Unit IV MEGHA V B

Assistant professor
CBR college of law shivamogga

GROUNDS OF JUDICIAL REVIEW

There is no general agreement on how to classify the grounds of review and different
textbooks take different approaches. The grounds themselves are broad, vague and
overlapping.
We may follow Lord Diplock’s classification in CCSU v. Minister for the Civil Service:
1. Illegality
2. Irrationality
3. Procedural Impropriety
The Diplock categories tell us little in themselves and do not avoid overlaps.
Indeed in Boddington vs. British Transport Police, the House of Lords has
emphasised that the heads of challenge are not watertight compartments but run together.
These grounds are discussed in detail in different parts of these study materials. Here, a
brief account is given to recapitulate memory.
1. ILLEGALITY
Ultra Vires
A decision is ultra vires if it is outside the language of the statute. In the case of courts
and judicial tribunals the terminology of ‘lack’ or ‘excess’ of jurisdiction means the
same as ultra vires although a distinction is sometimes made between lacking jurisdiction
at the outset and straying outside jurisdiction by some subsequent defect. In most
cases, however, this distinction does not matter.
Errors of Law
The question whether the court can review decisions on the ground of legal or factual
errors has caused problems. one hand, if the court can intervene merely because it considers
that a decision is wrong it would be trespassing into the merits of the case. On the other
hand the rule of law surely calls for a remedy if a decision maker misunderstands the law.
After many years of groping towards an accommodation the courts have adopted a
compromise. The outcome appears to be that almost all errors of law and some errors of
fact can be challenged.
A rationale which was popular in the nineteenth century is the doctrine of the
‘jurisdictional’ or ‘collateral’ or ‘preliminary’ question. According to this doctrine, if a
mistake relates to a state of affairs which the court thinks that Parliament intended
should exist objectively before the official has power to make the decision, then
the court will interfere on the ground that the authority has acted ultra vires if the court
thinks that the required state of affairs does not exist.
A second device which flourished during the 1960s but has largely been superseded
is the doctrine of ‘error of law on the face of the record’ or patent error. This allows the court
to quash a decision if a mistake of law can be discovered by reading the written record of
the decision without using other evidence.
Errors of fact are not normally reviewable but there are exceptions.
2. IRRATIONALITY
Irrationality or unreasonableness can be used to challenge the exercise of discretion
or findings of law and fact. The notion of ‘unreasonableness’ is so vague that it seems to
invite the court to impose its own opinion of the merits for that of the decision maker.
Wednesbury Test
However, it has a special and limited meaning. This ground of review is usually called
‘Wednesbury unreasonableness’ after Lord Greene’s speech in Associated Provincial
Picture Houses Ltd v. Wednesbury Corporation.
Lord Greene, MR emphasised that the court will interfere only where a decision is so
unreasonable that no reasonable authority could have made it, not merely because they
think it is a bad decision.
Another way of putting it is that the decision must be ‘beyond the range of
responses open to a reasonable decision maker’. This is sometimes equated with
‘perversity’ or ‘irrationality’.

. PROCEDURAL IMPROPRIETY
Failure to comply with a procedural requirement laid down by 386 General
Principles of Constitutional and Administrative Law statute (such as time limits,
consultation or giving required information or notice) could make a decision invalid.
However, the courts are reluctant to set aside a decision on purely technical grounds.
Traditionally the courts have tried to rationalise this by distinguishing between
‘mandatory’ (important) and ‘directory’ (unimportant) procedural requirements by
reference to the language of the governing statute.
Recently they have abandoned this approach in favour of a flexible response to the particular
context. Using their discretionary power to withhold a remedy, the courts will set a
decision aside for procedural irregularity only if the harm or injustice caused to the
applicant by the procedural flaw outweighs the inconvenience to the government
or to innocent third parties in setting the decision aside.
However the courts may not be willing to allow administrative efficiency to override a
statutory right of the public to be consulted.

WRITS
Under art. 32 of the Constitution, the Supreme Court is empowered to issue a writ in case of
breach of fundamental rights and under Art. 226, High Court may issue a writ for the breach
of fundamental rights and other rights. Thus, the jurisdiction of the High Court is wider
than the jurisdiction of Supreme Court. Art. 32 itself being a fundamental right, the
Supreme Court cannot reject writ petition when breach of fundamental rights is involved.
But, the power of High Court under Art. 226 is discretionary.
The High Court may reject a writ petition on two grounds:
1. When there is delay and latches
2. When there is an equally efficacious alternative remedy High Court and Supreme
Court can grant five types of writs:
1. HABEAS CORPUS
Habeas corpus literally means you must have the body i.e., the person must be produced
before the court. Where a person is illegally detained by another, the
court issues this writ to the person who has detained the other to come to the court
with that person and explain the legal basis on which he has detained that person. This writ
is sued in various cases:
1. for testing the regularity of detention under preventive detention laws
2. for securing the custody of minor or insane person
3. for securing the custody of spouse
4. for testing the regularity of detention for breach of privilege by the legislature
5. for testing the regularity of detention under court marshal
6. for testing the regularity of detention by executive during emergency.
In order to maintain the writ of Habeas corpus the physical detention of the person
is not necessary. Some kind of control, custody or restrain exercised on the person may be
sufficient to exercise this writ.

Kanu Sanyal vs. District Magistrate

The Court has held that in case of public interest it is not necessary to produce the
person before the court. Therefore, though habeas corpus literally means
producing the person before the court, where taking the person before the court
may adversely affect the law and order situation it is no necessary to produce him
before the court.
As in writ of habeas corpus, the question of personal liberty of a person is involved which
is very valuable, the Supreme Court has made several relaxations in case of writ of habeas
Corpus. They are:
1. In Ichhudevi vs. Union of India, Supreme court held that in case of writ
of High Court, the court does not as a matter of practice follow the strict
rules of pleading nor does it place undue emphasis on the strict rule of
observance of burden of proof. Even a post card may be sufficient to invoke
the jurisdiction of the court.
2. Rule of locus standi: is also not applicable to a writ of habeas corpus.
Any person may file a writ petition on behalf of the detenu.
3. Res Judicata is not applicable to the writ of habeas corpus. Therefore,
even though the High Court has rejected the writ petition, the Supreme
Court will entertain a fresh petition on the same ground.
4. All the writs can be sought only against the state whereas the writ of
habeas corpus is available even against a private person.

2. WRIT OF MANDAMUS
Mandamus is a judicial remedy issued in the form of an order to any constitutional statutory
or non-statutory agency to do or to forbear from doing some act which the agency is obliged
to do or refrain from doing under the law. The following are the conditions for the grant of
mandamus:
1. There must be a public or common law duty;
2. The duty must be absolute duty;
3. There must be specific demand and refusal;
4. There must be a clear right to enforce the duty;
5. The right to enforce the duty should subsist till the date of petition; and
6. The right to enforce the duty should belong to the petitioner.
1. Public or Common Law Duty
A public duty means a duty, which is imposed by law. A duty imposed by a contract is a
private duty. Therefore, a writ was not held to lie to enforce a contractual duty.
Guruswamy vs. State of Mysore
The court refused to enforce a contractual duty by issuing a writ of mandamus.
But this decision was over-ruled in Lotus Hotel vs. GSFC.
Lotus Hotel vs. Gujarat State Financial Corporation
 The Supreme Court decided the contract under two heads – First category of
contracts is that of Statutory Contracts which are entered into the exercise of a statutory duty.
Therefore, they have got a colour of statutory duty though the duty is under a contract as
well. Thus, where a statutory body established to advance loans enters into a contract for the
purpose of giving loans it is not only entering into a contract but also is discharging its
statutory duty. Therefore, a breach of that contract is also a breach of its statutory duty.
Hence, mandamus may be issued to enforce that duty.
But other contracts are independent contracts and their breach does not entail breach of any
statutory duty. Therefore, writ of mandamus does not lie for enforcement of such contracts
2. Absolute Duty
The duty must be absolute duty, i.e., it should not be discretionary duty. When the
authority has discretion, in exercising the duty that discretion used to be exercised by
the authority and the court cannot exercise the discretion on behalf of that authority. The
court may issue a writ of mandamus ordering the authority to exercise the discretion but
it will not order the authority to exercise the discretion in one way or other. Thus
where the authority has discretion to decide the matter but it will not tell the authority
as to in whose favour the decision should be.
3. Specific Demand and Refusal
There must be specific demand and refusal. In many cases, the duty of the
authority arises only when there is a specific demand from the person and therefore,
unless there is no demand the duty does not arise Further, the breach of duty arises when
the demand is refused. Unless there is a refusal there is no breach of duty. Therefore, writ
of mandamus does not lie unless there is a demand and refusal. But, the refusal need not be
expressed refusal. Unreasonable delay in complying with the demand itself is a refusal.
Naubat Rai vs. Union of India
The petition was illegally dismissed from military. The Court refused to issue
mandamus for his reinstatement because he did not at any point of time apply to
the authority for reinstatement.
Venugopal vs. Commissioner, Vijayawada Municipality
The petitioner had filed a suit against the respondent. This was treated as a
demand and refusal by the court and the court granted mandamus.
4. Clear Right to Enforce the Duty
Before, applying for writ of mandamus, the petitioner must show some right to
enforce the duty. In SP Manocha vs State of M.P., the court refused to issue
mandamus to the college to admit the petitioner because the petitioner could not show a
clear right to be admitted to the college.
5. Duty Should Subsist Till the Date of Petition
The right to enforce the duty should subsist till the date of petition. If the right has been
lawfully terminated before filing the petition the writ does not lie.
6. The Right Should Belong to the Petitioner
The right to enforce the duty should belong to the petitioner. A shareholder, e.g., cannot
enforce the right of company unless he can show that the infringement of the corporation’s
right has resulted in the infringement of his own right.

