Public corporations (such as LIC, ONGC, and SBI) are separate statutory entities created by specific Acts of Parliament, combining public ownership with commercial flexibility.
1. Are Public Corporations "State" under Article 12?
This is a vital question. If a corporation is "State," its employees enjoy constitutional protections and its actions are subject to writ petitions under Articles 32 and 226.
In the landmark case of R.D. Shetty v. International Airport Authority (1979), the Supreme Court established the definitive test to determine if a body is an instrumentality or agency of the State:
- The entire share capital is held by the government.
- Deep and pervasive state control over management.
- The corporation enjoys state-conferred monopoly status.
- The functions performed are of public importance and closely related to governmental functions.
If these tests are met, the corporation is considered "State" under Article 12, and its actions cannot be arbitrary or discriminatory (Ajay Hasia v. Khalid Mujib).
2. Methods of Accountability
- Parliamentary Control: Managed through the Committee on Public Undertakings (COPU), which examines the reports and accounts of public undertakings to ensure efficiency.
- Liability: Public corporations enjoy no sovereign immunity and are fully liable in contract and torts just like any private business.