Who betrayed Sardar Patel?

November 19, 2013

Arvind P. Datar

 

ONE NATION:It was primarily on the assurance of Sardar Vallabhbhai Patel that the rulers signed the Instruments of Accession which in turn created a united India. —PHOTO: THE HINDU ARCHIVES

Sardar Patel persuaded the Constituent Assembly to guarantee payment of Privy Purses and preserve the rights of the erstwhile rulers. But the Congress betrayed him 20 years later by abolishing the Privy Purses

In the recent media coverage on Sardar Vallabhbhai Patel, there was not one word about the greatest insult to his memory: the abolition of the Privy Purses, first by a Presidential Order and, later, by a constitutional amendment.

Article 1 of the Constitution states that India, that is, Bharat, shall be a Union of States. No person can claim greater credit for the creation of Bharat than Sardar Patel, ably assisted by V.P. Menon (Constitutional Adviser to Lord Mountbatten). In 1947, princely states numbering 555 covered 48 per cent of the area of pre-Independent India and constituted 28 per cent of its population. Legally, the princely states were not a part of British India and the people of these states were not treated as British subjects. But, in reality, they were completely subordinate to the British Crown.

The Indian Independence Act, 1947, provided for the lapse of paramountcy of the British Crown over the Indian states. Each ruler had the option to accede to the dominion of India or to Pakistan, or continue as an independent sovereign mini-state. The rulers were often seen, perhaps rightly, as lackeys and stooges of the British Empire. Even in the “mutiny” of 1857, many of them actively assisted the British. Lord Canning acknowledged their role as “breakwaters in the storm which would have swept over us in one great wave.” From the beginning, therefore, several members of the Congress were totally opposed to the payment of Privy Purses.

Integration

The tireless efforts of Sardar Patel and V.P. Menon resulted in the princes agreeing to the dissolution of their respective states. They surrendered several villages, thousands of acres of scattered jagir land, palaces, museums, buildings, aircraft, and cash balances and investments amounting to Rs.77 crore. In addition, there was the railway system of about 12,000 miles which the states surrendered to the Centre without receiving any compensation.

In consideration of their agreeing to integrate with India, the princes were to be paid a Privy Purse, which was approximately 8.5 per cent of the annual revenue of each princely state. The amounts varied from Rs.43 lakh a year to the Nizam of Hyderabad to just Rs.192 a year to the ruler of Katodia. Of the 555 rulers, 398 were to get less than Rs.50,000 a year. The total cost to the Indian exchequer in 1947 was Rs.6 crore, which was to be progressively reduced. At the time of abolition in 1970, the total amount payable to all the erstwhile princes was just Rs.4 crore a year.

On October 12, 1949, Sardar Patel persuaded the Constituent Assembly to include Articles 291 and 362 in the Constitution to guarantee the payment of Privy Purses and also preserve the personal rights, privileges and dignities of the rulers. His brilliant speech bears clear testimony to his statesmanship and deserves to be carefully read:

“The privy purse settlements are, therefore, in the nature of consideration for the surrender by the rulers of all their ruling powers and also for the dissolution of the States as separate units … Need we cavil then at the small — I purposely use the word small — price we have paid for the bloodless revolution which has affected the destinies of millions of our people? …

“The capacity for mischief and trouble on the part of the rulers if the settlement with them would not have been reached on a negotiated basis was far greater than could be imagined at this stage. Let us do justice to them; let us place ourselves in their position and then assess the value of their sacrifice. The rulers have now discharged their part of the obligations by transferring all ruling powers by agreeing to the integration of their States. The main part of our obligation under these agreements is to ensure that the guarantee given by us in respect of privy purses are fully implemented. Our failure to do so would be a breach of faith and seriously prejudice the stabilisation of the new order.”

He also informed the Assembly that if the cash received from the rulers of Madhya Bharat alone were invested, the interest would cover the payment of Privy Purses to all the princes. Nobody but Sardar Patel and V.P. Menon could have negotiated such a settlement with them. After Patel’s death, there were repeated demands to abolish the Privy Purses, but Pandit Jawaharlal Nehru refused to do so. Appalled at these demands, Menon remarked: “As an honourable party to an agreement, we cannot take the stand that we shall accept only that part of the settlement which confers rights on us, and repudiate or whittle down that part which defines our obligations. As a nation aspiring to give a moral lead to the world, let it not be said of us that we know the ‘price of everything, and the value of nothing’.”

Privy Purses case

In the 1967 election, several rulers had joined the Swatantra Party headed by C. Rajagopalachari, and many of them defeated Congress candidates. Indira Gandhi was, therefore, determined to abolish the Privy Purses. On June 25, 1967, the All India Congress passed a resolution to abolish them. The Constitution (Twenty-fourth Amendment) Bill, 1970 was introduced and passed in the Lok Sabha by a majority of 332:154 votes, but it was defeated in the Rajya Sabha by 149:75. Having failed in Parliament, Indira Gandhi asked President V.V. Giri to derecognise all the rulers. This derecognition was successfully challenged by N.A. Palkhivala before the Supreme Court in the historic Privy Purses case. Indira Gandhi’s landslide victory in the 1971 election enabled her to amend the Constitution that abolished the Privy Purses and extinguished all rights and privileges of the rulers. In Parliament, Indira Gandhi stated that the concept of Privy Purses and special privileges were incompatible with an “egalitarian social order.”

Thus, just 20 years later, the Congress Party, of which Sardar Patel was a member, betrayed the solemn constitutional guarantee given to the rulers by the Constituent Assembly. It was primarily on the assurance of Sardar Patel that the rulers signed the Instruments of Accession that created a united India.

In the end, the abolition of Privy Purses will remain one of the most shameful events in our constitutional history. The nation saved Rs.4 crore annually but lost its honour. It is equally regrettable that neither the Janata Party in 1977 nor any subsequent non-Congress government did anything to redeem Patel’s pledge. What purpose will, then, be served by spending Rs.2,500 crore to build the tallest statue in his memory?

(Arvind P. Datar is a senior advocate of the Madras High Court.)

Copyright© 2013, The Hindu

Vodafone case: Capital gains, everyone else loses

February 23, 2012

Updated: June 14, 2012 13:15 IST

Prashant Bhushan

In the Vodafone case, the Supreme Court has again made a wrong call on tax avoidance, setting a precedent that jeopardises thousands of crores of potential revenue for the exchequer.

Tax avoidance through artificial devices — holding companies, subsidiaries, treaty shopping and selling valuable properties indirectly by entering into a maze of framework agreements — has become a very lucrative industry today.