3. WRIT OF CERTIORARI AND WRIT OF PROHIBITION

Both the writs are similar in the sense that they can be issued on the similar
grounds. But they are different in the sense that the point of time at which they can be
granted will be different. These writs lie, where the action of the authority is without
jurisdiction.
Prohibition can be issued to prohibit the authorities from proceeding in the matter without
jurisdiction while certiorari can be issued to quash the act of the authority done without
jurisdiction. The following are the grounds for the issue of these writs:
1. Lack of jurisdiction;
2. Excess of jurisdiction;
3. Abuse of jurisdiction;
4. Violation of natural justice;
5. Error apparent on the face of the record; and
6. Fraud
1. Lack of Jurisdiction
Lack of jurisdiction refers to the jurisdiction where the authority has no
jurisdictional power at all to take action. This situation may arise if:
(a) the authority is improperly constituted
(b) the authority exercises jurisdiction in a case in which he has no jurisdiction
at all by committing an error in its decision or jurisdictional facts.
(c) the authority is incompetent to take action in respect of a locality, party,
or subject matter.
(d) the law which is given the jurisdiction is itself unconstitutional.
 (e) the preliminary essentials have been disregarded. Eg. Omission to serve
notice as required by law.
2. Excess of Jurisdiction
In this case the authority may have jurisdiction but it exceeds the permitted limits.
J. K. Choudhari vs. Datta Gupta
The governing body which had then power of dismissal in case of
teachers, dismissed the principal. Court held that this is an excess of jurisdiction.
3. Abuse of Jurisdiction
Even where the authority has a jurisdiction, if it does not exercise properly, it
amounts to abuse of jurisdiction. Exercising the jurisdiction for mala fide purposes,
for the improper purpose on an extraneous consideration or irrelevant consideration, by
ignoring related considerations etc. amounts to abuse of jurisdiction.
4. Violation of Natural Justice
There are two rules of natural justice:
1. Rule Against Bias
Rule against bias is based on the maxim “Nemo judex in causa sua” (No one can be a judge
in his own case).
1. Rule of Fair Hearing
Rule of fair hearing is based on another maxim “Audi alteram partem” i.e., here the other
side.
5. Error Apparent on the Face of the Record
When the authority has come to the conclusion by committing an error which is apparent
on the face of the order, the court may show certiorari to quash that order.
6. Fraud
If the order of the authority is obtained by fraud, that order may be quashed by issue of
certiorari.
  Article 309
 Doctrine of Pleasure
 Restrictions on Doctrine of Pleasure
Arts. 308 to 323 are the provisions of the Constitution in respect of services under the State.
They deal with the following aspects:
1. regulation of recruitment and conditions of services of person serving the union and
the states;
2. tenure of the office of members of these services;
3. Constitutional safeguards to the civil servants;
4. Creation of All India Civil Services; and
5. Establishment of the Union and State Public Service Commissions (PSCs).
Recruitment
‘Recruitment’ is a comprehensive term and includes any method provided for inducting a
person in public service. Appointment, selection, promotion, deputation are all well-
known methods of recruitment. Even appointment by transfer is not unknown as pointed out
in Ram Avtar vs. State of U. P.
ARTICLE 309
Art. 309 of the Constitution provides as under:
Subject to the provisions of this Constitution, Acts of the appropriate Legislature
may regulate the recruitment, and conditions of service of persons appointed, to
public services and posts in connection with the affairs of the Union or of any State:
Provided that it shall be competent for the President or such person as he may direct in
the case of services and posts in connection with the affairs of the Union, and for the
Governor of a State or such person as he may direct in the case of services and posts
in connection with the affairs of the State, to make rules regulating the
recruitment, and the conditions of service of persons appointed, to such services and
posts until provision in that behalf is made by or under an Act of the appropriate
Legislature under this article, and any rules so made shall have effect subject to the
provisions of any such Act.
The President, either directly or through officers subordinate to him may frame service
rules governing the conditions of service of the Central Government employees.
Similarly, Governor of a state may make rules governing the conditions of service of the
State Government employees.
 Ram Avtar vs. State of U. P.
The Supreme Court has held that the rule-making power under art. 309 is
identical to that of the legislature.
Once the legislature enacts a law in this matter, the rule-making power of the
Government comes to an end. However, it may continue to have rule-making power
in the areas not covered by the legislation.
Parliament has not so far passed any law on the subject. Recruitment and the conditions
of service of Central Government servants in general continue to be governed by rules
made by the President under art. 309. The rules made under the Article which are relevant
for the present purpose are:
1. The C.C.S. (Conduct) Rules, 1964.
2. The C.C.S. (C.C.A.) Rules, 1965.
3. The Railway (D. & A.) Rules, 1968.
4. The C.C.S. (T.S.) Rules, 1965.
In exercise of the powers conferred by art. 309, the Ministry of Personnel, Public
Grievances and Pensions has made Fundamental Rules (FRs) and Supplementary Rules
(SRs). Fundamental Rules together with the Supplementary Rules (popularly known as
FRSR) are considered the Bible of Rules for the central Govt. employees.
Fundamental Rules trace back their origin to the pre-independence time (came to effect
from 01-01-1922) and are the first set of rules which have been governing the terms and
conditions of service of the central Govt. employees till today (of course with
amendments from time to time). There are a total of 130 Fundamental Rules.
Supplementary Rules are the rules framed by the President under various
Fundamental Rules. There are a total of 335 Fundamental Rules.

RELATION OF 309 WITH 246 READ WITH VII SCHEDULE

The power to make rules conferred by art. 309 of the Constitution or by other statutes
includes the power to add, amend or alter the rules by virtue of art. 367 of the Constitution
and sec. 21 of the General Clauses Act, 1897.
Accordingly, so long as the Constitutional provision are not contravened, the rules
governing the conditions of service of Government servants can be altered or amend
by the Government from time to time according to the exigencies of thpublic service
without the consent of a Government servant concerned who will be bound by such
amendment or alteration in the rules.
Unlike the position of a private employee, the position of a government employee is not a
contractual position, it is a status.
R. T. Rangachari vs. Secretary of State
The Privy Council observed that Rules which are manifold in numbers and most
minute in particularity are all capable of change from time to time.
D. S. Garewal vs. The State of Punjab and Another
The Supreme Court also observed that numerous rules relating to conditions of
service may have to be changed from time to time if the exigencies of public service
so require.
There is no question of consent of the Government servant concerned at least by reason
of the sheer impossibility of securing such consent from every one. It is also open to the
Government to alter service rules retrospectively which may affect even the existing
incumbents adversely.
However, the existing incumbents are generally given protection with a view to avoiding
hardship to them. The rights accruing to a Government servant under the conditions of
service in force at the time of his retirement cannot be taken away after his retirement.

DOCTRINE OF PLEASURE
The doctrine of pleasure owes its origin to common law. The rule in England was
that a civil servant can hold his office during the pleasure of the crown and the service
will be terminated any time the crown wishes.
The same rule is applied in India, and an employee of the Central Government holds
office during the pleasure of the President of India, and an employee of the state
Government holds office during the pleasure of the Governor of the state.
Art. 310 of the Indian Constitution incorporates the Common law doctrine of pleasure.
Art. 310 expressly provides that all persons who are members of the Defence Services
or the Civil Services of the Union or of All-India Services hold office during the pleasure
of the President.
Similarly, members of the State Services hold office during the pleasure of the
Governor.
But this rule of English law has not been fully adopted in this article. A civil servant
in India could always sue the Crown for arrears of salary.
The rule is qualified by the words “except as expressly provided by the
Constitution.”
Thus art. 310 itself places restrictions and limitations on the exercise of the pleasure
under art. 310 are limited by art. 311(2). The services of permanent Government
servant cannot be terminated except,
1. in accordance with rules made under art. 309;
2. subject to the procedure in art. 311(2) of the Constitution; and
3. the fundamental rights.
The above doctrine of pleasure is invoked by the Government in the public interest
after a Government servant attains the age of 50 years or has completed 25 years of service.
This is constitutionally permissible as compulsory termination of service under F. R. 56 (b)
does not amount to removal or dismissal by way of punishment.
Further, some offices are required by their very nature to be independent. If they are
brought under the pleasure doctrine, they will find very difficult to discharge their duties
without fear or favour. Therefore, such offices are outside the purview of the pleasure
doctrine. For example, judicial officers, Election Commissioner.
While the Government reserves its right under F. R. 56 (b) to compulsory retire a
Government servant even against his wish, there is a corresponding right of the
Government servant under F. R. 56 (c) to voluntarily retire from service by giving the
Government three months notice. There is no question of acceptance of the request for
voluntary retirement by the Government when the Government servant exercises his right
under F. R. 56 (c).
 Similarly, under art. 310 the Government has power to abolish a post. However,
such an action, whether executive or legislative, is always subject to judicial review.
The question whether a person whose services are terminated as a result of the abolition of
post should be rehabilitated by giving alternative employment is a matter of policy on which
the Court has no voice.
Doctrine of pleasure as developed in England has not been accepted in full in
India. It is subject to the provisions of art. 311 which lays down procedural
safeguards for civil servants. Thus art. 311 becomes a proviso to Article 310.
Therefore, services of any civil servants cannot be terminated at pleasure unless the
mandatory provisions of art. 311 have been observed.
Doctrine of pleasure is further restricted by the general law of the land which empowers
any civil servant to file suit in a court of law for enforcing any condition of his service and
for claiming arrears of pay.
Power to dismiss at pleasure any civil servant is not a personal right of the President
or the Governor as the case may be. It is an executive power which is to be exercised at the
advice of council of ministers.
The Doctrine of pleasure as contained in art. 310, being a constitutional provision,
cannot be abrogated by any legislative or executive law; therefore art. 309 is to be read
subject to art. 310. This is not the case in England where Constitution is unwritten and
hence the common law doctrine of pleasure can be whittled down by any act of Parliament
Doctrine of pleasure as developed in England has not been accepted in full in
India. It is subject to the provisions of art. 311 which lays down procedural
safeguards for civil servants. Thus art. 311 becomes a proviso to Article 310.
Therefore, services of any civil servants cannot be terminated at pleasure unless the
mandatory provisions of art. 311 have been observed.
Doctrine of pleasure is further restricted by the general law of the land which empowers
any civil servant to file suit in a court of law for enforcing any condition of his service and
for claiming arrears of pay.
Power to dismiss at pleasure any civil servant is not a personal right of the
President or the Governor as the case may be. It is an executive power which is to be
exercised at the advice of council of ministers.
The Doctrine of pleasure as contained in art. 310, being a constitutional provision,
cannot be abrogated by any legislative or executive law; therefore art. 309 is to be read
subject to art. 310. This is not the case in England where Constitution is unwritten and
hence the common law doctrine of pleasure can be whittled down by any act of Parliament
But a rule, which provides for dismissal on a ground which unreasonably restricts the
fundamental rights of a Government servant, may be challenged as unconstitutional.
The words “pleasure of the President or Governor” do not mean that the Article is
applicable only when a Government servant is dismissed by the President or the Governor
personally.
Under art.s 53(1) and 154 (1), the executive power of the Union or a state may be exercised
by the President or Governor either directly or through officers subordinate to him.
Hence art. 310 is attracted whenever a person is dismissed by an officer competent
to dismiss such person serving under the Union or a State, as the case may be.
Whether the Pleasure may be Fettered by Legislation?
In India, the doctrine of pleasure has been embodied in the Constitution itself, in art. 310(1).
The Supreme Court has pointed out that, since the power of the State to dismiss a public
servant at its pleasure has been provided in art. 310(1), “except as expressly provided by
the Constitution”. Therefore, it follows that its power cannot be fettered by any statute.
In India, the power to dismiss a Government servant at pleasure is subject to only those
exceptions which are specified in the Constitution itself. It cannot be taken away or
curtailed by legislation, though the mode of its exercise may be.

Whether the Pleasure of the Government may be Fettered by Contract?

Art. 310(1) is not subject to the provisions of any contract. Hence, the pleasure of the
President or the Governor to dismiss at pleasure cannot be fettered by any contract to
the contrary. Any such contract would be bad as a ‘clog’ on the pleasure or for
contravention of art. 310(1).
Where the pleasure of the Government is itself subject to an express provision of the
Constitution, the constitutional provision cannot be overridden by the Government
by entering into a contract.
Satish Anand vs. Union of India
However, in this case, the Supreme Court stated that the State can enter into
contracts of temporary employment and impose special terms in each case,
provided they are not inconsistent with the Constitution.
Those who chose to accept those terms and enter into the contract are bound by them,
even as the State is bound. In such cases, the employment under State is not a status, but
a contractual position.
Whether the Pleasure under Art. 310(1) may be Delegated?
Though the contrary opinion was expressed in some cases, it is now settled that the
pleasure under art. 310(1) need not be exercised by the President or the Governor
personally.
Art. 310 is not outside the scope of art. 154. The result is that the pleasure is to be exercised
under art. 310(1) on the aid and advice of the Council of Ministers.
Further, it being an executive power of the State within the meaning of art. 154, the
exercise of pleasure may be delegated to subordinate officers in accordance with the
laws or rules made under art. 309 which may prescribe the procedure by which and the
authority by whom the pleasure may be exercised.
In short, the pleasure of the President to terminate the services of a Government servant
can be exercised by such officers to whom the President or Governor delegates the
power in accordance with relevant laws or rules made under art. 309.

