Tag: gautam bhatia supreme court of india

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Supreme Court of India

Competence and legitimacy: The Supreme Court’s opinions on the distribution of natural resources

GautamBhatia_SupremeCourtofIndiajpgWhat obligations does the State have when it decides to outsource the exploitation of natural resources to private parties? To what extent – if at all – can courts enforce those obligations? These questions have come to the forefront over the last few years and are bound to dominate the political and legal landscape for some time to come. Two events, in particular, have contributed to this: the 2G Spectrum Scam, and the Coal block allocation scam, political controversies that rocked the previous government, and which were ultimately litigated before the Supreme Court. While the Court has reserved its judgment in the latter case, it issued between 2012 and 2014, an assortment of opinions in the former (“the Spectrum Cases”). These opinions go some way towards clarifying the present Court’s stance on these two questions and provide some guidance towards anticipating how future cases will be decided.

Simplifying greatly, the 2G Spectrum controversy arose out of the government’s decision to allocate spectrum to telecommunications companies on a first-come-first-serve basis. The entire process was rent with irregularities, such as an arbitrary advancement of the deadline for applications, and was duly challenged before the Court (the First Spectrum Case). The challenge itself, however, went far beyond simply impugning the specifics of the individual case: it invited the Court to rule on the standards generally applicable to government’s alienation, transference, or distribution of natural resources – a question of policy, if there ever was one. The Court accepted the invitation. It held that in distributing natural resources, “the State [is] bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest.”

LawSchoolInductionIn the operative part of the Court’s opinion, these three principles – equality, public trust, and public interest (or common good) as obligations governing the State’s conduct – are repeatedly run together with little attention paid to the second important question: what is the Court’s institutional role in holding the State to these obligations? Equality, of course, is a constitutionally enforceable duty enforceable in the courts under Article 14. Additionally, the Court derived the doctrine of public trust (that is, in distributing natural resources, the State acts as a trustee for the people), and public interest or common good (whose difference from public trust is never satisfactorily explained) from Article 39(b), which is a non-enforceable Directive Principle of State Policy. Armed with this, the Court then held that “when it comes to alienation of scarce natural resources like spectrum etc., it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest… a duly publicized auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process.”

Non-discrimination under Article 14 and the public interest

The bench in the First Spectrum Case - Justices G.S. Singhvi and A.K. Ganguly.
The bench in the First Spectrum Case – Justices G.S. Singhvi and A.K. Ganguly.

This paragraph is worthy of close scrutiny. Essentially, the Court transforms what is meant to be an Article 14 enquiry (requiring the State to adopt a non-discriminatory method) into a public interest enquiry, by holding that non-discriminatory methods of distribution necessarily protect the public interest. It then substitutes its own vision of the public interest for that of the State’s, and holds that the only method consonant with that public interest is an auction (indeed, the Court expressly overrode the Telecome Regulatory Authority’s (TRAI) opinion in favour of a first-come-first-serve allotment by holding that TRAI could not “make recommendations which would deny people from participating in the distribution of national wealth and benefit a handful of persons.”)

Courts lack the institutional legitimacy and the competence to hold the government to some standards

The Court’s opinion is unfortunate, because it conflates the two very distinct questions that were outlined at the beginning of the essay. In finding that the government is bound by standards of equality, public trust and the common good, it automatically takes upon itself the task of determining the content of those standards, as well as their enforcement. This, however, is anything but obvious: there are many things that the State ought to do, which must be enforced at the ballot box, via social movements or elsewhere – but not in the courts. This is because one of two reasons might exist to prevent courts from ruling on the matter: reasons of institutional competence, and reasons of institutional legitimacy. Structurally, courts are not equipped and do not have the resources – that is, they lack the competence – to decide certain issues (such as, for instance, the allocation of resources in the national budget). Separately, as unelected bodies, courts have limited authority to interpret laws and protect constitutionally guaranteed rights – they cannot, for instance, frame policy, because that is something that the peoples’ elected representatives are exclusively authorised to do. For all its Article 14 gloss, the Court’s opinion arguably transgresses both these principles, and its failure to engage with them is doubly troubling.