A large part of the income of the ‘Big 5' accountancy and consultancy firms derives from tax avoidance schemes which flourish in the name of tax planning. Their legality has agitated courts in India and abroad for a long time. In 1985, a 5-judge bench of the Supreme Court in the McDowell case settled the question decisively, observing:

“In that very country where the phrase ‘tax avoidance' originated, the judicial attitude towards [it] has changed and the smile, cynical or even affectionate though it might have been at one time, has now frozen into a deep frown. The courts are now concerning themselves not merely with the genuineness of a transaction, but with [its] intended effect for fiscal purposes. No one can now get away with a tax avoidance project with the mere statement that there is nothing illegal about it. In our view, the proper way to construe a taxing statute, while considering a device to avoid tax is … to ask … whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it.”

“It is neither fair not desirable to expect the legislature to … take care of every device and scheme to avoid taxation,” the ruling added. “It is up to the Court … to determine the nature of the new and sophisticated legal devices to avoid tax ... expose [them] for what they really are and refuse to give judicial benediction.”

‘Legitimate tax planning'

Despite such a clear pronouncement, two recent judgments of smaller Supreme Court benches have gone back to calling artificial tax avoidance devices “legitimate tax planning”.

Though the Income Tax Act obliges even non-residents to pay tax on incomes earned in India, many foreign institutional investors avoided paying taxes citing the Double Taxation Treaty with Mauritius. This treaty says a company will be taxed only in the country where it is domiciled. All these FIIs, though based in other countries and operating exclusively in India, claimed Mauritian domicile by virtue of being registered there under the Mauritius Offshore Business Activities Act (MOBA). Companies registered under MOBA are not allowed to acquire property, invest or conduct business in Mauritius.

Yet these ‘Post Box Companies' claimed to be domiciled there and the I-T department allowed them to get away with claiming the benefits of the treaty for many years. Given the benign attitude of the Indian tax authorities and the fact that there was no capital gains tax and virtually no tax at all on these companies in Mauritius, most FIIs and most of the foreign investment in India, by 2000, came to be routed through Mauritius.

The party finally ended when a proactive tax officer tried to stop this blatant evasion. Relying on McDowell, he lifted the corporate veil of MOBA companies to determine their place of management and actual place of residence. Since this happened to be in different countries in Europe or North America, the relevant Double Tax Avoidance treaty became the one between India and that country. All these treaties provided for capital gains to be taxed where the gains had accrued. Since the gains accrued in India, he levied capital gains tax on these FIIs.

The CBDT circular

Responding to the FIIs' distress calls, the then Finance Minister, Yashwant Sinha, got the Central Board of Direct Taxes to issue a circular stating that once a company had obtained a tax residence certificate from Mauritius, it would not be taxed in India.

The CBDT's circular was challenged in the Delhi High Court by Azadi Bachao Andolan and a retired Income Tax Commissioner. The petitioners also pleaded that the government be directed to amend the treaty with Mauritius since it had become a tax haven. The High Court allowed the writ petitions and quashed the CBDT circular, holding it violative of the I-T Act.

The government appealed, telling the Supreme Court that its circular — which effectively offered a tax holiday to FIIs — was needed to attract foreign investment. The petitioners responded that tax exemptions could only be granted by Parliament, either by amending the Income Tax Act or by the Budget passed each year, and not by the government in the guise of such a circular. However, a two judge bench in 2003 called this device an act of legitimate tax planning which could be promoted by the government to attract foreign investment, defied the Constitution bench judgment in McDowell and set aside the Delhi High Court judgment.

In the Vodafone tax case, which was heard by a 3-judge bench of the Supreme Court, the court had the opportunity to correct the transgression of the McDowell principle in the Mauritius case. In 2007, Hutchinson Telecom International (HTIL), which owned 67 per cent of Hutch Essar Limited (HEL), an Indian telecom company, sold its holding to Vodafone International (VIH BV). Both companies announced that Hutchinson had sold, and Vodafone had bought, 67 per cent of the shares and interest in the Indian company for over $11 billion.

Section 9(1) of the Income Tax Act says incomes which shall be deemed to accrue or arise in India include “all income accruing or arising, whether directly or indirectly, through … the transfer of a capital asset situated in India.”

Vodafone's claim

Since the transfer of the Indian telecom firm's shares and assets to Vodafone had led to capital gains for Hutch, the IT department demanded capital gains tax from Vodafone, which was liable to withhold this tax from the amount they paid Hutch. Vodafone claimed the transaction was not liable to tax since it was achieved by transferring the shares of a Cayman Island-based holding company and did not involve the transfer of a capital asset situated in India. The High Court rejected this contention by holding:

“The facts clearly establish that it would be simplistic to assume the entire transaction between HTIL and VIH BV was fulfilled merely upon the transfer of a single share of CGP in the Cayman Islands. The commercial and business understanding between the parties postulated that what was being transferred … was the controlling interest in HEL. HTIL had, through its investments in HEL, carried on operations in India which HTIL in its annual report of 2007 represented to be the Indian mobile telecommunication operations. The transaction between HTIL and VIH BV was structured so as to achieve the object of discontinuing the operations of HTIL in relation to the Indian mobile telecommunication operations by transferring the rights and entitlements of HTIL to VIH BV. HEL was at all times intended to be the target company and a transfer of the controlling interest in HEL was the purpose which was achieved by the transaction.

“Ernst and Young who carried out due diligence of the telecommunications business carried on by HEL and its subsidiaries made the following disclosure in its report:

“The target structure now also includes a Cayman company, CGP Investments (Holdings) Ltd. CGP Investments (Holdings) Ltd was not originally within the target group. After our due diligence had commenced the seller proposed that CGP Investments (Holdings) Ltd should be added to the target group …”

The due diligence report emphasizes that the object and intent of the parties was to achieve the transfer of control over HEL and the transfer of the solitary share of CGP, a Cayman Islands company, was put into place at the behest of HTIL, subsequently as a mode of effectuating the goal.”

Following McDowell, where the Supreme Court had decisively frowned upon tax avoidance schemes, the High Court rejected Vodafone's contention that this transaction was not liable to tax. But in appeal, a Supreme Court bench of 3 judges headed by Chief Justice Kapadia accepted Vodafone's claim that the capital gain had arisen only from the transfer of the single share in the Cayman Island company and had nothing to do with the transfer of any asset situated in India.

Despite the fact that the entire object and purpose of the transaction between Hutch and Vodafone was to transfer the shares, assets and control of the Indian telecom company to Vodafone, the Supreme Court declared in January 2012 that the transaction has nothing to do with the transfer of any asset in India!

With such welcoming winks towards tax avoidance devices, it is unlikely that any foreign company would be called upon to pay tax or at least capital gains tax in future in India. Thousands of crores of tax revenue, and the future attitude of the courts towards innovative tax avoidance devices, will be shaped by these two judgments.

The Vodafone case is in the lineage of the Mauritius case inasmuch as both encourage tax avoidance devices ostensibly to attract foreign investment. The 2G judgment of the Supreme Court cancelling 122 telecom licences granted four years earlier, in sharp contrast, enforces the constitutional principle of equality and non-arbitrariness. The proponents of FDI are groaning that this will stem the flow of investment. Honest foreign companies should not be deterred by this judgment, which strikes a blow against crony capitalism. But even if FDI becomes a casualty in the enforcement of the rule of law, so be it.

