Can't take PSUs out of courts' purview, SG Parasaran tells govt


A move by the government to amend the constitution to take public sector undertakings (PSUs) out of the purview of courts in matters concerning service conditions, contractual disputes and corporate governance issues, among others, has run into a legal wall, with the Solicitor General of India raising objections to it.

The amendment, if passed by Parliament and approved by the President, would exclude PSUs from the ambit of Article 12 of the constitution, which defines the "state" and all authorities under the control of the government. It would also exclude PSUs from Part-III of the constitution, which deals with the issue of fundamental rights of citizens.

In his opinion sent to the law ministry, SG Mohan Parasaran has said any move to amend the constitution for this purpose would run afoul of the basic structure of the statute.

Parasaran gave his opinion in response to a request from the Department of Public Enterprises, which has prepared a draft cabinet note to amend Article 12 as recommended by a panel of experts on reforms in the central public service.

The note says the government wants to add an explanation to Article 12 saying that "a statutory corporation, a company formed and registered under the Companies Act, 1956, or a society under the Societies Registration Act shall not be considered as state for the purposes of this article".

This is not the first time that the government has tried to take PSUs out of the purview of entities defined under "state". In 1992, a similar amendment was reviewed by the Law Commission of India, which said that not only would the amendment not serve any purpose, it would also in all likelihood be struck down by the judiciary for being in breach of the basic structure doctrine of the constitution.

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