The bench in the Second Spectrum Case - Justices D.K. Jain, S.H. Kapadia, Ranjan Gogoi, Dipak Misra, and J.S. Khehar.
The bench in the Second Spectrum Case – Justices D.K. Jain, S.H. Kapadia, Ranjan Gogoi, Dipak Misra, and J.S. Khehar.

The Government’s reaction was a Presidential Reference attempting to re-litigate the issue under the guise of seeking a clarification on the scope of the judgment. A Constitution Bench of the Supreme Court retreated from the expansive position taken in the first of the Spectrum Cases. In the Second Spectrum Case, it focused on the use of the word “perhaps” in the previous opinion (“an auction is… perhaps the best method…), to hold that the First Spectrum Case was limited to its facts, and did not lay down any general principles. Unfortunately, the Second Spectrum Case, like its predecessor, failed to engage with issues of institutional competence and legitimacy. Once again, it took refuge in the boundlessly manipulable category of Article 14 “arbitrariness” to hold that “when… a policy [of distribution of natural resources] is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated to private entrepreneurs for commercial pursuits… adoption of means other than those that are competitive and maximise revenue may be arbitrary and face the wrath of Article 14.”

There are two ways of reading the above paragraph. One is that the Court, while narrowing the actual reach of the First Spectrum Case, has kept alive its overall import: public interest and the common good will determine what is or is not arbitrary under Article 14, and that determination ultimately vests with the Courts, to be exercised on a case to case basis. There is, however, another interpretation, which comes through in a subsequent paragraph: if the objective of a particular distribution is not directly social welfare or common good, but indirectly aims at that goal through maximising State revenue, then non-competitive methods will attract Article 14. For example, in the case of spectrum, if the government’s objective in allocating it to private parties is to maximise revenue (which it then – presumably – uses to further the common good), then a non-auction-based method violates Article 14. Notice that this is very close to the traditional Article 14 two-pronged test of intelligible differentia and rational nexus: clearly, differentiating spectrum applicants into those who applied before and after the cut-off date (first-come-first-served) bears no rational nexus with the purpose of revenue maximisation. Indeed, the Court seemed to be heading towards this conclusion (although it didn’t specifically make it), when it held in a subsequent paragraph: “Where revenue maximization is the object of a policy, being considered qua that resource at that point of time to be the best way to subserve the common good, auction would be one of the preferable methods, though not the only method. Where revenue maximization is not the object of a policy of distribution, the question of auction would not arise. Revenue considerations may assume secondary position to developmental considerations.”

The future development of the Court’s jurisprudence depends on which reading of the Second Spectrum Case – narrow or broad – is adopted by future Courts. In this essay, I’ve tried to suggest that it is the narrow reading – one that limits itself to a rigorous intelligible-differentia-rational-nexus Article 14 analysis – is truer to the institutional role of the Court.

Going beyond Article 14

The bench in the Third Spectrum Case - Justices Vikramjit Sen and K.S. Radhakrishnan.
The bench in the Third Spectrum Case – Justices Vikramjit Sen and K.S. Radhakrishnan.

In addition to the core arguments outlined above, the concepts of public trust and public good have played an additional role as background principle guiding the interpretation of legal provisions. In the Third Spectrum Case, a controversy arose over whether the Comptroller and Auditor General (“CAG”) was authorised to demand an audit of private telecom companies under its Article 149 powers. The key question was whether, in Article 149, the term “… any other authority or body”, that came after “Union” and “States” included purely private entities (which were therefore subject to a CAG audit). On a textual reading, it would seem that – on the principle of noscitur a sociis – the term was limited to bodies of a public or quasi-public character. The Court held, however, that “when the executive deals with the natural resources, like spectrum, which belongs to the people of this country, Parliament should know how the nation’s wealth has been dealt with by the executive and even by the UAS Licence holders. When nation’s wealth, like spectrum, is being dealt with by even the private parties, like service providers, they are accountable to the people and to the Parliament.” On a similar note, in Reliance Natural Resources Ltd. v. Reliance Industries Ltd., which involved an extremely complex dispute over the fixing of gas prices, the Court invoked the international law principle that a nations’ people have ultimate sovereignty over natural resources and the public trust doctrine, along with Articles 39(b) and (c) of the Constitution, to interpret Article 297 of the Constitution as prohibiting the State from entering “into a contract that permits extraction of resources in a manner that would abrogate its permanent sovereignty over such resources”, and that the State could not, inter alia, “transfer title of those resources after their extraction unless the [State] receives just and proper compensation.” These two cases demonstrate that Article 14 is not the only recourse available to the Court: it can use the public trust doctrine, and other similar concepts, as background principles to interpret constitutional and other provisions to conform to their requirements. How far it will go down that path before interpretation becomes invention, again, remains to be seen.