Our courts must send a clear signal that India is not a banana republic where foreign companies can be invited to loot our resources and even avoid paying taxes on their windfall gains from the sale of those resources.

(The author is a Supreme Court advocate)

Arvind P. Datar's responds to this article

March 2, 2012

Updated: March 2, 2012 15:52 IST

Vodafone is a misunderstood case

Arvind P. Datar

• The demand for tax in the Vodafone case was a result of failing to understand the difference between the sale of shares in a company and the sale of assets of that company.

• 

The article “Capital gains, everyone else loses” by Prashant Bhushan (February 23, 20120) gives a wrong impression that the Vodafone case has resulted in a loss of several thousands to the exchequer and the Supreme Court has blessed a massive tax evasion scam. The truth is that the demand made by the Income Tax Department was wholly unsustainable. If the Vodafone case had a tax implication of just Rs.10 crore, the case would have been over before the Income Tax Appellate Tribunal itself and there would not even be a single comment in the press or electronic media. But the law does not change if the tax demand is of a large amount.

Shares and assets

The demand for tax in the Vodafone case was a result of failing to understand the difference between the sale of shares in a company and the sale of assets of that company. It is an elementary principle of company law that ownership of shares in a company does not mean ownership of the assets of the company. Thus, an individual who owns 45 per cent or 85 per cent of the share capital does not own 45 per cent or 85 per cent of that company's assets. The assets belong to that company which is a separate legal entity. In the Vodafone case, 51 per cent of Hutchison Essar Ltd. (HEL) was directly owned by the Hutchison group of Hong Kong through a multiple layer of companies and ultimately by a company incorporated in the Cayman Islands. This was not the result of any devious tax planning scheme but the consequences of the growth of Hutchison Essar Ltd. by acquiring several telecom companies over the years. Hutchison International decided to exit its Indian operations and a public announcement was made to this effect.

Vodafone was the successful buyer of the share of the Cayman Island company for $11-billion. Consequently, by purchasing one share of the Cayman Island company, Vodafone came to own 51 per cent of share capital of HEL. The transfer of shares of one non-resident company (Hutchison) to another non-resident company (Vodafone) did not result in the transfer of any asset of HEL in India. All the telecom licences and assets continued to belong to HEL or its subsidiaries.

The absurdity of the demand in the Vodafone case can be explained by two simple illustrations. Hyundai Motors India Ltd. is a wholly owned subsidiary of the parent Hyundai company in Korea. The Indian subsidiary has a large factory near Chennai and perhaps owns several other assets. If, for example, Samsung purchases 65 per cent of the share capital of the parent Korean company in Seoul can it be argued that Samsung has automatically purchased 67 per cent of the factory at Chennai? Consequently, can it be said that the sale of shares in Korea resulted in a capital gain in India which requires Samsung to deduct tax at source under the Indian Income Tax Act, 1961? Under Section 9(1)(i) of our Act, there is liability to tax only if there is a transfer of a capital asset in India. In this illustration, the capital asset that is transferred was the share in Korea and there is no transfer of assets in India. The Indian subsidiary continues to exist and continues to own the factory as well as other assets.

The absurdity can also be seen by a domestic illustration. Tata Motors Ltd. has its headquarters at Mumbai and factories at Jamshedpur and Pune. If another Indian group purchases 67 per cent of the shares of Tata Motors Ltd., the transfer of shares takes place in Mumbai which is the registered office of that company. Can any one say that there is a corresponding transfer of 67 per cent of its factory, lands and buildings at Pune and Jamshedpur as well? Can the local stamp authorities in Jharkhand and Maharastra demand stamp duty on the ground that there is also a transfer of underlying assets? It is elementary that what has been sold is only 67 per cent of the paid-up share capital of Tata Motors Ltd.

The assets of that company remain with that company and do not get transferred. The sale of the shares of Tata Motors cannot and does not result in the transfer of its “underlying assets.”

This is exactly what happened in Vodafone. The shares owned by Hutchison were sold to Vodafone indirectly purchasing 51 per cent of the share capital of Hutchison Essar Ltd., a company registered in Mumbai. Not a single asset of this Mumbai based company was transferred either in India or abroad. Indeed, there would be no transfer of any asset in India.

This is also exactly how several international transactions are concluded. Vodafone was not the first case where transfer of shares between non-resident overseas company resulted in a change in control of an Indian company. But controlling interest is not a capital asset; it is the consequence of the transfer of shares. The demand made by the Income Tax Department in the Vodafone case was thus contrary to elementary principles of company and tax law.

The McDowell case

Prashant Bhushan makes detailed reference to the decision of a five-judge bench in this case. The tragedy is that the observations in the McDowell case were wholly unnecessary. The only issue there was whether the excise duty directly paid by the purchasers of liquor could be included for the levy of sales tax. There was absolutely no need to get into the distinction between tax avoidance and tax evasion. The McDowell judgment had blurred the distinction between these two concepts by not correctly following the development on this subject in the United Kingdom. The true principle is that tax avoidance is perfectly legitimate, but tax evasion is not. For example, central excise duty is exempted for units located in Himachal Pradesh. If an assessee sets up his manufacturing unit in the exempted area, he is “avoiding the excise duty” by taking advantage of a lawful scheme. This is tax avoidance and not tax evasion. Similarly, there is no bar in one non-resident company selling its shares to another non-resident company outside the territory of India. The Indian Income Tax Act does not apply to such transactions and such a transaction cannot be treated as tax evasion.

India-Mauritius treaty

There has been severe criticism of the India-Mauritius Treaty and it has been accused of depriving the Indian government of crores of rupees of tax revenue. If there is a policy decision to permit tax exemption for investments through Mauritus, one cannot blame the courts for any potential loss of revenue. The government is fully conscious of the so-called loss of direct tax revenue but these incentives are essential to foreign direct investments. The huge growth in the telecom and other sectors has been substantially done through the Mauritius route. One cannot forget the enormous employment generated by FOI and the substantial increase in excise duty, sales tax and other duties and cesses. To merely harp on loss of income tax is not correct.

In the end, the Supreme Court's decision is absolutely correct and adheres to the fundamental principles of company and tax laws. In the Vodafone case the demand was for capital gains tax which never arose in India. Once the hollowness of the department's claim was exposed, the absence of any liability became clear. One should not look at any judgment with a jaundiced eye and condemn it on the ground that it results in a loss of tax revenue.

The courts merely interpret the law and if a transaction is not liable to Indian income tax, one must graciously accept the result.

(The author is a senior lawyer of the Madras High Court.)