CLAUSE (2): ‘CIVIL POST’

Art. 310(2) states that though all service under the Government is terminable at any time,
this clause provides for payment of compensation where service is held under a special
contract which provides for payment of compensation and the service is terminated
before the expiry of the contractual period. This clause is, though, not applicable in the
following cases:
1. In the case of members of Defence Services.
2. In the case of members of All India Services.
3. In the case of members of a civil service of the Union or of a State.
The scope of this clause is very narrow and is limited to those cases where the post
does not belong to any of the regular services and the Government is obliged to enter into
a special contract for securing the services of a person having special qualifications.
The compensation is payable only for premature termination of contractual service.
This clause enables the President or Governor to enter into a contract with specially
qualified persons providing for payment of compensation where no compensation is
payable under the doctrine “service at the pleasure of the State”.

RESTRICTIONS ON THE DOCTRINE OF PLEASURE [ART. 311]

The pleasure of the President or Governor is controlled by provisions of art. 311, so the
field covered by art. 311 is excluded from the operation of the doctrine of pleasure.
The pleasure must be exercised in accordance with the procedural safeguards provided
by art. 311. Under Indian Constitution several restrictions has been placed on Doctrine
of Pleasure.
1. The service contract entered between the civil servant and government may be
enforced.
2. The fundamental rights guaranteed under the constitution are restrictions on the
pleasure doctrine and therefore this doctrine cannot be resorted too freely and
unfairly, art.s 14, 15 and 16 of the Constitution imposed limitations on free
exercise of Pleasure Doctrine.
Art. 14 embodies the principle of reasonableness the principle of
reasonableness is anti-thesis of arbitrariness. In this way, art. 14 prohibits arbitrary
exercise of power under pleasure doctrine.
In addition to art. 14 of the constitution art. 15 also restricts arbitrary exercise of power
in matters of services. Art. 15 prohibits termination of service on grounds of
religion, race, caste, sex or place of birth or any of them.
Another limitation is under Art. 16(1) which obligates equal treatment and bars arbitrary
discrimination.
3. Further the doctrine of pleasure is subject to many more limitations and a
number of posts have been kept outside the scope of pleasure doctrine.
Under the constitution the tenure of the Judges of the High Courts and Supreme
court, of the comptroller and Auditor-General of India, of the Chief
Election Commissioner and the Chairman and Members of Public service
commission is not at the pleasure of the Government.
Thus, the general principle relating to civil services has been laid down under art. 310
of the Constitution to the effect that government servants hold office during the
pleasure of the government and art. 311 imposes restrictions on the privilege of dismissal
at the pleasure in the form of safeguards.
APPLICATION OF ART. 311
Termination of Service Amounting to Punishment
The protection under art. 311 is available only when ‘dismissal, removal, reduction
in rank is by way of punishment.’ It is difficult to determine as to when an order of
termination of service or reduction in rank amounts to punishment.
In Parshottam Lal Dhingra vs. Union of India, the Supreme Court laid down two tests
to determine when termination is by way of punishment:
1. Whether the servant had a right to hold the post or the rank?
2. Whether he has been visited with evil consequences?
If a government servant had a right to hold the post or rank under the terms of any
contract of service, or under any rule, governing the service, then the termination
of his service or reduction in rank amounts to a punishment and he will be entitled to
protection under art. 311.
Arts. 310 and 311 apply to Government servants, whether permanent, temporary, officiating
or on probation.
The procedure laid down in art. 311 is intended to assure, first, a measure of tenure
to government servants, who are covered by the Article and secondly to provide certain
safeguards against arbitrary dismissal or removal of a government servant or reduction to a
lower rank.
These provisions are enforceable in a court of law. Where there is an infringement of art.
311, the orders passed by the disciplinary authority are void ab initio and in the eye of law
“no more than a piece of waste paper” and the government servant will be deemed to have
continued in service or in the case of reduction in rank, in his previous post throughout.

EXCEPTIONS TO ARTICLE 311

No Removal by Subordinate Authority
Removal by subordinate authority does not mean that the dismissal or removal
must be by the same authority who made the appointment or by his direct superior.
It is enough if the removing authority is of the same or co-ordinate rank as the appointing
authority.
Mahesh vs. State of U. P.
The person appointed by the Divisional Personnel Officer, E.I.R., was dismissed by
the Superintendent, Power, E.I.R. The Court held the dismissal valid as both the
officers were of the same rank.
Reasonable Opportunity of Being Heard
Managing Director, ECIL vs. B. Karunakar
In this important judgement, the Supreme Court has held that when the enquiry
officer is not disciplinary authority, the delinquent employee has a right to receive
the copy of the enquiry officer’s report so that he could effectively defend himself
before the disciplinary authority.
A denial of the enquiry officer’s report before the disciplinary authority takes its decision
on the charges, is a denial of reasonable opportunity to the employee to prove his innocence
and is a breach of the principles of natural justice.
It is difficult to say in advance to what extent the said findings would influence the
disciplinary authority while drawing its conclusions.
The Court affirmed its rulings in Union of India vs. Mohd. Ramzan, but held that its ruling
will apply only prospectively.
In Khem Chand vs. Union of India, the Supreme Court held that the “reasonable
opportunity” means:
1. An opportunity to deny his guilt and establish his innocence, which he can do only
if he is told what the charges levelled against him are and the allegations on which
such charges as based.
2. An opportunity to defend himself by cross examining the witness produced
against him and by examining himself in support of his defiance.
3. An opportunity to make his representation as to why the proposed punishment should
not be inflicted on him.
Exclusion of Opportunity to be Heard
Art. 311(2) provides that reasonable opportunity of being heard is not applicable in the
following cases:
1. where a person is dismissed or removed or reduced in rank on the ground
of conduct which has led to his conviction on a criminal charge; or
2. where the authority empowered to dismiss or remove a person or to reduce
him in rank is satisfied that for some reason, to be recorded by that
authority in writing, it is not reasonably practicable to hold such inquiry; or
3. where the President or the Governor, as the case may be, is satisfied that in
the interest of the security of the State, it is not expedient to hold such inquiry.
An employee who is convicted on criminal charges need not be given an
opportunity to be heard, before his dismissal from service.
 Divisional Personal Officer, Southern Railway vs. T. R. Chellappan
However, in this case the Supreme Court held that the imposition of the penalty of
dismissal, removal or reduction in rank without holding an inquiry was
unconstitutional and illegal.
The objective consideration is only possible when the delinquent employee is being heard.
Union of India vs. Tulshiram Patel
But in this case, the Court held that the dismissal, removal or reduction in rank of a
person convicted on criminal charges is in public interest, and therefore not
violative of art. 311(2). The Court thus overruled its earlier decision in
Chellappan’s Case.
EXCEPTIONS TO ART. 311(2)
The proviso to art. 311(2) provides for certain circumstances in which the
procedure envisaged in the substantive part of the clause need not be followed.
They are:
1. Conviction on a Criminal Charge;
2. Impracticability; and
3. Reasons of security.
CONVICTION ON A CRIMINAL CHARGE
One of the circumstances excepted by clause (a) of the provision is when a person
is dismissed or removed or reduced in rank on the ground of conduct which has laid to
his conviction on a criminal charge.
The rationale behind this exception is that a formal inquiry is not necessary in a case in
which a court of law has already given a verdict.
However, if a conviction is set aside or quashed by a higher court on appeal, the
Government servant will be deemed not to have been convicted at all. Then the
Government servant will be treated as if he had not been convicted at all and as if the order
of dismissal was never in existeIf the appointing authority were aware of the conviction
before he was appointed, it might well be expected to refuse to appoint such a person but
if for some reason the fact of conviction did not become known till after his appointment,
the person concerned could be discharged from service on the basis of his conviction
under cl. (a) of the proviso without following the normal procedure envisaged in art. 311.

IMPRACTICABILITY
 Clause (b) of the proviso provides that where the appropriate disciplinary authority is
satisfied, for reasons to be recorded by that authority in writing that it does not consider it
reasonably practicable to give to the person an opportunity of showing cause, no such
opportunity need be given.
The satisfaction under this clause has to be of the disciplinary authority that has the power
to dismiss, remove or reduce the Government servant in rank.
As a check against an arbitrary use of this exception, it has been provided that the reasons
for which the competent authority decides to do away with the prescribed procedures must
be recorded in writing setting out why it would not be practicable to give the accused an
opportunity.
The use of this exception could be made in case, where, for example a person concerned
has absconded or where, for other reasons, it is impracticable to communicate with
him.
REASONS OF SECURITY
Under proviso (c) to art. 311 (2), where the President is satisfied that the retention
of a person in public service is prejudicial to the security of the State, his services can be
terminated without recourse to the normal procedure prescribed in art. 311(2).
The satisfaction referred to in the proviso is the subjective satisfaction of the President
about the expediency of not giving an opportunity to the employee concerned in the
interest of the security of the State.
That indicates that the power given to the President is unfettered and cannot be made a
justifiable issue, as that would amount to substituting the satisfaction of the court in place
of the satisfaction of the President.
The Constitution of India through art. 311, thus protects and safeguards the rights of
civil servants in Government service against arbitrary dismissal, removal and reduction in
rank.
Such protection enables the civil servants to discharge their functions boldly, efficiently
and effectively. The public interest and security of India is given predominance
over the rights of employees.
So conviction for criminal offence, impracticability and inexpediency in the interest of the
security of the State are recognised as exceptions.
The judiciary has given necessary guidelines and clarifications to supplement the law in
art. 311. The judicial norms and constitutional provisions are helpful to strengthen the
civil service by giving civil servants sufficient security of tenure.
But there may arise instances where these protective provisions are used as a shield
by civil servants to abuse their official powers without fear of being dismissed.
Disciplinary proceedings initiated by Government departments against corrupt officials
are time consuming.
 STATUTORY CORPORATIONS

‘Statutory Corporations’ are autonomous corporate bodies created by Special Acts of

Parliament or state legislature with defined functions, powers, duties, immunities
etc.
They are also called ‘public corporations’, ‘public undertakings’ or ‘public sector
undertakings’.
State helps the statutory corporations by subscribing the full capital and it is fully owned
by the State.
Government nominates the Board of Directors and they manage and operate such
corporations. It enjoys financial autonomy and is answerable to legislature only which
creates it.
GROWTH OF PUBLIC SECTOR IN INDIA
The public sector undertaking is growing at a rapid rate after independence. At present
in our country, there are 750 State public sector enterprises and 225 central public
sector enterprises approximately employing nearly about 1,00,000 managers.
th
During 7 Five year plan, on an average 50,000 Crore of rupees were invested at the
beginning in public sector enterprises which brought a remarkable contribution
in the field of economic development. Needless to mention here that these public sector
enterprises covered all economy sector.
REASONS FOR INCREASING STATE PARTICIPATION
The reasons for increasing State participation are as under:
1. Low Savings and Investment
2. Establishment of Large Scale or Heavy Industries
3. Concentration of Economic Power
4. Profit Motive Criterion
5. Uneven Distribution of Resources