(Gautam Bhatia blogs at Indian Constitutional Law and Philosophy.)

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Supreme Court of India

Supreme Court’s pragmatic approach shields right to education amendments from basic structure challenge

In an important judgment this week, the Supreme Court upheld Articles 15(5) and 21A of the Constitution of India against a basic structure challenge.

Article15(5)_ConstitutionofIndia

In Ashoka Kumar Thakur (2008), a Constitution Bench had upheld the validity of Article 15(5), save for its application to private un-aided educational institutions. That question had been left open for another day, and was finally answered this week. Alongside it was the question of whether Article 21A, which guarantees the right to a free and compulsory education between the ages of six and fourteen, is consistent with the basic structure.

It is trite knowledge that Kesavananda Bharati v. State of Kerala established the proposition that Parliament, in the exercise of its amending power, cannot “damage or destroy” the Constitution’s basic structure. Over the years, basic features of the Constitution have been identified in the language of abstract principle: separation of powers, the rule of law, a democratic and republican form of government, secularism, judicial review, and so on. In this case, the petitioners made a novel claim: Article 19(1)(g), which guarantees the freedom of occupation, was a basic feature, and that Article 15(5) eliminated it entirely. It was argued in addition that by “treating equals unequally”, there was an Article 14 violation as well.

GautamBhatia_SupremeCourtofIndiajpgIf you find something odd about these claims, you’re right. Typically, Articles 14 and 19(1)(g) are invoked to challenge the constitutionality of a law. Here, however, it is not a law that is at stake. A Constitutional right itself is being attacked for violating other constitutional rights. Thus, we have the odd argument that some constitutional provisions stand in a hierarchical relationship above others. This cannot be right. It is precisely to avoid this manner of claim that the Supreme Court, over the years, has steadfastly refused to locate the basic structure in any one provision, but has understood it to embody abstract principles that underlie and justify concrete provisions.

Admittedly, some provisions are integral to the basic structure. Undoubtedly, if Parliament simply repealed Article 14, thus removing the anchor for the principles of “equality before law” and “rule of law”, a basic structure challenge would be sustained. Arguably – although more controversially – eliminating Article 19(1)(g) from the Constitution altogether would violate the basic structure. Article 15(5), however, does nothing of the sort. It just carves out a fairly narrowly drawn exception to Article 19(1)(g): that the Article will not apply only to the special provisions aimed at advancing socially and educationally backward classes. This language is familiar to us from Article 16(4), and leaves ample scope for judicial review, as is evidenced from sixty years of affirmative action jurisprudence, which has placed substantial limits both on the government’s identification of beneficiaries, as well as the extent to which reservation is permitted. Admittedly, it goes against a strictly formalistic, colour-blind vision of equality, but so do all reservation provisions under the Constitution – Articles 15(4), 16(4), 16(4A) and 16(4B).

These were precisely the arguments that the Court used to reject the basic structure challenge. Article 15(5), insofar as it sought to equalise the educational opportunities of members of socially and educationally backward classes, did not destroy equality. Rather, it adopted a group-and-context sensitive vision of equality that took into account historic and continuing structural subordination in determining present allocation of resources. As the Court has held before, the Constitution holds both these visions of equality in balance. Therefore, it also clarified – correctly, in my opinion – that Article 15(5) would not prevent it from reviewing laws on the touchstone of Articles 14 and 19(1)(g). Article 19(1)(g), for instance, would continue to apply if the government failed to demonstrate that the requirements of Article 15(5) were satisfied. Article 14 would continue to apply in all cases. For example, if the government imposed an 80% reservation requirement on private schools, it is likely that the Court would not find it to fall within Article 15(5) at all, and almost certain that it would strike it down under Article 14.

