Public Corporation

Course Teacher
Md. Sadekur Rahman
Assistant Professor, Department of Law
University of Barishal
 Public Corporation
 Public Corporation is a body corporate created by an Act of
Parliament. It is an artificial person with the flexibility of the
private sector and the powers of the government. They are set
up with the objective of carrying out a specific type of
commercial activity.

 The powers and functions of public corporations are well

defined and they are financially independent. These
organizations are formed for administering nationalized
industries or undertakings. Many service organizations of the
government are set up in the form of corporations.

 Examples of statutory public corporation: WASA, DESA,

Bangla Academy, Bangladesh Shilpakala Academy.
 Public Corporation
 In the words of Prof. Robson,
“the public corporation is the most important
invention of the twentieth century in the sphere of
government institutions. It is to be found in one form
or another in many different countries all over the
world. Public authorities enjoying various degrees of
autonomy have existed for centuries; but the public
corporation of today has special characteristics which
distinguishes it from older bodies. It was specially
devised as an organ of public enterprise and it has
become the chosen instrument for this purpose in
many lands.”
 Features of Public Corporation
 It is a statutory corporation.

 It is formed and operated basically with a service motive. Profits are

only a secondary consideration.

 It is under State ownership. The day to day decisions are taken by

the management of the corporation whereas major policy decisions
are taken by the government.

 It enjoys immunity from parliamentary inquiry into its day-to-day

working as distinct from matters of policy.

 It is a corporate entity.

 It enjoys perpetual succession.

 Features of Public Corporation
 It has the power to acquire, hold or dispose of property.

 It can sue and be sued in its own name.

 It is created with a corpus or capital fund. All receipts

are credited to the fund and payments are made from it.
It can generate its own funds from its operating surplus
and market borrowings.

 The employees are not civil servants but may be on

deputation from the government.
 Liabilities of Public Corporation
 Liabilities in contract: A public corporation can enter into
contract and can sue and can be sued for breach thereof. A
public corporation can enter into a contract between a public
corporation and private individual.

 Liabilities in torts: A public corporation is liable in tort like

any other person. It will be liable for the tortuous acts
committed by its servants and employees to the same extent
as a private employer of full age and capacity would have
been. A corporation may be held liable for libel, deceit or
malicious prosecution though it cannot be sued for tortuous
acts of a personal nature, such as assault, personal
defamation, etc. Similarly it can sue for tortuous acts of any
person, such as libel, slander etc.
 Liabilities of Public Corporation
 Liabilities for crime: a public corporation may also be held
vicariously liable for offences committed by its servants in the
curse of employment. Libel, fraud, nuisance, contempt of
court etc. since, however, it is an artificial person it cannot be
held liable for any offence which can be committed only by a
natural person.

 Liability for pay tax: In the absence of grant of immunity in a

statute, a public corporation is subject to payment of tax or
other duties like any other person under the relevant laws.
The fact that the corporation is wholly owned or controlled by
the government or the property in possession of the
corporation belongs to the government does not ipso facto
exempt the corporation from payment of taxes.
 Classification of Public Corporation
 Public corporations may be classified into four groups:
i. Commercial corporation
ii. Development corporation
iii. Social corporation
iv. Financial corporation

 Commercial Corporation: This group includes those

corporations which perform commercial and industrial
functions. The managing body of a commercial corporation
resembles the board of directors of a public company. As their
functions are commercial in nature they are supposed to be
financially self-supporting and they are also expected to earn
profit.
 Classification of Public Corporation
 Development Corporation: The modern state is a
welfare state. As a progressive state it exercises many
non-sovereign functions also. Development corporations
have been establishment with a view to encourage
national progress by promoting developmental
activities.

 Social Corporation: Corporation which have been

establishment for the purpose of providing social
services to the citizens on behalf the government are not
commercial in nature and therefore, are not expected to
be financially self-supporting.
 Classification of Public Corporation
 Financial Corporation: This group includes
financial institutions, like Bangladesh bank, Life
insurance corporation. They advance loans to
institutions carrying on trade, business or
industry on such terms and conditions as may
be agreed upon. They may provide credits to
those institutions which find it difficult to avail
of the same or which do not find it possible to
have recourse to capital issue methods.