1. LOW SAVINGS AND INVESTMENT

The savings and investment pattern of the country is very low. Private sector is totally
proved to be failure i.e., neither they mobilised the resources nor applied properly the
foreign investment opportunities for the development of the country.
On the other hand, the position is better in the case of public sector since the State
squeezes the additional savings and invests the same for the development of the country as
a whole.
2. ESTABLISHMENT OF LARGE SCALE OR HEAVY INDUSTRIES
Since the resources of the private sector undertaking is limited, heavy or large scale
industries cannot be operated for lack of funds or resources. For example, Iron and Steel
industry that needs a larger amount of funds which is not possible to supply by the private
sector.
The same is quite possible under the public sector as because the state can
accommodate the necessary funds.
3. CONCENTRATION OF ECONOMIC POWER
Concentration of economic power restores in the hands of a few under private sector.
If the public sector industries develop the same can check the growing disparities and
maintains a balance.
4. PROFIT MOTIVE CRITERION
It is needless to say that private sector undertakings do not find any interest on the less-
profitable undertakings since its object is to earn maximum profit even if it may be
considered as necessary for the social benefit and for the development of the country as a
whole or which attains self-sustained economic growth.
That is why, under the circumstances, public sector undertakings should come forward
in order to develop the neglected sectors since it has a service motive.
5. UNEVEN DISTRIBUTION OF RESOURCES
In order to make a balanced development of trade and commerce, the Government should
not leave the entire field of trade and commerce under private sector which practically
invites uneven distribution of resources within the country which also affect the promotion
of export trade with foreign countries.
We know that the primary objective of the public sector undertaking is to do the greatest
good to the greatest number and to supply social services for the benefit of the largest
section of the people. At the same time, it becomes necessary to strengthen the position
of the state as a whole.
The same is accepted by the new industrial policy of the Government of India which
states that,
“the nation has now set itself to establish a social order where justice and equality
of opportunity shall be secured to all the people ...”.
 OBJECTIVES OF PUBLIC SECTOR
The general objectives of public sector are:
1. To provide required investment and promotion of industrial activity by way of
indirect public investment either by supplying financial assistance to private sector
or to supply infrastructural and basic activities;
2. To supply socio-economic developmental opportunities which should not be
transferred to private sector undertakings;
3. To nationalize those companies which are foreign dominated,
4. To supply activities relating to import-substituting and export-promoting
which are essential for the development of the country;
5. To develop savings by mobilizing resources with the help of proper public
sector prices more quick than others;
6. To introduce certain activities to take the benefit of foreign aid and co-
operation in the public sector;
7. To make a balanced regional development by establishing regional
promotional undertakings in less developed regions, e.g., D V. C (Damodar Vally
Corporation);
8. To protect the interest of small farmers by transferring all private licences to the
corporations of agricultural reforms;
9. To control the concentration of economic power and wealth as well;
10. To make a social control on long term capital by supplying the necessary
financial assistance through public financial institutions which are quite
justified;
11. To supply necessary finance for various development programmes which are
essential for the development of the country;
12. To make opportunities for employment and to form a rational society which is
absolutely desired;
13. To re-distribute incomes either by raising wage levels and checking higher
salary level or by supply outputs at a concessional rate to the poor etc.
14. To generate surplus resources for future growth and development; and
15. To use human resources and material resources in a better way.

FEATURES OF STATUTORY CORPORATIONS

The following are the salient features of statutory corporations:
1. Creature of a Statute
2. A Corporate Body
Therefore, not a citizen under the Citizenship Act, 1955
1. Owned by State
Therefore, ‘State’ under art. 12 of the Constitution
1. Answerable to Legislature
2. Own Staffing System
3. Financial Independence:

1. CREATURE OF A STATUTE
A statutory corporation is established by a statute. The parent statute i.e., the statute
under which the statutory corporation is established lays down the powers, functions,
obligations and liabilities.
Therefore, a statutory corporation may undertake only those activities which are expressly
authorised by the parent statute. It may also undertake activities which are incidental to
those activities authorised by the parent statute as long as they are not prohibited.
Activities which are not authorised by the parent statute are ultra vires the
corporation, and are not binding on the corporation. Further, as the acts cannot be ratified
by the corporation. Doctrine of estoppel and doctrine of acquiescence are also not
applicable in such cases.
The parent statute may delegate rule-making powers to the corporation. Rules made by
the corporation in exercise of such powers are binding laws.

2. A CORPORATE BODY
It is an artificial person created by law and is a legal entity. Such corporations are managed
by Board of Directors constituted by Government.
Being a separate legal entity, a statutory corporation may enter into contracts, and can
undertake any kind of business under its own name. It may hold and dispose of properties,
and may sue and be sued.
Not a Citizen
Being an artificial person, a statutory corporation is not a citizen under the Citizenship
Act, 1955, inasmuch as sec. 2 of the Citizenship Act, 1955 provides that the word
‘person’ shall not include any company, association or body of persons whether
incorporated or not.
As a consequence, a statutory corporation cannot claim fundamental freedoms
guaranteed under art. 19 of the Constitution. In STC vs. CTO and TELCO vs. State of
Bihar, the Supreme Court accepted this view.
As shareholders and company are separate persons, a shareholder cannot seek to enforce the
rights of the company. A shareholder does not have locus stadi in such cases.
R. C. Cooper vs. UoI
The Supreme Court held that where the infringement of the right of a company
leads to the infringement of rights of an individual shareholder also, the
shareholder may enforce his right under art. 19, which may indirectly benefit the
company also.

3. OWNED BY STATE
State provides help to such corporations by subscribing the capital fully or wholly. It is fully
owned by the State. It undertakes regulatory, benefactory, commercial or developmental
activities on behalf of the government.
Corporation a State under art. 12 of the Constitution
A statutory corporation is a State under art. 12 of the Constitution, falling under the ‘other
authorities’ clause of the article. As the government has deep and pervasive control
over the corporation, the corporation is treated as an arm of the government.
As a consequence, fundamental rights may be claimed against a statutory
corporation. It is subject to the writ jurisdiction of the Supreme Court under art. 32
and the writ jurisdiction of the High Courts under art. 226.
Not Government
Though a statutory corporation is State under art. 12 and may be under the control
of the government, it is not itself a government. This leads to three important
consequences:
1. Sixty days notice as required under sec. 80 of the Civil Procedure Code, 1908 is not
mandatory before instituting a suit against a statutory corporation.
2. A statutory corporation cannot claim the privilege under secs. 123 and 124 of the
Indian Evidence Act, 1872, which is available to the government. It cannot, in other
words, claim privilege to withhold documents.
 3. Immunity from law given to government cannot be enjoyed by a statutory
corporation. Thus, for example, where a statute does not expressly or by
necessary implication exempt a statutory corporation from payment of taxes, the
statutory corporation is liable to pay tax in the same way as any other person.
Hence, a statutory corporation is an ‘assessee’ under the Income Tax Act, and a
‘dealer’ under the Goods and Service Tax Act.

4. ANSWERABLE TO LEGISLATURE
A statutory corporation is answerable either to Parliament Legislature or State Assembly
whosoever creates it. Parliament or state legislature has no right to interfere in the
working of statutory corporation. It can only discuss policy matters and overall performance
of corporation.
Where rule-making powers are conferred upon a statutory corporation, the parent statute
may provide for legislative control of the delegated legislation. In such cases the
legislature may exercise its control over the rule-making powers of the statutory
corporation.
5. OWN STAFFING SYSTEM
Employees are not government servants, even though government owns and manages
a corporation. Employees of various corporations receive balanced or uniform pay and
benefits by the government. They are recruited, remunerated and governed as per the rules
laid down by the corporation.
Status of Employees
Employees of a statutory corporation are appointed by the corporation itself. The terms of
conditions of their service is governed by the Rules framed by the corporation.
Some corporations may adopt the Rules applicable to government servants, instead of
framing their own Rules.
Protection of art. 311 Not Applicable
As a statutory corporation is not government and the employees are appointed by the
corporation, they are not government servants. Therefore, the protection given to
government servants under art. 311 of the Constitution is not available to the employees
of a statutory corporation. However, they may enjoy the protection given in Part III of
the Constitution, and they may claim application of the rules of natural justice. Thus,
practically, they may enjoy protection similar to that available to government servants
under art. 311.
Where a corporation is not an independent statutory authority, but merely a limb of a
government department, its servants are government servants and they may claim
protection under art. 311.
Jaswant Singh vs. Union of India
Thus, in this case, the servants of Beas Construction Board were held to be
government servants and the protection under art. 311 was extended to them.
Not an Office of Profit
In many cases a person who is holding an office of profit cannot be appointed to another
office. If wants to occupy such other office, he has to vacate the office of profit occupied
by him.
For example, under arts. 102 and 191 a person holding an office of profit cannot be a
member of Parliament or State Legislature, respectively. If he wants to become M.P.,
M.L.A. or M.L.C., he has to first vacate the office of profit held by him.
As employees of a statutory corporation are not government servants, and
government has no say in their appointment and removal they are not deemed to hold an
office of profit.
But where the Rules of statutory corporation empower the government to appoint or remove
an employee, such employee is deemed to hold an office of profit
6. FINANCIAL INDEPENDENCE
Depending upon the provisions of the parent statute, a statutory corporation is largely
autonomous in finance and management. It enjoys financial autonomy or independence. It
is not subject to the budget, accounting and audit controls.
After getting the prior permission from the government, it can even borrow money within
and outside the country.
 MERITS OF STATUTORY CORPORATIONS
The following are the advantages and merits of statutory corporations:
1. Initiative and Flexibility
2. Avoids Red-Tapism
3. Easy to Raise Capital
4. Works with Service Motive
5. Secures Working Efficiency
2. Initiative and Flexibility: A statutory corporation manages and operates its affairs
independently, without any government’s interference, with its own initiative
and flexibility.
3. Avoids Red-Tapism: Red-tapsim and bureaucracy are such evils that hamper the
working of organizations. Such evils are not found in statutory corporations. It can
take quick decisions and prompt actions on any matter that affects its
business.
3. Easy to Raise Capital: As such corporations are fully owned by government, they
can easily raise required capital by floating bonds at low rate of interest. Since
these bonds are safe, public also feels comfortable in subscribing such bonds.
4. Works with Service Motive: They work with the aim to render services and
profit earning is not the first priority. The profits that such corporations earn are
utilized for the benefit of consumers and community.
Problems of exploitation, speculation and profiteering etc. are avoided in case of
statutory corporations.
5. Secures Working Efficiency: Such corporations provide better amenities and more
attractive terms of service to its employees which helps in reducing the labour
problems. It, thus, helps in securing greater working efficiency.

LIMITATIONS OF STATUTORY CORPORATIONS

Statutory corporations also suffer from some disadvantages or limitations. Main
limitations of statutory corporations are:
1. Less Autonomy
2. Inflexibility
3. Clash Amongst Divergent Interests
 4. Ignores Commercial Principles
5. Excessive Public Accountability
6. Less Autonomy: In practice, autonomy of statutory corporations are in a closed and
systematic way controlled by the government even in matters which allow them
to enjoy freedom. ONGC, FCI and Electricity Boards are statutory
corporations important to government and public both.
But Central Government and state Governments curtail their freedom which as per the
Acts they are entitled to.
2. Inflexibility: A corporation is said to be inflexible and insensitive to changing
situations because an amendment in the Act of legislature is required, if any
change in objects and powers of corporation has to be made.
3. Clash Amongst Divergent Interests: Government appoints the Board of
Directors and their work is to manage and operate corporations. As there are
many members, it is quite possible that their interests may clash. Because of this
reason, the smooth functioning of corporation may be hampered.
4. Ignores Commercial Principles: Statutory corporations may ignore the
commercial principles in their working because they do not work to earn profit and
do not have any fear of loss. Without these principles, inefficiency and losses can
take place in a corporation.
5. Excessive Public Accountability: Such corporations work with the motive to
render services and not profit motive. This public accountability of corporation act
as a stumbling block in operational efficiency of the enterprise.