Read Prashant Bhushan’s response

March 2, 2012

Updated: March 9, 2012 19:53 IST

Prashant Bhushan responds

Mr. Datar's response to my criticism of the Supreme Court's Vodafone judgment is precisely Vodafone's lawyers' arguments before the courts, which is natural since he was one of them. Though the stated object and purpose of the sale purchase agreement between Hutch and Vodafone was to transfer the shares, assets and control of the Indian Telecom Company HEL, which was also evident from their sale purchase agreement, press releases, filings before the SEC, and their FIPB application, they claim to have achieved this by transferring a single share of a Cayman Island-based holding company and then entering into a series of framework agreements. This “device” of using the transfer of the Cayman Island company in the bid to avoid Capital Gains tax is precisely the tax avoidance devices that the Constitution bench in McDowell mandated, must be frustrated by the courts. The Court said: “It is up to the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and … to expose the devices for what they really are and to refuse to give judicial benediction.”

Moreover, in this case, as the Bombay High Court pointed out, the purpose of Vodafone to transfer the assets, shareholding and control of HEL from Hutch could not be achieved by just the transfer of the Cayman Island company. Therefore the set of framework agreements. In their words, “The transaction between HTIL and VIH BV was structured so as to achieve the object of discontinuing the operations of HTIL in relation to the Indian mobile telecommunication operations by transferring the rights and entitlements of HTIL to VIH BV. HEL was at all times intended to be the target company and a transfer of the controlling interest in HEL was the purpose which was achieved by the transaction.”

Tax avoidance devices have been honed to a fine art by clever lawyers and consultants advising such corporations. Unfortunately, in the Vodafone and the Mauritius cases, the court has winked at them instead of frowning upon and frustrating them as mandated by the binding judgment in McDowell.

(Prashant Bhushan is a Senior Advocate and member of the civil society team that drafted the Jan Lokpal Bill.)

Copyright© 2013, The Hindu

If it may please the Supreme Court

November 16, 2013

Updated: November 16, 2013 02:18 IST

Arun Mohan Sukumar

 

A VACUUM: For all its progressive pronouncements against sexual harassment at the workplace, the Supreme Court has come up woefully short in addressing the issue within its fraternity. Photo: S. Siva Saravanan

With no effective system in place to check, investigate or punish instances of sexual harassment by serving or former judges, the apex court now finds itself in the dock

The tragedy of a legal education is that it prepares you to be a free-spirited being in a regimented world. If John Grisham novels — where the protagonist wins “justice” after a gripping courtroom drama — got you hooked to the law in the first place, chances are law school will nurture that idealism to tell you how the world should be, not how it is. Fresh off the block from learning the rigours of constitutional law or legal ethics in your fourth year, you head for the hallowed Supreme Court of India, ready to right most wrongs. As an intern, no less. In the two months that follow, the long arm of the law beats you down with the big stick of reality. You are informed — usually by a court clerk or a senior lawyer’s private secretary — that the only way to succeed is by endearing yourself to your employer.

Coming up short

The possibility of sexual abuse looms large in any fiduciary relationship, in any industry and at any workplace. What sets apart the allegation by a former law student and intern that she was harassed by a retired judge of the Supreme Court from others is that it was made, in the first place. For all its progressive pronouncements against sexual harassment at the workplace, the Supreme Court has come up woefully short in addressing the issue within its fraternity. In 1997, the court suggested in the Vishaka case that “an appropriate complaint mechanism [against sexual abuse] be created in the employer’s organisation for redress of the complaint made by the victim.” Not once were the Supreme Court’s own service rules amended to reflect the Vishaka guidelines. It took the court 16 years to institute a remedial process for its employees: in August 2013, the Gender Sensitisation & Sexual Harassment of Women at the Supreme Court of India (Prevention, Prohibition and Redressal) Regulations, 2013 took effect. The regulations however, are confined to actions or misconduct that occur within the court’s “precincts.” Naturally, there is no mechanism to hear complaints of harassment by former Supreme Court judges, who remain privy to the many powers that a current judge enjoys.

The Gender Sensitisation and Internal Complaints Committee (GSICC) conceived by the regulations would be comprised almost entirely of lawyers and judges. Two members, from a total of 13, will be nominated from outside the closely knit legal community, and that too by the Chief Justice of India. Even with its serious deficiencies, the Supreme Court has made little effort to act on the regulations. Three months after the rules were formulated, the court is yet to institute the GSICC.

No surprise then that the lawyer in question chose to blog about her ordeal rather than approach the Supreme Court through a formal complaint. In the absence of an effective remedial mechanism, the Chief Justice also had no option but to take suo motu cognisance of the matter. His immediate reaction — to designate three colleagues who would sit in judgment over their peer — reveals how ill-prepared the Supreme Court is to address questions of accountability.

Making a distinction

At the heart of this problem is the Supreme Court’s difficulty in distinguishing its administrative and legal duties. The independence granted to the higher judiciary by the Constitution has materialised into administrative autonomy, with few checks and balances. The Supreme Court Registrar, a Class I employee responsible for taking all major administrative decisions, reports directly to the Chief Justice. Several perks, grants and privileges of Class I employees are determined by the Chief Justice himself, effectively foreclosing any external scrutiny of non-judicial appointments.

Appointments

Key among such appointments are those of law clerks and judicial interns. Every Supreme Court judge is allowed two law clerks at any given time — one appointed by the court registry, and the other chosen at his personal discretion. Since law clerks and interns are valuable to the functioning of the court, it is only natural that judges themselves have the final say in their appointment. Every year, a panel of two judges conducts interviews with those candidates shortlisted by the registry. After the interview process, a “rank list” of clerks is circulated among judges, who may choose from this final pool. Once this appointment process is over, however, the term of law clerks is subject entirely to the decision of their masters.

The services of law clerks and interns may be terminated at any time by the judge whom they work for. Law clerks, fresh from studying principles of administrative law, are made to sign an undertaking that states: “My period of assignment can be terminated without any notice.” Even leave of absence requires prior approval from the judge. Clerks or interns do not have access to any mechanism to air or redress their grievances. They do not go through a formal orientation process — consequently, for the most part of their tenure, they interact with the judge’s secretaries, the judge himself, and fellow interns. Above all, the “residential office” system ensures that the lion’s share of an intern’s work hours is spent within a huge, isolated compound in Lutyens’ Delhi. If this system does not lend itself to abuse, what does?

No transparency

Flaws in the Supreme Court’s administrative set-up are compounded by a complete lack of transparency in the exercise of its judicial functions. The collegium system has ensured that a strong group of senior judges continues to influence appointments not only in the higher judiciary but also of former colleagues to independent commissions, arbitral tribunals and other quasi-judicial bodies. The normal tenure of an intern or a law clerk ranges from a few months to a year, but this may be extended by a serving judge of the Supreme Court until his retirement. It is not uncommon for a Supreme Court judge to retain their law clerks for post-retirement assignments as well. Since tribunal or arbitral postings are extremely valuable to a law student interested in advocacy, these offers are rarely turned down. Above all, a reference from a Supreme Court judge improves one’s chances of securing admission in a prestigious graduate programme abroad. Chances that an intern or a law clerk reports sexual harassment during her term with a sitting judge of the court are, therefore, slim.