In challenging Article 21A, the petitioners made another curious argument.

Article21A_ConstitutionofIndia

The Right of Children to Free and Compulsory Education Act, 2009, (“RTE Act”) as is well known by now, requires private, un-aided schools to accept 25% of their total admitted students from underprivileged backgrounds. The petitioners used this to argue that because Article 21A imposed constitutional obligations upon private parties, it violated the basic structure. Naturally, the Court gave short shrift to this argument. Article 21A does nothing of the sort. It provides a right to education that is enforceable against the State. Under the RTE Act, the State carries out its obligations by imposing certain regulations of admissions upon private schools. While that might raise constitutional questions about the Act, it does not, in any way, affect Article 21A itself.

Of course, the constitutional validity of the RTE Act – including the 25% requirement – was challenged, and upheld, in Society for Un-Aided Private Schools of Rajasthan v. Union of India. After having upheld the validity of Article 21A then, the Court needed to go no further. It clarified, however, that while Article 21A vested in the State the power to make law to discharge its educational obligations, the scope of that Article – and consequently, the scope of the power it conferred upon the State – would still be interpreted harmoniously with Articles 19(1)(g) and 30. Consequently, a law made under Article 21A would continue to be tested for reasonableness under Articles 19 and 30. Notice how this analysis mirrors the Court’s analysis of Article 15(5), and leaves it with maximum judicial wiggle room to examine laws as and when they are made.

LR-BlogAdHarmoniously construing Articles 21A and 30(1), the Court held that the minority institutions’ right to preserve their character necessitated excluding the applicability of the RTE Act to those institutions. It also found that Article 21A provided a basis separate from Article 19(6), for justifying the 25% seat reservation. This, I would suggest was unnecessary. It would have been doctrinally more satisfactory to use Article 21A – as the Supreme Court did in Society for Un-Aided Private Schools – to adjudicate upon the reasonable restriction that the RTE Act placed upon private schools, and uphold it on that basis. The Supreme Court’s opinion, however, implies that we now have two separate bases for restricting Article 19(1)(g) rights: 19(6) and 21A, and it is entirely unclear how these two relate to each other.

Ultimately, the opinion is characterised by pragmatism. The Court maintains its time-honoured tradition of judicial avoidance when it comes to basic structure claims. At the same time, it leaves its hands untied to scrutinise legislation passed under the two amendments on the touchstone of existing constitutional rights, as and when it might come to court.

(Gautam Bhatia blogs at Indian Constitutional Law and Philosophy.)

Categories
Supreme Court of India

Previous sanction requirement for prosecuting senior bureaucrats for corruption offences struck down – the Article 14 thicket grows denser

GautamBhatia_SupremeCourtofIndiajpgThis week, in Centre for Public Interest Litigation v. Union of India, a Constitution Bench of the Supreme Court struck down Section 6A of the Delhi Special Police Establishment Act, 1946 (“DSPE Act”). The Section, which had been inserted into the enactment through a 2003 amendment (with a tortuous history of its own), prohibited inquiries or investigations of offences alleged to have been committed under the Prevention of Corruption Act, 1988 without the prior approval of the Central Government, if such allegations were made – inter alia – against certain senior government officials (Joint Secretary and above), and officials appointed in government corporations. Section 6A thus created two classes of officials, one of which could be investigated for corruption without prior sanction and the other, which could not. This classification was challenged under Article 14 of the Constitution. The Supreme Court upheld the challenge.

In order to survive an Article 14 challenge, the government must demonstrate three things. There must be an intelligible differentia between the two groups that have been treated differently. This differential treatment must bear a rational nexus with a governmental purpose. And the purpose itself must be legitimate. This is accepted doctrine, established in cases such as Budhan Choudhry v. State of Bihar, and Rama Krishna Dalmia v. Justice S.R. Tendolkar (both cases that the Court cites).

Unfortunately, the Court’s opinion omits these distinct enquiries. This renders the basis of its judgment uncertain, and leaves the law in a state of some confusion.