CLASSIFICATION OF STATUTORY CORPORATIONS

There is a wide variety of statutory corporations. Each corporation is established for a
different purpose and according to its purpose the constitution and other aspects are
decided.
However, considering the purpose and function as well as some main features of different
statutory corporations, we may classify them as under:
1. Industrial Corporations;
2. Commercial Corporations;
3. Financial Corporations;
4. Commodity Corporations;
5. Social and Service Providing Corporations; and
 6. Developmental Corporations.

1. INDUSTRIAL CORPORATIONS
Statutory corporations which are formed to operate the nationalized industry mills or
industry mills established by the State are called ‘industrial statutory corporations’.
Such corporations are called ‘sectoral corporations’ because they operate industry mills in
one certain sector.
COMMERCIAL CORPORATIONS
Statutory corporations which undertake commercial activities
remaining under some concerned ministry are called ‘commercial statutory
corporations’.
Commercial statutory corporations are related to selling and buying products and services
to stabilize the product price and make a profit.
Noted examples are Road Transport Corporations (KSRTC, NWKRTC, EWKRTC, etc.),
Electricity Boards (KPTCL, BESCOM, HESCOM, MESCOM, GESCOM, etc.), Bharat
Sanchar Nigam Ltd. (BSNL), Videsh Sanchar Nigam Ltd. (VSNL), etc.
3. FINANCIAL CORPORATIONS
These statutory corporations are established for providing financial assistance to eligible
enterprises. They may also be in banking or insurance sectors.
Industrial Finance Corporation (IFC), Unit Trust of India (UTI), Life Insurance
Corporation (LIC), Reserve Bank of India (RBI), etc. are noted examples.
4. COMMODITY CORPORATIONS
These statutory corporations primarily undertake the of development of a
commodity, such as the Oil and Natural Gas Commission (ONGC), Tea Board, Coffee
Board and Silk Boards. Often, they also regulate the concerned sectors.
5. SOCIAL AND SERVICE PROVIDING CORPORATIONS
Statutory corporations which are formed for social service and public welfare at a regional
or national level are called ‘service providing statutory corporations’. The main purpose of
these corporations is public welfare not earning a profit. As they are involved in social
service, they are also called ‘social statutory corporations’.
6. DEVELOPMENTAL CORPORATIONS
Statutory corporations which are formed and operated for the development of financial
structure, education, industry, culture, literature, and public welfare are called
‘developmental statutory corporations’. The main purpose of such corporations is
development of a specific sector and not earning profit.
The Damodar Valley Corporation (DVC), which is established by the Damodar Valley
Corporation Act, 1948 to control floods and utilize water for irrigation and power
generation is a noted example of such corporations.
The above classification is not a strict classification. In many cases, a corporation falls
under more than one head. For example, BSNL and VSNL may be commercial
corporations as well as a developmental corporations, as they strive to provide
telecommunication and internet to all parts of the country, and thereby see that people
from all parts of country can be brought together and grow. So also Tea Board and Coffee
Board may be viewed as commodity corporations as well as commercial corporations and
developmental corporations.

GOVERNMENT COMPANY AND STATUTORY CORPORATION

FORMATION
A government company is a corporate body that is created under the Indian
Companies Act, 1956. It is governed by provisions of Companies Act. Whereas, statutory
corporation is a corporate body created by either Parliament or State Legislature by a
special act which defines its powers, duties and functions.
MANAGEMENT
Statutory corporation is managed by the Board of Directors nominated by the
government whereas government company is managed by Board of Directors
consisting of members nominated by the government and also members elected by
shareholders.
CAPITAL
Government subscribes the full capital in case of statutory corporation and
government pays a minimum of 51% of capital in case of government company.
SCOPE FOR PRIVATE PARTICIPATION
There is no scope of private participation in case of statutory corporation. In case of
government company, there is a scope for private participation in the capital if the company
is partly owned by the government.
OPERATIONAL AUTONOMY
A statutory corporation works as an autonomous body within the permissions of the Act.
It enjoys considerable degree of autonomy with no interference of government in
day-to-day activities. A government company runs on commercial principles like a
private enterprise and enjoys higher degree of freedom from government interference.
FLEXIBILITY
A public corporation is subject to some restrictions of the government whereas a
government company enjoys more freedom from government control.
ACCOUNTABILITY
Public, corporation is accountable to the public through legislature whereas in a
government company, government and the concerned ministry are accountable to the
public.