The Supreme Court has resisted any attempt to shine light on the appointment of former judges to independent tribunals. It is yet to respond to the Central Information Commissioner’s request, made in 2011, to disclose the process by which the Chief Justice appoints arbitrators under the Arbitration and Conciliation Act, 1996. A streamlined, transparent process for appointing former judges to tribunals would lessen the considerable leverage that serving and retired judges have over their interns, and thus the scope for abuse.

Alleged harassment

With no effective system in place to check or punish instances of sexual harassment by serving or former judges, the Supreme Court now finds itself in the dock. Having taken cognisance of the matter, the three-judge committee could call upon the lawyer to investigate her allegation. If she refuses to name the judge in question, the court will be in a bind: it can neither afford to close the matter given the public debate it has generated, nor can the committee pretend this was a false claim against an eminent personality. The first would amount to airbrushing the widely acknowledged practice of sexual harassment in a male-dominated legal community; the second would mean going easy on contemptuous remarks against the court.

Whatever course the committee takes, it must not attempt to preserve the court’s reputation by putting the lawyer in the dock. It takes extraordinary courage — from someone palpably confused by how ideals taught in law school could have been so easily betrayed by reality — to go public with an allegation of this sort. As she has poignantly written, “If the shared experiences of women cannot be easily understood through a feminist lens, then clearly there is a cognitive vacuum that feminism fails to fill.” The Supreme Court must swiftly investigate the matter, verify the allegation made and dispense what the law should but rarely does: Justice.

arun.sukumar@thehindu.co.in

The case that saved Indian democracy

April 24, 2013

Updated: April 24, 2013 03:14 IST

Arvind P. Datar

A March 2013 picture of Kesavananda Bharati 

CLEAR PATH: The hard work and scholarship that had gone into the preparation of this case was to answer just one main question – whether the power of Parliament to amend the Constitution was unlimited.

CLEAR PATH: The hard work and scholarship that had gone into the preparation of this case was to answer just one main question – whether the power of Parliament to amend the Constitution was unlimited.

The judgment in Kesavananda Bharati v State of Kerala, whose 40th anniversary falls today, was crucial in upholding the supremacy of the Constitution and preventing authoritarian rule by a single party

Exactly forty years ago, on April 24, 1973, Chief Justice Sikri and 12 judges of the Supreme Court assembled to deliver the most important judgment in its history. The case of Kesavananda Bharati v State of Kerala had been heard for 68 days, the arguments commencing on October 31, 1972, and ending on March 23, 1973. The hard work and scholarship that had gone into the preparation of this case was breathtaking. Literally hundreds of cases had been cited and the then Attorney-General had made a comparative chart analysing the provisions of the Constitutions of 71 different countries!

Core question

All this effort was to answer just one main question: was the power of Parliament to amend the Constitution unlimited? In other words, could Parliament alter, amend, abrogate any part of the Constitution even to the extent of taking away all fundamental rights?

Article 368, on a plain reading, did not contain any limitation on the power of Parliament to amend any part of the Constitution. There was nothing that prevented Parliament from taking away a citizen’s right to freedom of speech or his religious freedom. But the repeated amendments made to the Constitution raised a doubt: was there any inherent or implied limitation on the amending power of Parliament?

The 703-page judgment revealed a sharply divided court and, by a wafer-thin majority of 7:6, it was held that Parliament could amend any part of the Constitution so long as it did not alter or amend “the basic structure or essential features of the Constitution.” This was the inherent and implied limitation on the amending power of Parliament. This basic structure doctrine, as future events showed, saved Indian democracy and Kesavananda Bharati will always occupy a hallowed place in our constitutional history.

Supreme Court v Indira Gandhi

It is supremely ironical that the basic structure theory was first introduced by Justice Mudholkar eight years earlier by referring to a 1963 decision of the Supreme Court of Pakistan. Chief Justice Cornelius — yes, Pakistan had a Christian Chief Justice and, later, a Hindu justice as well — had held that the President of Pakistan could not alter the “fundamental features” of their Constitution.

The Kesavananda Bharati case was the culmination of a serious conflict between the judiciary and the government, then headed by Mrs Indira Gandhi. In 1967, the Supreme Court took an extreme view, in the Golak Nath case, that Parliament could not amend or alter any fundamental right. Two years later, Indira Gandhi nationalised 14 major banks and the paltry compensation was made payable in bonds that matured after 10 years! This was struck down by the Supreme Court, although it upheld the right of Parliament to nationalise banks and other industries. A year later, in 1970, Mrs Gandhi abolished the Privy Purses. This was a constitutional betrayal of the solemn assurance given by Sardar Patel to all the erstwhile rulers. This was also struck down by the Supreme Court. Ironically, the abolition of the Privy Purses was challenged by the late Madhavrao Scindia, who later joined the Congress Party.

Smarting under three successive adverse rulings, which had all been argued by N.A. Palkhivala, Indira Gandhi was determined to cut the Supreme Court and the High Courts to size and she introduced a series of constitutional amendments that nullified the Golak Nath, Bank Nationalisation and Privy Purses judgments. In a nutshell, these amendments gave Parliament uncontrolled power to alter or even abolish any fundamental right.

These drastic amendments were challenged by Kesavananda Bharati, the head of a math in Kerala, and several coal, sugar and running companies. On the other side, was not only the Union of India but almost all the States which had also intervened. This case had serious political overtones with several heated exchanges between N.A. Palkhivala for the petitioners and H.M. Seervai and Niren De, who appeared for the State of Kerala and the Union of India respectively.

The infamous Emergency was declared in 1975 and, by then, eight new judges had been appointed to the Supreme Court. A shocking attempt was made by Chief Justice Ray to review the Kesavananda Bharati decision by constituting another Bench of 13 judges. In what is regarded as the finest advocacy that was heard in the Supreme Court, Palkhivala made an impassioned plea for not disturbing the earlier view. In a major embarrassment to Ray, it was revealed that no one had filed a review petition. How was this Bench then constituted? The other judges strongly opposed this impropriety and the 13-judge Bench was dissolved after two days of arguments. The tragic review was over but it did irreversible damage to the reputation of Chief Justice A.N. Ray.

Constitutional rights saved

If the majority of the Supreme Court had held (as six judges indeed did) that Parliament could alter any part of the Constitution, India would most certainly have degenerated into a totalitarian State or had one-party rule. At any rate, the Constitution would have lost its supremacy. Even Seervai later admitted that the basic structure theory preserved Indian democracy. One has to only examine the amendments that were made during the Emergency. The 39th Amendment prohibited any challenge to the election of the President, Vice-President, Speaker and Prime Minister, irrespective of the electoral malpractice. This was a clear attempt to nullify the adverse Allahabad High Court ruling against Indira Gandhi. The 41st Amendment prohibited any case, civil or criminal, being filed against the President, Vice-President, Prime Minister or the Governors, not only during their term of office but forever. Thus, if a person was a governor for just one day, he acquired immunity from any legal proceedings for life. If Parliament were indeed supreme, these shocking amendments would have become part of the Constitution.

