defined powers and functions and enjoying considerable financial and administrative autonomy. It is a creation of law and represents the most significant development in the field of management of state enterprises in the present century. 18

President Roosevelt gave a classical definition about Public Corporation. The president, in his message to the American Congress, observed, as follows: = "A corporation has the power of the Government but possessed with flexibility and initiative of a private enterprise". Features or Characteristics of Public Corporation The distinguishing features or characteristics of a statutory corporation can be summed up as follows: 1. Public Corporation is created by Law: A public corporation is created by a special legislative enactment, defining its objectives, powers, privileges and the form of management and its relationship with the Government. 2. Public Corporation is a Body Corporate: It is considered as a person in the contemplation of law. As such, it can acquire, hold and sell properties in its own name. It can sue or may be sued by others. 3. Public Corporation is wholly owned by the State: The Government generally provides the capital of the public corporation. Other Governmental agencies and financial institutions can also contribute to the capital of the corporation. But individual investors are generally deprived from acquiring the shares of such corporations. 4. Public Corporation is Free from Government Controls: Public corporations are relatively free from political, parliamentary and departmental interference in the exercise of the powers vested in them under the Act. 5. Public Corporation enjoys Financial Autonomy: Public corporation not only enjoys administrative autonomy but also financial autonomy. Except for appropriation to provide capital or to cover the losses, the public corporations are usually financed independently. They prepare their own budgets and have the power to retain their earnings. They can also borrow funds from the public or from the Government or other financial institutions. They are generally exempted from most of the regulatory and prohibitory statutes applicable to the expenditure of public funds. 6. Service Motive: The management of the corporation generally vests with the Board of Directors nominated by the Government. The directors may be Government officials or non-officials. 7. Management: A corporation is expected to behave commercially in the same manner as a private enterprise i.e. they are supposed to function efficiently on sound commercial principles. This does not mean that the corporations are expected to make profits. They can make profit but not at the expense of the consumers. Thus, the public corporations primarily work for service, and profit is only a secondary consideration. 8. Public Accountability: Public accountability is another important feature of a public corporation. Though it enjoys complete autonomy in its administrative areas, it is accountable to the legislature. Its accounts are audited by the corporation and the Auditor General, and its annual report must be placed before the legislature. 9. Status of Staff: The employees of the corporation are not the servants of the Government and are not governed by Civil Service Rules. They are employed and paid out of the funds of the corporation. The above-referred characteristics of the corporation reveal that it is a combination of public accountability and business management. It thus gives us the best of both public ownership and private enterprise. 19

Advantages of the Public Corporation 1. Effective Form of Organization: The public corporation is considered as an effective administrative instrument, which follows a middle course between the departmental organizations on the one side and privately owned and managed companies on the other side. 2. Public corporations are flexible in nature: The public corporation enjoys maximum autonomy in dealing with its affairs. It is almost free from the rigid and persistent control of the Government. Therefore, it can manage its affairs with initiative and flexibility. 3. Public corporations are free from Red Tapism : Since the Board of Directors is entrusted with powers to make important decision, quick decisions are possibly. It can also adjust its policies according to the changing business conditions and take prompt actions. Thus it is free from the evils of red tapism associated with the departmental organization. 4. Initiative: Being an autonomous body, it can experiment new lines and exercise initiative in the business affairs. 5. Service Motive: The evils generally associated with private enterprise such as profiteering, exploitation, illegitimate speculation are absolutely absent in the workings of the corporation. Its principal motive is service. Hence, the interests of the consumers are well protected. 6. Easy Financing: The public corporations can raise funds very easily from various sources. The investing public also readily subscribes to the loans floated by them as they consider the loan bonds more safe and sound. 7. No Exploitation of the Workers: The employees of the public corporations are generally well paid. Since their aim is not to maximize profits, they are in a position to pay higher wages and bonus to their employees. They are acting as model-employers. 8. Expertise Management: The Government can appoint even an outsider as the managing director of the corporation. By appointing business experts, the corporation can avail their valuable and expertise services. It can also appoint the representatives of the various interests like labour, consumers etc. Therefore, there is no possibility for exploitation of any section of the society. 9. Economies of Large Scale Operations: Public corporations are considered as a viable form of organization for launching enterprises on large scale. Besides, businesses, which do not produce enough profits during the initial stages can be organized only as corporations. Only this form of organization can do justice where public utilities and social services are involved. Demerits of Public Corporation Experience of the working of the public corporations have shown some of its defects and raised certain problems. The important defects are outlined below: 1. Public corporations have Limited Autonomy: The corporations, in practice, enjoy neither complete autonomy nor flexibility. Their autonomy is somewhat limited. 2. Political Interference: The Ministers and the politicians frequently interfere with the workings of the corporations and influence their policies. In many cases, politicians are appointed as the Chairman or Managing Directors of such corporations. They possess no sufficient experience in the business lines of the corporations. Thus, the management of the corporations is also very poor.

20

3. Public corporations are Evils of Big Business: As large undertakings are generally organized as public corporations, the evils of big business are bound to exist in all the activities of the corporations. 4. Labour Problems : Bridging the gulf between the labour and management really poses a difficult problem to the management which is already inefficient. In reality, the experiences are more bitter and painful in public corporations. The workers generally demand abnormal increase in their wages even if the corporation is working at a loss. Increased wages will further increase the volume of losses, which are to be made good out of the Government funds. In India, we can hardly find one or two public corporations like BHEL, Neyveli Lignite Corporation, which are making profits.

21