CONTROL OF STATUTORY CORPORATIONS

As may be seen from the above description, a statutory corporation has significant role to
play in the growth of he country and to that effect, it has
There are different controls over statutory corporations:
1. Government Control;
2. Legislative Control;
3. Judicial Control;
4. Pubic Control through
(a) Mass Media;
(b) Consumer Councils;
(c) Consumer Forums; and
Interest Representation or Consultation.
1. GOVERNMENT CONTROL
Government control over public enterprises is highly significant and effective.
Governmental control does not mean governmental interference.
There are various modes of governmental control over statutory corporations. The
following are the main such modes:
1. Power of Nomination, Appointment Removal and Dissolution;
2. Power to Issue Directions;
3. Power to Control Finances; and
4. Power to Institute Enquiries
2. Power of Nomination, Appointment Removal and Dissolution
The parent statutes often provide for nomination or appointment as well as for removal
of some of the directors or some important persons in the management of the corporation.
For example, the Reserve Bank of India Act lays down that the Governor of Reserve
Bank shall be appointed by the central government, and may be removed by the central
government.
The main objects of any statutory corporation are to advance the policies of the
government and to promote the public interest. Therefore, some statutes such as the Tea
Board Act and the Coffee Board Act, provide that if the corporations formed the them
fail to advance the government policies or the public interest, the government shall have the
power to dissolve it.
2. Power to Issue Directions
That a statutory corporation advances the policies of the government and public interest
may also be ensured by issuing of directions by the government to the corporation. For
this, there has to be a provision in the parent statute empowering the government to issue
directions to the corporation.
The power to issue directions may be general or specific. Sec. 34 of the Air
Corporations Act empowers the central government to issue directions to the two
corporations formed under it, and it is mandatory for the corporations to follow the directions.
The Delhi Transport Undertaking Act empowers the government to issue specific
directions to the DTU in the matter of wages and service conditions of its employees.
. Power to Control Finances
The most effective control over any body or institution is financial control. This true in
case of statutory corporations. Statutes establishing corporations provide for various modes
of financial control of the corporation by government.
In some cases the entire capital of the corporation is provided by the government. For
example, the entire capital of Life Insurance Corporation of India is provided by the central
government.
In some other cases, the parent statute may empower the government to control raising or
altering of the capital of the corporation, and of borrowing money by the corporation.
Statutes establishing Hindustan Steel Ltd., and Damodar Valley Corporation include
such provisions.
Some such statues may also provide for the audit of the finances of the corporation
by the Auditor-General or by an auditor appointed by the government. The statute may also
empower the government to call for the budget, accounts and annual reports of the
corporation.
4. Power to Institute Enquiries
Another mode of control by government over statutory corporations is power to order
enquiry into its functioning. This acts as a sufficient deterrent for the corporation
from deviating from the norms and Rules. The Delhi Transport Undertaking Act
includes such a provision.
2. LEGISLATIVE CONTROL
A statutory corporation is a creature of a statute. It owes its existence to
legislature. Therefore, legislature which created a statutory corporation may reserve
powers to control it.
In a way, the legislative control begins even before the corporation is formed. To pass
the parent statute a bill is introduced in the legislature. The need for the corporation,
its organisation, powers and functions, financial aspects, control over such corporation, etc.
will be discussed by the legislature.
Statutes establishing the Corporations often provide that their annual reports should be
submitted to the Government of India giving an account of the activities and then laid before
the legislature, i.e., its Houses.
Under the Insurance Corporation Act, 1956, besides the auditor’s report and annual
report, the report of the actuaries containing the result of an investigation made by the
actuaries into the financial condition of the business of the Corporation should also
be so laid.
The legislative control over the function of the statutory corporations is confined to broad
featured criticism. Day to day functioning is outside the purview of such control. The
member’s right to ask questions about the public undertakings and general debates
especially the budget debate provide the occasions for such criticism.
This direct control over statutory corporations by legislature is not very effective because
the members of legislature lack expertise and technical skills necessary to scrutinise the
documents presented to the legislature by the statutory corporation.
The parliamentary control over public undertaking has been unsystematic, haphazard
and ineffective.
It operates through the instrumentalities of:
1. Question hour
2. Adjournment motions
3. Parliamentary debates
4. Discussions on reports
5. Parliamentary committees especially the Committee on Public Undertakings.
Control Through Committees
Effective control over statutory corporations is through Committees of Parliament. Before
1964 the Estimates Committee and the Public Accounts Committee of the Parliament
exercised control over statutory corporations.
The Estimates Committee of the Lok Sabha often made suggestions with a view to proper
working to the Damodar Valley Corporation (DVC) and the Oil and Natural Gas
Commission (ONGC) and other Corporations.
In 1964, a Committee under the chairmanship of Shri V. K. Krishna Menon made certain
recommendations in respect of better control over statutory corporations. Amongst other
things it has suggested the appointment of a Committee of the Lok Sabha by name
‘Committee on Public Undertakings’, for exercise of continuous broad supervision.
Committee on Public Undertakings
Constitution was amended to make provision for the appointment of Committee on Public
Undertakings, and arts. 312-A and 312-B were inserted.
Art. 312-A provides for establishment and functions of the Committee. Art. 312-B provides
for the constitution of the Committee.
Constitution of the Committee
The Committee consists of 22 members comprising 15 members elected by Lok Sabha
every year from amongst its members according to the principle of proportional
representation by means of single transferable vote and 7 members elected by Rajya
Sabha in like manner and nominated by that House for being associated with the
Committee.
The system of election ensures that each party or group is represented on the Committee
in proportion to respective strength of the Houses.
A Minister is not eligible to be elected as a member of the Committee and if a member,
after his election to the Committee, is appointed a Minister, he ceases to be a member of
the Committee from the date of such appointment.
The Chairman of the Committee is appointed by the Speaker from amongst members
of the Committee.
Functions of the Committee
According to art. 312-A the functions of the Committee are
(a) to examine the reports and accounts of the public undertakings specified in
the Fourth Schedule;
(b) to examine the reports, if any, of the Comptroller and Auditor-General on the
public undertakings;
(c) to examine, in the context of the autonomy and efficiency of the public
undertakings, whether the affairs of the public undertakings are being managed in
accordance with sound business principles and prudent commercial practices;
and
(d) to exercise such other functions vested in the Committee on Public Accounts and
the Committee on Estimates in relation to the public undertakings specified in
the Fourth Schedule as are not covered by clauses (a), (b) and (c) above and as
may be allotted to the Committee by the Speaker from time to time.
Proviso to art. 312-A provides that the Committee shall not examine and investigate any
of the following, namely:
(i) matters of major Government policy as distinct from business or
commercial functions of the public undertakings;
(ii) matters of day-to-day administration; and
(iii) matters for the consideration of which machinery is established by any special
statute under which a particular public undertaking is established.
JUDICIAL CONTROL
A statutory corporation is an artificial person. As such, it may enter into contracts in the
same way as a natural person may. The corporation also employs its servants. Thus,
a statutory corporation may be sued for breach of contracts. It may also be sued
vicariously for the torts committed by its servants.
A statutory corporation is ‘State’ as defined by art. 12 of the Constitution. Thus, it is
amenable to the writ jurisdiction of the High Courts and the Supreme Court. As a
consequence, the acts of statutory corporations are subject to judicial review. Further,
fundamental rights may be enforced against a statutory corporation.
PUBLIC CONTROL
The very object of establishing a statutory corporation is to advance public interest by
undertaking programmes for the benefit of the public. They cannot ignore the public
interest while discharging their functions. They are directly responsible to the public in
their functioning.
There are four channels through which the public control over statutory
corporations is exercised:
(a) Control through Mass Media
Mass media plays a very important role in any democracy. It not only provides
information to the people, it mobilises public opinion. It creates an effective barrier against
political interference, bureaucratic red-tapism, corruption, and inefficiency
It often motivates NGOs, social servants, action groups, etc. to raise voice against
malpractices by the persons and institutions in authority. As a consequence, mass media
makes them to be within their limits act in the larger interest of the public.
(b) Control through Consumer Councils
Under the Consumer Protection Act, 1986 The Consumer Councils are created to advise
and assist the consumers in seeking and enforcing their rights. We have Consumer
Protection Councils both at Centre level and State level, that is one Central Council and
many State Councils.
These councils work towards the promotion and protection of consumers. They make
investigations and give publicity to the matters concerning consumer interests, take
steps towards furthering consumer education and protecting consumer from
exploitation, advice the Government in the matter of policy formulation keeping
consumer interest as pivotal concern, etc. Although their suggestions are
recommendatory in nature, but they have significant impact in policy making.
While deciding about the composition of these councils, the State keeps in mind that it
should have proper representation from all the possible areas affecting consumer
interests. Again the rules as to when should these councils meet, what should they aim
at, how they conduct their business are framed by the Government with a view to
balance the efficacy and practicability of its business.
Working Groups
Rule 3 of the Consumer Protection Rules establishes ‘Working Groups’ for the purpose
of monitoring the implementation of the recommendations of the Central Council and to
suggest the working of the Council. The Central Government may constitute from amongst
the members of the Council, a Standing Working Group, under the chairmanship of the
Member Secretary of the Council.
(c) Control through Consumer Forums
Consumer Protection Act, 1986 has established Consumer Grievance Redressal Forums
at district level and Consumer Grievance Redressal Commissions at the state and national
levels. These forums provide speedier, informal and inexpensive redressal of the grievances
of consumers.
The Act was amended in 1993 and invested these forums with power to pass ‘cease
and desist’ orders and also power to order ‘recall’ of goods.
These forums have been effective in enforcing the rights of the consumers. Most of the
service providers are careful to avoid being dragged before these forums. Thus, the existence
of these forums, in a way, acts as a preventive measure, thus making them even more
effective by saving consumers’ time, money and labour.
d) Control by Way of Interest Representation or Consultation
In many countries there is public participation in the management and policy- making
bodies of public undertakings. Representatives of the affected interest will be nominated,
elected or appointed in these bodies to monitor their functioning and to prevent them from
acting against the public interest.
In India, however, there is no such mechanism adopted. On the other hand, in some
cases, there is a consultative mechanism. For example, under the Road Transport
Corporations Act, 1950, Road Transport Corporations are established. Under sec. 17 of
the Act, Government may establish one or more Advisory Councils for the purpose
of advising the Corporation in the matters specified in the notification.
Under the Electricity Boards Acts, public hearing is mandatory before revising the
electricity tariffs.
 LIABILITIES OF STATUTORY CORPORATIONS
A statutory corporation is liable in two capacities, one, as State, and the other, as an
individual. It is a State under art. 12 of the Constitution, while it is also a legal person having
the same rights and duties as an individual.
CONTRACTUAL LIABILITY
Though a statutory corporation is State, it is not government. Therefore, art. 299 is not
applicable to contracts made by them. Therefore, their liability is the same as any individual
under the India Contract Act, 1872 and other applicable laws.
Contracts made by statutory corporations now fall under two classes:
1. ordinary contracts; and
2. statutory contracts.
Statutory contracts are contracts made in order to discharge statutory functions and duties
of the corporation. Therefore, the breach of such a contract amounts to breach of statutory
duty and a writ of mandamus may be issued to the corporation
Lotus Hotel vs. Gujrat State Finance Corporation
Where a statutory body established to advance loans enters into a contract for the
purpose of giving loans it is not only entering into a contract but also is
discharging its statutory duty. Therefore, a breach of that contract is also a breach
of its statutory duty. Hence, mandamus may be issued to enforce that duty.
Ordinary contracts are contracts which are independent of any statutory duty. Their
breach does not amount to breach of any statutory duty. Therefore, no writ lies to enforce
such contracts. They may be enforced in ordinary Courts by instituting suit against
the corporation.
Further, as the statutory corporations are established for the benefit of public, their
functioning should be beneficial to the public. Their powers under contracts or otherwise
are, therefore, held to be subject to their duty to act in the interest of the public.
Kartik Enterprise vs. Orissa State Electricity Board
The OSEB increased electricity tariffs for various categories of consumers. The
Petitioner challenged the revision of tariffs on, inter alia, a unique ground, namely,
that the statute casts an obligation on the Board to operate efficiently and
economically. Without discharging this obligation, it cannot increase the tariffs.
This contention was accepted by the Court. The Court observed that, “without the
corresponding obligation to act efficiently and economically. The Board is
not intended to exercise its power to adjust its tariff. We cannot accept a situation
 where the State or any of its instrumentalities would have power without any
correlative duty to exercise such powers ...”
TORTUOUS LIABILITY
A corporation has to appoint its employees without which it cannot function. If the
employees of the corporation commit any tort against any other person, the
corporation is vicariously liable.
Many statutory corporations undertake hazardous activities. As a statutory corporation
is State, it is assumed that it acts in the public interest, and discharges its duties
more efficiently in the public interest, than any private enterprise would. Thus, their
duty to take care is very high.
M. C. Mehta vs. Union of India
The Supreme Court of India went a step ahead of the House of Lords. It held that
the exceptions to the rule of strict liability under Rylands vs. Fletcher do not suit
the Indian situation, and hence, are not applicable to a case where an industry has
undertaken hazardous activities. It was held that in such cases the rule applicable is
not one of ‘strict liability’, but one of ‘absolute liability’.
In such cases, the compensation awarded will be very high running in several crores
of rupees, and the corporations often plead incapacity to pay such a high compensation.
In such cases, the Court has observed that where a company undertakes or a statutory
corporation is permitted to undertake a hazardous or inherently dangerous activity for
profit, the law must presume that such permission is conditional on the company or
corporation absorbing the cost of any accident as an appropriate item of overheads. To
balance the private and public rights in such cases, the Court observed that the compensation
must be correlated to the magnitude and capacity of the company or corporation,
because such compensation must have a deterrent effect.
TAX LIABILITY
A Statutory corporation is bound by the laws in the same way as any other person. Therefore,
it is liable to pay tax in the same way as any private individual or company. A
company is an assessee under the Income Tax Act, and a dealer under the Goods and Service
Tax Act.
Only where the relevant tax law expressly exempts the corporation from tax liability
under that law, it is not liable to pay the tax.
As the tax is paid by the corporation to the government, there is implied exemption to pay
tax.
CRIMINAL LIABILITY
Once it was believed that a legal person is not liable under criminal law. This was because
of two reasons:
1. Mens ea, being necessary element to constitute a crime. A legal person, having no
mind, was incapable of having mens rea necessary to constitute a crime.
2. Punishments for crimes were predominantly of corporeal nature, i.e.,
imprisonment or death sentence. These punishments could not be inflicted upon
legal persons which do not have physical existence.
But today, many offences are of strict liability, not requiring mens rea as necessary ingredient
of the offence. Most of the financial offences are offences of strict liability. And,
the punishment for such offences may be fine. Therefore, it is quite natural that today a
corporation may be held liable under criminal law.
Further, if a legal person acts through human agents, those human agents are responsible
for the acts and omissions of the corporation, and hence may be punished for the
offences committed by the legal person, along with the legal person.
PUBLIC LAW LIABILITY
A statutory corporation, being State, is amenable to the writ jurisdiction of the High
Courts and the Supreme Court. It may be held liable for violation of the fundamental
rights of the people.
Writ of mandamus lies against a statutory corporation to enforce its statutory duties
or statutory contracts, or to prevent it from committing breach of duties.
Writs of prohibition and certiorari lie against a statutory corporation to prevent it from
acting without or in excess of its jurisdiction.
Writ of quo warranto may lie against a person who occupies an office in a statutory
corporation, without proper qualifications.

MALADMINISTRATION

Maladministration means inefficient or dishonest administration. The definition of