Thanks to Kesavananda Bharati, Palkhivala and the seven judges who were in the majority, India continues to be the world’s largest democracy. The souls of Nehru, Patel, Ambedkar and all the founding fathers of our Constitution can really rest in peace.

(Arvind P. Datar is a senior advocate of the Madras High Court.)

Copyright© 2013, The Hindu

Restoring the Supreme Court’s exclusivity

August 31, 2013

Updated: August 31, 2013 12:25 IST

 

T. R. Andhyarujina

 

The country’s highest judicial institution has lost its original character by a vast self-enlargement of its jurisdiction that has virtually turned it into a general court of appeal

The Supreme Court of India is perceived by the lay public as the most potent institution in the Constitution by its appellate authority over all courts and tribunals and by its striking orders correcting and supervising government actions. In the public euphoria over this functioning of the Supreme Court, there is no awareness that the Supreme Court has radically changed its character and stature which was prescribed by the makers of the Constitution.

When the Supreme Court was established in 1950, the Constitution conferred on it limited but important functions of deciding cases involving fundamental rights, cases of Constitutional importance and substantial questions of law of general importance. The Supreme Court was given a residuary power to grant special leave to appeal, in its discretion from any judgment of any Court or Tribunal (Article 136 of the Constitution) sparingly and in exceptional cases. The Supreme Court was not to be the apex court to decide ordinary disputes between litigants. Only exceptionally, such disputes between litigants would be decided by the Court. The lower courts and the High Courts were considered as generally competent and adequate for the dispensation of justice between litigants.

Small and compact

Consistently with this restricted jurisdiction of the Supreme Court, the Constitution provided that the Supreme Court, like Supreme Courts in other jurisdictions, would be a small, compact court of the Chief Justice and not more than seven judges unless Parliament otherwise provided. Further, as substantial questions relating to the interpretation of the Constitution were of the utmost importance, the Constitution provided that such questions should be decided by large benches of judges and the minimum number of judges who were to sit for deciding such questions should be five.

From 1950 to about 1990, the Supreme Court generally retained this character comparable to the character of Supreme Courts in other jurisdictions. Special leave to appeal from a decision of a High Court or tribunal was sparingly given in the discretion of the Court. The composition of the Court was of benches of three judges, and five judges and, exceptionally, benches of seven judges and even 13 judges, as in the famous case of Kesavananda Bharati, decided important cases.

Progressive dilution

Today, all this has changed. The Supreme Court of India has lost its original character by a vast self-enlargement of its jurisdiction making itself a general court of appeal by routinely entertaining special leave petitions between litigants which do not involve important constitutional issues or issues of law of general importance. Up to June 2013, 35,439 special leave petitions which do not involve such issues are pending in the Court. Public Interest Litigation (PIL), which was laudably innovated by the Supreme Court in 1970 to redress the rights of disadvantaged sections of the society, has been converted into litigation for correcting government actions from corruption scams to banning tinted glasses on automobiles. Writ petitions to enforce fundamental rights under Article 32 of the Constitution are less than one per cent of the petitions annually admitted by the Court.

Cases of constitutional and national importance have been sidelined and not heard for years. The last major Constitutional case with a bench of nine judges was decided in 2007 in I.R. Coelho vs. State of Tamil Nadu which considered Parliament’s power to amend the Constitution by including statutes in the Ninth Schedule of the Constitution. Important Constitutional cases referred to nine judges such as the scope of Interstate Trade, Commerce & Intercourse, the right of States to tax minerals have not been heard for several years. At least five cases for consideration by seven judges, and 36 cases for consideration by a bench of five judges are pending for several years. Only 15 cases were decided by five judges between 2011 to 2013.

Bench strength

With the increasing load of appeals from High Court decisions the number of judges have had to be increased periodically from eight judges in 1950 when the Constitution came into force to 31 in 2008. Presently, the Supreme Court is composed of one bench of the Chief Justice’s Court of three judges and 13 or 14 benches of two judges in 13 or 14 courtrooms sitting regularly day after day. In no Supreme Court of other jurisdictions are there benches of 13 to 14 courts of two judges each as the Indian Supreme Court now has. Supreme Courts of other jurisdictions such as the United States, the United Kingdom, Canada, Australia and South Africa sit either en banc, i.e. of its full strength, or in large benches of five or more judges considering the importance of the case, as such a large composition of judges is considered fitting for deciding important cases in the highest court.

By contrast, the Supreme Court of India today decides cases of major importance by benches of two judges. Recently, the Supreme Court nullified Section 8(4) of the Representation of the People Act, 1951. This important decision on the interpretation of Parliament’s legislative powers on members of legislatures convicted of offences was delivered by a bench of two judges of the Court despite the Constitutional requirement that substantial questions of interpretation of the Constitution should be decided by not less than five judges. Important policy matters are decided by a bench of two judges of the Court. In the 2G Spectrum Case, a bench of two judges prescribed a national policy for disposing of all public resources by public auctioning. A bench of two judges has laid down the law in the vexing cases of inordinate delay in the disposing of petitions for clemency by the President in death penalty cases. The important question of decriminalising homosexuality under the Indian Penal Code has been heard, and the judgment which is reserved will be given by a bench of two judges.

When Sir B.N. Rau, the Constitutional Advisor at the time of the framing of the Constitution met Justice Frankfurter of the U.S. Supreme Court, he was told by Justice Frankfurter that the jurisdiction exercisable by the Supreme Court should be exercised by the full court and the highest court of appeal in the land should not sit in divisions. The Drafting Committee of the Indian Constitution also drew attention to the practice in the U.S. Supreme Court of not sitting in divisions and how the judges of the Supreme Court of the U.S. attached the greatest importance to this practice.

Separate court

In most of the other Supreme Courts, the cases decided by them are few and are of constitutional and national importance leaving the lower Courts to decide finally the cases which the Supreme Courts do not consider deciding to overload themselves with. The Supreme Court of the U.S. selects from among 7,000 petitions for certiorari (admission) around 100 cases in which certiorari is granted. On an average per year about 80 cases are decided by the Supreme Court of the U.K., the Supreme Court of Canada and the High Court of Australia. The Constitutional Court of South Africa — which has been ably functioning since 1994 deciding major constitutional cases and cases of national importance — decides on an average 38 cases per year. In contrast in 2012, the Supreme Court of India decided 898 cases, with few cases of constitutional or national importance.

The Supreme Court of India understandably is compelled to take up cases from 24 High Courts whose judgments increasingly require correction, and litigants have no forum for their correction except the Supreme Court. In this situation, the only solution to preserve the exclusivity and standing of the Supreme Court is to create a separate national court of appeals distinct from the Supreme Court in which appeals from High Courts and Tribunals can be entertained. Such a provision for a Supreme appellate court at the highest level distinct from a Constitutional Court is provided by the Constitution of South Africa. Simultaneously, the number of judges of the Supreme Court can be reduced from 31 to a smaller strength and the Court can function with benches of three and five judges as it functioned earlier. Above all, it is imperative to create awareness by lawyers, judges and informed public opinion of the necessity for restoring the character and standing of our Supreme Court comparable to the Supreme Courts in other jurisdictions.

