Public Undertaking in Administrative Law
Public Undertaking in Administrative Law
1. Meaning of Public Undertaking
A Public Undertaking refers to an enterprise or business entity which is owned, controlled, or substantially financed by the government. It is set up to serve the public interest by providing goods or services, often in sectors where private enterprise may not adequately serve the needs of the public.
2. Nature and Characteristics
Government Control: The government either wholly owns or controls the undertaking.
Public Purpose: It aims to fulfill social or economic objectives, such as infrastructure, transportation, utilities, etc.
Autonomy: It may have managerial and operational autonomy but remains accountable to the government.
Quasi-Public Entity: Though commercial in operation, it has public law obligations.
3. Significance in Administrative Law
Regulation and Control: Public undertakings are subject to administrative law principles because they exercise public functions and powers.
Accountability: They must comply with statutory provisions and principles of natural justice.
Judicial Review: Courts can review actions of public undertakings if they violate laws or fundamental rights.
Employment and Industrial Relations: Special laws often govern employees working in public undertakings, given their quasi-governmental status.
4. Public Undertakings vs. Private Companies
Public undertakings are different because they operate under government control with public accountability.
They may enjoy certain privileges and immunities but are also subject to public law scrutiny.
Key Case Laws on Public Undertakings
Case 1: Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978) – India
Facts: The question was whether the Bangalore Water Supply and Sewerage Board was an “instrumentality” or “agency” of the state.
Significance: The Supreme Court laid down criteria for determining whether a public undertaking is part of the government machinery.
Criteria Included: State ownership/control, financial assistance, government’s control in management, and public function.
Relation: This case is fundamental in deciding when public undertakings fall under administrative law and can be held liable under constitutional and public law principles.
Case 2: P & C Construction Co. v. Union of India (1967) – India
Facts: The case dealt with the application of administrative law principles to public corporations.
Significance: The court held that public corporations or undertakings performing public functions are subject to judicial review.
Relation: It affirmed that administrative law principles apply to public undertakings.
Case 3: Rajasthan State Electricity Board v. Mohan Lal (1967) – India
Facts: The case involved service conditions of employees working in a public undertaking.
Significance: The Supreme Court held that public undertakings are subject to administrative law principles, especially in employment matters, and employees are entitled to protections like natural justice.
Relation: Demonstrates the reach of administrative law into employment relations in public undertakings.
Case 4: Air India v. Nergesh Meerza (1981) – India
Facts: The issue was whether Air India, a government-owned airline, was subject to the principles of natural justice regarding employee termination.
Significance: The Supreme Court held that Air India, despite being a public undertaking, must follow the principles of natural justice.
Relation: This case reinforces that public undertakings cannot escape constitutional obligations and administrative law scrutiny.
Case 5: Union of India v. Delhi High Court Bar Association (2001) – India
Facts: The question was about the extent of government control over public undertakings.
Significance: The Supreme Court clarified that public undertakings, while having autonomy, remain under government control and are amenable to administrative law principles.
Relation: The case reaffirms the accountability of public undertakings under administrative law.
Summary of Public Undertaking and Administrative Law
| Aspect | Explanation | Relevant Case |
|---|---|---|
| Definition | Enterprise owned or controlled by government | Bangalore Water Supply Board |
| Public Function | Undertakes public services | P & C Construction Co. |
| Judicial Review | Subject to courts’ supervision | Rajasthan Electricity Board |
| Employment Relations | Employees entitled to natural justice | Air India v. Nergesh Meerza |
| Government Control & Accountability | Public undertakings are accountable under administrative law | Union of India v. Delhi HC Bar |
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