maladministration is wide and can include: Delay. Incorrect action or failure to take any
action. The definition of maladministration can include:
1. Delay
2. Incorrect action or failure to take any action
3. Failure to follow procedures or the law
 4. Failure to provide information
5. Inadequate record-keeping
6. Failure to investigate
7. Failure to reply
8. Misleading or inaccurate statements
9. Inadequate liaison
10. Inadequate consultation
11. Broken promises
It generally refers to corruption in administration. Corruption may defined as a form of
dishonesty undertaken by a person entrusted with a position of authority, often to acquire
personal benefit.
But, corruption is a wider term including any wrong actions and attitudes on the part of an
administrative authority. Bribery and misappropriation are only two of the many forms of
corruption. It may also involve practices that are not illegal. For example, nepotism,
arrogance and rudeness are very common forms of corruption among administrative
authorities.
MEASURES TO TACKLE WITH MALADMINISTRATION
There are several measures undertaken by the different countries in the world to tackle
maladministration, especially corruption. The most celebrated effort is the office of
ombudsman.
In India, Lokpal, Lokayukta and CVC are the notable efforts to fight against
corruption
OMBUDSMAN
An ombudsman is a person who acts as a trusted intermediary between either the state and
its authorities, or an organization, and some internal or external constituency, while
representing not only but mostly the broad scope of constituent interests.
An indigenous Danish, Norwegian and Swedish term, Ombudsman is
etymologically rooted in the Old Norse word umboðsmaðr, essentially meaning
"representative”. The term is used in a sense to mean “the grievance man.”
In its most frequent modern usage, an ombudsman is an official, usually appointed
by the government or by parliament but with a significant degree of autonomy, who
is charged with representing the interests of the public by investigating and addressing
complaints reported by individuals.
In different countries the ombudsmen may be called by different names.
 OMBUSMAN IN INDIA
The Government of India has designated several ombudsmen (sometimes called
Chief Vigilance Officer (CVO)) for the redress of grievances and complaints from
individuals in the banking, insurance and other sectors being serviced by both private
and public bodies and corporations. The CVC (Central Vigilance Commission)
was set up on the recommendation of the Santhanam Committee (1962–64).
Lokpal
In India, the Ombudsman is known as the Lokpal or Lokayukta. An Administrative
Reforms Commission (ARC) was set up on 5 January 1966 under the
Chairmanship of Shri Morarji Desai. It recommended a two-tier machinery: Lokpal at the
Centre (parliamentary commissioner, as in New Zealand) and one Lokayukta each
at the State level for redress of people's grievances.
However, the jurisdiction of the Lokpal did not extend to the judiciary (as in case of New
Zealand). The central Government introduced the first Lokpal Bill, Lokpal and Lokayuktas
Bill in 1968, and further legislation was introduced in 2005. Final bill, after all the
amendments, has been passed in Rajya Sabha on 17 December 2013 and passed in Lok
Sabha on 18 December 2013
Lokayukta
The state-level Lokayukta institution has developed gradually. Orissa was the first
state to present a bill on establishment of Lokayukta in 1970, but Maharashtra was the
first to establish the institution, in 1972. Other states followed: Bihar (1974), Uttar
Pradesh (1977), Madhya Pradesh (1981), Andhra Pradesh (1983),
Himachal Pradesh (1983), Karnataka (1984), Assam (1986), Gujarat (1988), Delhi
(1995), Punjab (1996), Kerala (1998), Chhattishgarh (2002), Uttaranchal (2002),
West Bengal (2003) and Haryana (2004).
The structure of the Lokayukta is not uniform across all the states. Some states have
UpaLokayukta under the Lokayukta and in some states, the Lokayukta does not have suo
moto powers of instigating an enquiry.
KARNATAKA LOKAYUKTA
Problems of Redressal of Citizens Grievances is the subject on which the
Administrative Reforms Commission headed by Late Shri Morarji Desai, who later became
the Prime Minister of India gave its first report. It is that report which recommended
for the establishment of Lokpal and Lokayukta institutions at the Central and State level
respectively for redressal of citizens grievances by investigating into administrative
actions taken by or on behalf of Central Government or State Government or certain
public authorities. These institutions were intended to serve as institutions independent of
the Government concerned and as institutions to supplement the judicial institutions
headed by Chief Justices or Judges of Supreme Court of India or High Court of the State.
The recommendation for appointment of Lokayuktas at the States level, as indicated
in that report, was made to improve the standards of Public Administration, by
looking into complaints against administrative actions, including cases of
corruption, favouritism and official indiscipline in administrative machinery. It
is the said recommendation which made the Karnataka State Legislature to enact
the Karnataka Lokayukta Act, 1984 for investigating into allegations or grievances in
respect of administrative actions relatable to matters specified in List II or List III
of the 7th Schedule to the Constitution of India.
KARNATAKA LOKAYUKTA ACT, 1984
The Administrative Reforms Commission had recommended the setting up of the
institution of Lokayukta for the purpose of appointment of Lokayukta at the state's
level, to improve the standards of public administration, by looking into complaints
against the administrative actions, including cases of corruption, favouritism and
official indiscipline in administrative machinery.
One of the election promises in the election manifesto of the Janata Party was the setting
up of the Institution of the Lokayukta.
The Act provides for the appointment of a Lokayukta and one or more
Upalokayuktas to investigate and report on allegations or grievances relating to the
conduct of public servants.
The public servants who are covered by the Act include:
1. Chief Minister;
2. all other Ministers and Members of the State Legislature;
3. all officers of the State Government;
4. Chairman, Vice Chairman of local authorities, Statutory bodies or Corporations
established by or under any law of the State Legislature, including Co-operative
Societies;
5. Persons in the service of Local Authorities, Corporations owned or controlled by the
State Government, a company in which not less than 50% of the shares are held by
the State Government, Societies registered under the State Registration Act, Co-
 operative Societies and Universities established by or under any law of the
Legislature.
Where, after investigation into the complaint, the Lokayukta considers that the allegation
against a public servant is prima facie true and makes a declaration that the post held by him,
and the declaration is accepted by the competent authority, the public servant concerned,
if he is a Chief Minister or any other Minister or Member of State Legislature shall
resign his office and if he is any other non- official shall be deemed to have vacated
his office, and, if an official, shall be deemed to have been kept under suspension,
with effect from the date of the acceptance of the declaration.
If after investigation, the Lokayukta is satisfied that the public servant has committed
any criminal offence, he may initiate prosecution without reference to any other authority.
Any prior sanction required under any law for such prosecution shall be deemed to
have been granted.
The Vigilance Commission is abolished. But all inquiries and investigations and other
disciplinary proceedings pending before the Vigilance Commission will be transferred
to the Lokayukta.
Long Title
An act to make provision for the appointment and functions of certain authorities for
making enquiries into administrative action relatable to matters specified in List II or
List III of the Seventh Schedule to the Constitution, taken by or on behalf of the
Government of Karnataka or certain public authorities in the State of Karnataka
(including any omission or commissions in connection with or arising out of such action)
in certain cases and for matters connected therewith or ancillary thereto.
Preamble
Whereas it is expedient to make provision for the appointment and functions of certain
authorities for making enquiries into administrative action relatable to matters specified
in List II or List III of the Seventh Schedule to the Constitution taken by or on behalf of
the Government of Karnataka or certain public authorities in the State of Karnataka
(including any Omission of commission in connection with or arising out of such action)
in certain cases and for matters connected therewith or ancillary thereto.
Appointment of Lokayukta and Upalokayukta
For the purpose of conducting investigations and enquiries in accordance with the provisions
of this Act, a person to be known as the Lokayukta and one or more persons to be known
as the Upalokayukta or Upalokayuktas are appointed under sec. 3 of the Act.
A person to be appointed as the Lokayukta shall be a person who has held
1. the office of a Judge of the Supreme Court, or
2. that of the Chief Justice of a High Court
A person to be appointed as an Upalokayukta shall be a person who has held the office of
the Judge of a High Court.
Lokayukta and Upalokayukta shall be appointed by the Governor on the advice tendered
by the Chief Minister in consultation with
1. the Chief Justice of the High Court of Karnataka,
2. the Chairman, Karnataka Legislative Council,
3. the Speaker, Karnataka Legislative Assembly,
4. the Leader of the Opposition in the Karnataka Legislative Council, and
5. the Leader of the Opposition in the Karnataka Legislative Assembly.
A person appointed as the Lokayukta or an Upalokayukta shall, before entering upon his
office, make and subscribe before the Governor, or some person appointed in that
behalf of him, an oath or affirmation in the form set out for the purpose in the First Schedule
to the Act.
Conditions of Service
The Lokayukta or Upalokayukta shall not be a member of the Parliament or be a member
of the Legislature of any State and shall not hold any office or trust of profit or be
connected with any political party or carry on any business or practice any profession.
Salary and allowances of the Lokayukta and the Upalokayukta shall be equal to that of
the Chief Justice of a High Court and that of a Judge of the High Court respectively. No
dearness allowance shall be paid to them.
On ceasing to hold office, the Lokayukta or an Upalokayukta shall be ineligible for further
employment to any office of profit under the Government of Karnataka or in any authority,
corporation, company, society or university referred to in sec. 2(12)(g).
Tenure of Office
A person appointed as the Lokayukta or Upalokayukta shall hold office for a term of five
years from the date on which he enters upon his office.
The Lokayukta or an Upalokayukta may, by writing under his hand addressed to the
Governor, resign his office.
The Lokayukta or an Upalokayukta may be removed from office by an order of the
Governor.
Matters which may be Investigated by the Lokayukta
Lokayukta may investigate any action which is taken by or with the general or
specific approval of the authorities listed in sec. 7(1), and Upalokayukta may
investigate any action which is taken by or with the general or specific approval of the
authorities listed in sec. 7(2).
Where two or more Upalokayuktas are appointed under this Act, the Lokayukta may, by
general or special order, assign to each of them matters which may be investigated by
them under this Act. However, no investigation made by an Upalokayukta under
this Act, and no action taken or things done by him in respect of such investigation
shall be open to question on the ground only that such investigation relates to a matter
which is not assigned to him by such order.
When the office of an Upalokayukta is vacant by reason of his death, resignation,
retirement, removal or otherwise or when an Upalokayukta is unable to discharge his
functions owing to absence, illness or any other cause, his function may be discharged
by the other Upalokayukta, if any and if there is no other Upalokayukta by the
Lokayukta.
Matters Not Subject to Investigation
The Lokayukta or an Upalokayukta shall not conduct any investigation under this Act in the
case of a complaint involving a grievance in respect of any action,
1. if such action relates to any matter specified in the Second Schedule to the Act; or
2. if the complainant has or had, any remedy by way of appeal, revision, review or other
proceedings before any tribunal, Court officer or other authority and has not availed
of the same.
The Lokayukta or an Upalokayukta shall not investigate,
1. any action in respect of which a formal and public enquiry has been ordered with
the prior concurrence of the Lokayukta or an Upalokayukta, as the case may be;
2. any action in respect of a matter which has been referred for inquiry, under the
Commission of Inquiry Act, 1952 with the prior concurrence of the Lokayukta or
an Upalokayukta, as the case may be;
3. any complaint involving a grievance made after the expiry of a period of six
months from the date on which the action complained against become known to
the complainant; or
4. any complaint involving an allegation made after the expiry of five years from the
date on which the action complained against is alleged to have taken place:
However, he may condone the delay in lodging a complaint if the complainant satisfies
that he had sufficient cause for not making the complaint within the period specified
above.
Lokayukta or an Upalokayukta shall not question any administrative action involving
the exercise of a discretion except where he is satisfied that the elements involved in the
exercise of the discretion are absent to such an extent that the discretion can prima facie
be regarded as having been improperly exercised.
Procedure for Making Complainant and Investigation
Any person may make a complaint under the Act to the Lokayukta or an
Upalokayukta. In case of a grievance, if the person aggrieved is dead or for any reason,
unable to act for himself, the complaint may be made or if it is already made, may be
prosecuted by his legal representatives or by any other person who is authorized by him in
writing in this behalf.
Lokayukta may also initiate an investigation suo motu, by recording his opinion to
initiate the investigation. A copy of the opinion shall be forwarded to the public servant
and the Competent Authority concerned.
Every complaint shall be made in the form of a statement supported by an affidavit
and in such forms and in such manner as may be prescribed.
The Lokayukta or an Upalokayukta shall make a preliminary inquiry to find out whether
it is a fit case to conduct any investigation. If he proposes to conduct enquiry, he shall
forward a copy of the complaint to the public servant and the Competent Authority
concerned.
The Lokayukta or an Upalokayukta may make such order as to the safe custody of