(T.R. Andhyarujina is a senior advocate of the Supreme Court and former Solicitor General of India.)

Copyright© 2013, The Hindu

The importance of the outsider

August 26, 2013

Updated: August 26, 2013 23:45 IST

 

Raju Ramachandran

 

The proposed Judicial Appointments Commission, in which judges will be marginally outnumbered, will make the selection system more transparent and help to assess professional merit in a better way

Now that the Union Cabinet has decided on the composition of the proposed Judicial Appointments Commission (The Hindu, August 23, 2013), an informed debate becomes possible. The commission will be presided over by the Chief Justice of India, and will include two Supreme Court judges. The “non-judges” will be the Law Minister, two eminent persons and the Justice Secretary, who will be the Member-Secretary. The Leader of the Opposition in either House will be part of a committee which nominates the eminent persons, the other members being the Prime Minister and the Chief Justice. Thus, all the organs of the State, as also the citizenry, will be represented. And the judges will be marginally outnumbered. This is as it should be.

Checks and balancesl

Recent reactions of senior leaders of the Bar seem to take the view that the independence of the judiciary would be compromised by “outside” participation. The Chairman of the Bar Council of India is reported to have said that “we are totally against this National Judicial Appointment[s] Commission Bill because of the fact that in the process of appointment of judges, we do not want any interference from any outsider, including the executive” (PTI report, August 2, 2013). A later press release of the Bar Council of India (August 10, 2013) says “…. lawyers of the country are not going to tolerate the replacement of the existing collegiums with the proposed Commission, without the representation of the Bar Councils and the (Bar) Associations.” The president of the Supreme Court Bar Association is reported to have said that “loading the Commission with more members from the Executive and including fewer members from the judiciary would curtail the independence of the judiciary” and that “the cure should not be worse than the disease. The Bar will not agree to transfer the power of appointment to the executive. The collegium system can be improved by making methods of selection more transparent” (The Hindu, August 16, 2013).

So far, the central issue of democratic accountability has either not been addressed, or swept under the carpet. This is the first reason why the collegium system needs to be scrapped. The Constitution functions under a system of checks and balances. Judges of the superior courts are given the power to strike down laws of Parliament and the State Legislatures, which in their view violate the provisions of the Constitution. The judiciary has, in addition, given itself the power to annul amendments to the Constitution if they violate the “basic structure” (Kesavananda Bharati, 1973), and the political class has acquiesced. It is completely undemocratic if the selection to such a powerful institution is to be left entirely to a body of men and women concededly learned in the law, but unelected, and in practice virtually irremovable, thanks to a complicated impeachment procedure.

This self-selecting procedure, created by the judges themselves in 1993 is unique to our country. Other democracies are not worse off in the matters of judicial independence only because they have more “participatory” systems of appointment. Independence is nice, but with accountability, it is better.

Not their sole prerogative

There is a second reason why judicial appointments should not be the sole preserve of judges or even a body of judges and lawyers. The legal profession will assess professional merit only in terms of “technical” skills.

Forty years ago, in less salubrious times, the late Mohan Kumaramangalam created fear by stressing the importance of the “social philosophy” of judges to justify the supersession of three senior judges of the Supreme Court for appointment as Chief Justice of India. It is now time to think dispassionately. While the supersession of a judge can never be justified on the basis of his social or constitutional philosophy, surely it is a relevant factor to be taken into account at the time of appointment. Even if they consult senior lawyers, the collegiums only look at “technical” competence. While selecting lawyers for the High Court they look at their “levels” of practice, their incomes, their major arguments and their courtroom etiquette. And when judges are selected from the High Courts for the Supreme Court, it is mainly on the basis of their seniority (subject of course to the rejection of those whom the collegium decides to treat as “unfit”). Any interrogation on constitutional philosophy is outside the scope of this exercise. “There is only one philosophy” say judges and eminent lawyers and “that is the philosophy of the Constitution.” And, pray, what is that philosophy? We all know, after all, that the Constitution is what the judges say it is.

A recent Constitution Bench judgment has created consternation. In another of those “rapid” judgments, a five judge bench of the Supreme Court held that reservation in super specialities in the faculty of the All India Institute of Medical Sciences was unconstitutional. The correctness of that judgment is not the subject of today’s comment, though there is scope for two views on it. What is disturbing is an observation in the penultimate paragraph that “the very concept of reservation implies mediocrity.” There is no nuance here, no qualification, just a bald statement. The judgment is authored by the outgoing Chief Justice, who was of course under pressure of time. But four other judges who signed the judgment have not had a problem with the language. This is the judicial perception of reservation, while applying a 63-year-old Constitution which has affirmative action written into it. Can we seriously find fault with a legislator who wants to know what a judge’s constitutional philosophy is?

Tenure

And there is a third reason why “outsiders” become relevant. Manpower planning is not a concept which the judiciary has ever considered important. Over the years both in pre- and post-collegium days, we have witnessed the spectacle of Chief Justices of India occupying office for periods like 41 days in the case of Justice G.B. Pattanaik, approximately one month in the case of Justices Rajendra Babu and J.C. Shah and as few as 18 days in the case of Justice K.N. Singh. There has not been a single occasion when a judge has renounced the high office to make way for a colleague who would have a longer tenure and would thus serve the institution better. The proposed commission needs to bring in human resource consultants as well, to ensure that only those with sufficient tenures will occupy these positions.

Similarly, High Court Chief Justices have occupied their positions for as little as three to six months en route to the Supreme Court. Little concern has been shown for the effect that these short-term appointments have on administration in the High Courts. Nor has there been too much worry about the quality of recommendations for judicial appointments by collegiums presided over by such short-term Chief Justices, who would really have had no occasion to assess the competence of such persons. There have also been instances where senior judges have been appointed as High Court Chief Justices for just a few days before their retirement, so that they do not lose out on the benefits of retiring from that higher position. While the judiciary has found it perfectly reasonable and legitimate to mandate a two-year term for Directors General and Inspectors General of Police (Prakash Singh, 2006), that unfortunately is not sauce for the gander.

(Raju Ramachandran is a senior advocate, Supreme Court of India.)

Copyright© 2013, The Hindu

Upholding judicial independence

December 7, 2013

Updated: December 7, 2013 01:03 IST

Anil Divan

 

It is a unanimously held view that the rule of law and the independence of the judiciary should in no manner be compromised. It is widely perceived that the collegium system has not worked well and requires extensive reforms.

The provisions of the Constitution (120th Amendment) Bill later corrected as the Constitution (99th Amendment) Bill read with the Judicial Appointments Commission Bill, 2013 (JAC Bill), if adopted, will emasculate an independent judiciary and will pose a grave threat to the rule of law. The Constitution Amendment having been passed by the Rajya Sabha on September 5, 2013 is coming up before the Lok Sabha in the winter session.

Our Supreme Court has said “[the] Rule of Law is a basic feature of the Constitution which permeates the whole of the constitutional fabric and is an integral part of the constitutional structure. The independence of the judiciary is an essential attribute of the Rule of Law.”

The court has also observed: “In India, however, the judicial institutions, by tradition, have an avowed apolitical commitment and the assurance of a non-political complexion of the judiciary cannot be divorced from the process of appointments. … The constitutional values cannot be whittled down by calling the appointment of judges an executive act.”

The doctrine of separation of powers cannot be stretched so as to set up a mechanism which is capable of being abused by making judicial appointments completely subservient to the will of the executive.

Pernicious features
First, the composition of the JAC is the Chief Justice of India (CJI), two senior-most judges of the Supreme Court, the Law Minister, and two eminent persons selected by a panel consisting of the Prime Minister, the CJI and the Leader of the Opposition in the Lok Sabha. It can be modified or altered by Parliament by ordinary law (Article 124A). This configuration of six members is not part of the Constitution and is not constitutionally entrenched. The JAC can be ‘packed’ by pliant elements in future by the executive even by an Ordinance and the JAC can recommend non-meritorious persons even on the basis of caste, religion or loyalty to the government.

The appointment of the CJI, the CJ of High Courts, and judges of the Supreme Court and the High Courts and transfer of High Court judges are to take place on the recommendation of the JAC. Thus, a JAC can, even by a majority, recommend a junior judge of the Supreme Court to be a CJI — or even a Chief Justice or judge of the High Court can be recommended to be the CJI. Further, with six members as contemplated in the JAC, a casting vote for the CJI is essential.

Secondly, there is no provision recognising the convention that the senior-most Supreme Court judge will be appointed as the CJI (unless physically impaired) — a constitutional convention adhered to from 1950 except for the two supersessions concerning Justice A.N. Ray and Justice M.H. Beg. Such a provision will prevent lobbying and will preserve collegiality in the apex court.

Thirdly, the JAC Bill provides that the Central government will appoint the officers and employees of the Commission, making its secretariat a government department. This is the most dangerous provision. The officials and personnel of the Commission should be appointed in the same manner as those of the Supreme Court (Article 146), viz. by the CJI or such other judge or officer of the court as he may direct. If the secretariat or officers and servants of the JAC are treated as government departments, there are a hundred ways of making the JAC dysfunctional. In addition, the confidentiality and secrecy of the JAC deliberations cannot be maintained. The importance of an independent secretariat is a sine qua non for an independent and politically neutral JAC.

Fourthly, all expenses including salaries, allowances and pensions should be charged upon the Consolidated Fund of India as provided for the Supreme Court and the High Courts (Article 146 and 229). The JAC must be financially independent of executive budgetary control.

Finally and, most importantly, the criticism against the collegium system was lack of transparency, no consultations with the Bar, favouritism, the lack of a level-playing field for meritorious members of the Bar, no list of potential candidates prepared after advertisements and nominations to be put up in the public domain and lack of guidelines and criteria in the selection process. These core concepts must be incorporated in the Constitution Amendment and not left to be addressed by the Central government or the JAC. One opaque collegium need not be substituted by another, raising the apprehension that future vacancies may be shared by internal accommodations within the JAC.

The above pernicious shortcomings are ticking time-bombs which can be detonated at any time by a powerful executive having a parliamentary majority in the future — and we are looking at a future which may extend to many years.

If these flaws are removed and appropriate ancillary provisions are made in the Constitution Amendment Bill itself, the entire judicial reform can be part of the Constitution and the JAC Bill will become wholly redundant.

It is worth recalling that the provisions of the Bills were never communicated to the Bar for a robust debate, in spite of a written request by leading members of the Bar in April 2013. The two Bills were gazetted and tabled in the Rajya Sabha on August 29, 2013. On September 5, 2013, the Constitution Amendment Bill was passed in the Rajya Sabha by 131 votes in favour and a single vote by Ram Jethamalani in opposition. The JAC Bill has been referred to a parliamentary committee. This great hurry reminds one of the amendments passed during the Internal Emergency — the 39th Amendment moved on August 6, 1975, and passed on August 8, 1975; the 40th Amendment moved on May 18, 1976, and passed on May 27, 1976; the 41st Amendment moved on August 18, 1976 and passed on August 30, 1976; the 42nd Amendment moved on August 28, 1976, and passed on November 11, 1976.

Reactions to the Bill
The views of former CJI M.N. Venkatachaliah (who headed the National Commission to Review the Working of the Constitution) as reported mention that it would be dangerous if the primacy of the CJI in the appointment process was done away with — it would be against the basic structure of the Constitution. Two other former CJIs are reported to have strong reservations about the JAC being altered by a simple majority and even somebody other than the CJI being made chairperson of the JAC (Indian Express, September 6, 2013).

If the Bills in the present form are passed without eliminating the pernicious features, a serious constitutional challenge is likely to be mounted on the ground of violation of the basic structure by undermining an independent judiciary and consequently the rule of law. These are not imaginary fears. Who expected constitutional amendments which effectively emasculated judicial review being passed during the Internal Emergency after detaining all Opposition leaders, gagging the press and controlling the media and intimidating High Court judges by punitive transfers?

Modus Vivendi: possible consensus
Is a consensus possible? Dr. Rajendra Prasad in his speech in the Constituent Assembly on the eve of the adoption of the Constitution said: “We have prepared a democratic Constitution. But a successful working of democratic institutions requires in those who have to work them willingness to respect the viewpoints of others, capacity for compromise and accommodation. … After all, a Constitution like a machine is a lifeless thing. It acquires life because of the men who control it and operate it, and India needs today nothing more than a set of honest men who will have the interest of the country before them…”

The Law Minister in his speech delivered in Hindi in the Rajya Sabha on September 5, 2013, said that Parliament had great respect for the judiciary and that the independence of the judiciary should not be impaired. There seems to be some rethinking by the government in regard to the composition of the JAC being entrenched in the Constitution.

It is a unanimously held view that the rule of law and the independence of the judiciary should in no manner be compromised. It is widely perceived that the collegium system has not worked well and requires extensive reforms.

If the amendment is passed with the pernicious flaws indicated above, it is likely to create enormous tensions between the Bar and the judiciary on the one side and the executive on the other — a bruising confrontation which could well be avoided before the coming general elections.

It is hoped that our political leadership will rise to a level of statesmanship to give substance to the prophetic words of Rajendra Prasad, and bring judicial reforms while preserving the rule of law supported by an independent judiciary.

(Anil Divan is president, Bar Association of India. anildivan@gmail.com)

Copyright© 2013, The Hindu