documents relevant to the investigation, as he deems fit.
Investigation may be held either in public or in camera, as the Lokayukta or the
Upalokayukta, as the case may be, considers appropriate in the circumstances of the case.
The Lokayukta or the Upalokayukta may, in his discretion, refuse to investigate or cease to
investigate any complaint involving a grievance or an allegation, if in his opinion,
1. the complaint is frivolous or vexatious or is not made in good faith;
2. There are no sufficient grounds for investigating or, as the case may be, for
continuing the investigation; or
3. Other remedies are available to the complainant and in the circumstances of the
case it would be more proper for the complainant to avail such remedies.
In any case where the Lokayukta or an Upalokayukta decides not to entertain a complaint
or to discontinue any investigation in respect of a complaint he shall record his reasons
therefor and communicate the same to the complainant and the public servant concerned.
For the purpose of investigation, the Lokayukta or an Upalokayukta may
1. issue summonses to the witnesses;
2. call for documents;
3. record evidence.
Reports of Lokayukta
If, after investigation the Lokayukta or an Upalokayukta is satisfied that such
action has resulted in injustice or undue hardship to the complainant or to any other
person, he shall, by a report in writing, recommend to the competent authority
concerned that such injustice or hardship shall be remedied or redressed in such
manner and within such time as may be specified in the report.
The competent authority to whom a report is sent shall, within one month of the expiry of
the period specified in the report, intimate or cause to be intimated to or the Lokayukta the
Upalokayukta the action taken on the report.
If, after investigation the Lokayukta or an Upalokayukta is satisfied that such allegation
is substantiated either wholly or partly, he shall by report in writing communicate his
findings and recommendations along with the relevant documents, materials and
other evidence to the competent authority.
The Competent authority shall examine the report and within three months of the
date of receipt of the report, intimate or cause to be intimated to the Lokayukta or
the Upalokayukta the action taken or proposed to be taken on the basis of the report.
If the Lokayukta or the Upalokayukta is satisfied with the action taken or proposed
to be taken on his recommendations or findings, he shall close the case under information
to the complainant, the public servant and the competent authority concerned.
But where he is not so satisfied and if he considers that the case so deserves, he may make
a special report upon the case to the Governor and also inform the Competent Authority
concerned and the Complainant.
The Lokayukta shall present annually a consolidated report on the performance of
his functions and that of the Upalokayukta under this Act to the Governor. The Governor
shall cause a copy thereof together with an explanatory memorandum to be laid before each
House of the State Legislature
Vacating Office Under Direction by Lokayukta
Where after investigation into a complaint the Lokayukta or an Upalokayukta is
satisfied that the complaint involving an allegation against the public servant is
substantiated and that the public servant concerned should not continue to hold the post
held by him, the Lokayukta or the Upalokayukta shall make a declaration to that effect in his
report.
Where the competent authority is the Governor, State Government or the Chief
Minister, it may either accept or reject the declaration after giving an opportunity of being
heard. In other cases, the competent authority shall send a copy of such report to the State
Government, which may either accept or reject the declaration.
If it is not rejected within a period of three months from the date of receipt of the report,
or the copy of the report, as the case may be, it shall be deemed to have been accepted
on the expiry of the said period of three months.
If the declaration so made is accepted or is deemed to have been accepted, the fact of
such acceptance or the deemed acceptance shall immediately be intimated by Registered
post by the Governor, the State Government or the Chief Minister if any of them is the
competent authority and the State Government in other cases.
Initiation of Prosecution
If after investigation into any complaint the Lokayukta or an Upalokayukta is
satisfied that the public servant has committed any offence and should be prosecuted
in a court of law for such offence, he may pass an order to that effect. If prior sanction of
any authority is required for such prosecution, such sanction shall be deemed to have been
granted by the appropriate authority on the date of such order.
Secrecy of Information
Any information obtained by the Lokayukta or an Upalokayukta or members of his
staff in the course of or for the purpose of any investigation under this Act and any evidence
recorded or collected in connection with such information, shall be treated as
confidential and no court shall be entitled to compel the Lokayukta or the Upalokayukta
or any public servant to give evidence relating to such information or produce the
evidence so recorded or collected
 LOKPAL: LESSONS FROM KARNATAKA
The best case for a Lokpal is to show that the existing Lokayuktas work. And even
if they have not performed satisfactorily, an assessment of their performance should
inform the design of Lokpal.
An analysis of the cases handled by the Karnataka Lokayukta during 1995-2011
using data obtained through the RTI Act provides such an opportunity. Lokayukta can
investigate corruption cases either by traps initiated in response to complaints,
or raids conducted on the basis of information collected by the Lokayukta police.
After a raid or trap, the Lokayukta police investigates the case, and if it is unable to find
sufficient evidence to prosecute, then it is closed. Otherwise, a request is made to the
competent authority to sanction prosecution. If the sanction is granted, the charge
sheet is filed for trial.
A section of the civil society is demanding a stringent law to empower Lokpal to
pursue cases of corruption on its own. The Karnataka Lokayukta had such power. However,
it carried out only 355 suo motu raids, whereas it responded to over 2,259 citizen
complaints.
Moreover, the share of raid cases has been decreasing over the years. A
comparison of raid and trap cases suggests that one of the most active Lokayuktas is, in fact,
primarily driven by citizen complaints. This, in turn, suggests that the institutional
incentives for suo motu action seem to lie elsewhere.
IMPACT ON PERFORMANCE
Leadership of the Lokayukta is believed to have a significant impact on
performance. One way of judging the performance of incumbents is the number of new
cases filed during their tenure. About 65 per cent of the cases in our data (consisting of
four Lokayuktas) were initiated during the tenure of Lokayukta 2006-11.
Another measure is the number of cases against officials belonging to the highest cadres.
Two-thirds of the cases against such officials were initiated during the tenure of the
same Lokayukta 2006-11.
A third of the cases against these officials were initiated during President's rule,
alerting us to a possible nexus between politicians and higher officials. However, if
conviction is the yardstick of performance, then the tenure of the Lokayukta 2001- 06 stands
out, as two-thirds of the cases in which convictions were secured were either initiated or
concluded during this period.
While the above measures give a glimpse of how leadership affects the
performance, an important measure of impact of individual styles on institutional
performance is the ratio of trap to raid cases filed. The tenure of Lokayukta 2001- 06 had
an excessive focus on traps.
THE LOKPAL AND LOKAYUKTAS ACT, 2013
The historic Lokpal and Lokayuktas Act, 2013 was passed by Indian Parliament
paving the way for establishment of a Lokpal (Ombudsman) to fight corruption in public
offices and ensure accountability on the part of public officials, including the Prime
Minister, but with some safeguards.
Lokpal will consist of a chairperson and a maximum of eight members, of which
50% will be judicial members 50% members of Lokpal shall be from SC/ST/OBCs,
minorities and women.
Selection of chairperson and members of Lokpal through a selection committee
consisting of PM, Speaker of Lok Sabha, leader of opposition in Lok Sabha, Chief Justice
of India or a sitting Supreme Court judge nominated by CJI. Eminent jurist to be
nominated by President of India on basis of recommendations of the first four members
of the selection committee “through consensus”.
Lokpal’s jurisdiction will cover all categories of public servants. All entities (NGOs)
receiving donations from foreign source in the context of the Foreign Contribution
Regulation Act (FCRA) in excess of Rs 10 lakh per year are under the jurisdiction of
Lokpal. Centre will send Lokpal bill to states as a model bill. States have to set up
Lokayuktas through a state law within 365 days.
• Lokpal will have power of superintendence and direction over any central
investigation agency including CBI for cases referred to them by the
ombudsman.
• A high-powered committee chaired by the PM will recommend selection of CBI
director. The collegium will comprise PM, leader of opposition in Lok Sabha and
Chief Justice of India PM has been brought under purview of the Lokpal, so also
central ministers and senior officials.
• Directorate of prosecution will be under overall control of CBI director. At
present, it comes under the law ministry.
• Appointment of director of prosecution to be based on recommendation of the
Central Vigilance Commission.
• Director of prosecution will also have a fixed tenure of two years like CBI chief.
 • Transfer of CBI officers investigating cases referred by Lokpal with the
approval of watchdog.
• Bill incorporates provisions for attachment and confiscation of property
acquired by corrupt means, even while prosecution is pending.
• Bill lays down clear time-lines for preliminary enquiry and investigation and trial.
Provides for special courts Public servants will not present their view before
preliminary enquiry if the case requires 'element of surprise' like raids and searches.
• Bill grants powers to Lokpal to sanction prosecution against public servants.
• CBI may appoint a panel of advocates with approval of Lokpal, CBI will not have
to depend on government advocates.
CENTRAL VIGILANCE COMMISSION (CVC)
Central Vigilance Commission (CVC) is an apex Indian governmental body created in 1964
to address governmental corruption. It has the status of an autonomous body, free of control
from any executive authority, charged with
1. monitoring all vigilance activity under the Central Government of India, and
2. advising various authorities in central Government organizations in planning,
executing, reviewing and reforming their vigilance work.
It was set up by the Government of India in February, 1964 on the
recommendations of the Committee on Prevention of Corruption, headed by Shri
K. Santhanam, to advise and guide Central Government agencies in the field of vigilance.
Nittoor Srinivasa Rau, was selected as the first Chief Vigilance Commissioner of
India.
ROLE OF CVC
The CVC is not an investigating agency, and works through either the CBI or
through the Departmental Chief Vigilance Officers. The only investigation carried out by
the CVC is that of examining Civil Works of the Government which is done through the
Chief Technical Officer.
Corruption investigations against government officials can proceed only after the
government permits them. The CVC publishes a list of cases where permissions are
pending, some of which may be more than a year old. The CVC has also been publishing
a list of corrupt government officials against whom it has recommended punitive action.
APPOINTMENT
 The Central Vigilance Commissioner and the Vigilance Commissioners are
appointed by the President after obtaining the recommendation of a Committee consisting
of
1. The Prime Minister — Chairperson
2. The Home Minister — Member
3. The Leader of the Opposition in the Lok Sabha — Member
REMOVAL OF CVC
The Central Vigilance Commissioner or any Vigilance Commissioner can
be removed from his office only by order of the President on the ground of proved
misbehaviour or incapacity after the Supreme Court, on a reference made to it by the
President, has, on inquiry, reported that the Central Vigilance Commissioner or any
Vigilance Commissioner, as the case may be, ought to be removed.
The President may suspend from office, and if deem necessary prohibit also from attending
the office during inquiry, the Central Vigilance Commissioner or any Vigilance
Commissioner in respect of whom a reference has been made to the Supreme Court
until the President has passed orders on receipt of the report of the Supreme Court on
such reference.
The President may, by order, remove from office the Central Vigilance
Commissioner or any Vigilance Commissioner if the Central Vigilance
Commissioner or such Vigilance Commissioner, as the case may be:
1. is adjudged an insolvent; or
2. has been convicted of an offence which, in the opinion of the Central
Government, involves moral turpitude; or
3. engages during his term of office in any paid employment outside the duties of his
office; or
4. is, in the opinion of the President, unfit to continue in office by reason of
infirmity of mind or body; or
5. has acquired such financial or other interest as is likely to affect prejudicially his
functions as a Central Vigilance Commissioner or a Vigilance Commissioner
LIMITATIONS OF CVC
1. CVC is only an advisory body. Central Government Departments are free to
either accept or reject CVC's advice in corruption cases.
2. CVC does not have adequate resources compared with number of complaints
that it receives. It is a very small set up with a sanctioned staff strength of
 299. Whereas, it is supposed to check corruption in more than 1500
central government departments and ministries.
3. CVC cannot direct CBI to initiate inquiries against any officer of the level of
Joint Secretary and above on its own. Such a permission has to be obtained
from the concerned department.
4. CVC does not have powers to register criminal case. It deals only with vigilance or
disciplinary cases.
5. CVC has supervisory powers over CBI. However, CVC does not have the power to
call for any file from CBI or to direct CBI to investigate any case in a
particular manner. CBI is under administrative control of Department of
Personnel and Training (DoPT). Which means that, the powers to appoint,
transfer, suspend CBI officers lie with DoPT.
6. Appointments to CVC are indirectly under the control of Govt of India, though the
leader of the Opposition (in Lok Sabha) is a member of the Committee to select
CVC and VCs. But the Committee considers candidates put up before it. These
candidates are decided by the Government.
As a result, although CVC is relatively independent in its functioning, it has neither
resources nor powers to inquire and take action on complaints of corruption that
may act as an effective deterrence against corruption.