The government’s argument was straightforward. High-level government officials must repeatedly take important decisions. They must take them swiftly and without the benefit of hindsight. Repeated and frivolous allegations of corruption will invariably exercise a chilling effect upon their behaviour. Often, they will prefer inaction over taking a controversial decision that could subsequently land them in court, answering corruption charges. Section 6A is important just to avoid this policy paralysis. Thus, governmental efficiency is the legitimate purpose with which this classification bears a rational nexus.

A response to this could do one of four things: challenge the intelligibility of the classification, its nexus with the stated purpose, whether the stated purpose is the actual purpose, and if so, whether it is a legitimate purpose.

Surprisingly, however, the Court begins its analysis by ignoring the government’s stated purpose altogether. In Paragraph 58, it notes:

“It seems to us that classification which is made in Section 6-A on the basis of status in the Government service is not permissible under Article 14 as it defeats the purpose of finding prima facie truth into the allegations of graft, which amount to an offence under the PC Act, 1988.”

LR-BlogAdAdmittedly, the purpose of the Prevention of Corruption Act is to expose corruption. Yet the stated purpose of S. 6A of the DSPE Act, which is under consideration, is different: to achieve efficiency by insulating “decision-making officials” from frivolous allegations. The Court spends a significant part of its opinion demolishing a straw-man. It argues – with perfect truth – that making a distinction between higher and lower officials bears no rational nexus with exposing corruption, because “irrespective of their status or position, corrupt public servants are corrupters of public power. The corrupt public servants, whether high or low, are birds of the same feather and must be confronted with the process of investigation and inquiry equally.” The Court makes a number of observations about the need for an unhampered, unbiased, free, and fearless enquiry into corruption, and the role and purpose of the CBI more generally. But in so doing, the Court substitutes the government’s stated purpose with a purpose it imports from a different statute, without providing reasons for the same. Having done so, it enters a finding of irrationality in the scheme of classification.

It is difficult not feel that its suspicion of a corrupt and self-serving political class has played a role in the Court’s thinking. Immediately after its most conclusive statement of no-rational-nexus, the Court observes:

“There will be no confidentiality and insulation of the investigating agency from political and bureaucratic control and influence because the approval is to be taken from the Central Government which would involve leaks and disclosures at every stage.”

That is no doubt an undesirable state of affairs, but one that, in a Constitutional democracy based on the separation of powers, is meant to be punished by the voters at the ballot box. A bad situation of governance is not an Article 14 violation.

The Court then shifts tack. In Paragraph 67, it holds:

“The object of Section 6-A, that senior public servants of the level of Joint Secretary and above who take policy decision must not be put to any harassment, side-tracks the fundamental objective of the PC Act, 1988 to deal with corruption and act against senior public servants. The CBI is not able to proceed even to collect the material to unearth prima facie substance into the merits of allegations. Thus, the object of Section 6-A itself is discriminatory.”

This is a very curious statement. The Court rules that because the objective of S. 6A (a legally enacted provision of a statute) is in conflict with the objective of another legally enacted statute (the Prevention of Corruption Act), it is an illegitimate objective. Both the DSPE and the PC Acts, however, enjoy the same legal status in our hierarchy of norms. A finding of illegitimate objective surely needs something more than an existing conflict with an equally authoritative norm.

The Court punctuates its legal findings with rhetorical flourishes about equality before law, noting that it is singing to the tune of the aphorism, “However high you may be, the law is above you.” Insofar as this applies to different procedural requirements for prosecuting the same offence, this is simply untrue. Sanction-for-prosecution requirements exist in a number of laws, most controversially, the Armed Forces (Special Powers) Act, 1958. The Court expressly holds that it is concerned with the validity of sanction-for-prosecution more generally, but is concerned only with this case. Yet the seeming basis for judgment – that you can’t have different legal regimes for different persons, based on their status – cuts much wider and deeper, and calls into question a number of legislations – which, evidently, the Court did not intend. Yet it is where it must explain why this statutory provision specifically violates Article 14 that the Court stumbles.

It is only towards the end of the judgment that the Court briefly engages with the government’s argument. Noting that there has been no recorded case of frivolous harassment of officials, and noting that the classification assumes that out of all investigative organisations, harassment is limited to the CBI, it dismisses the argument. This, of course, is the quintessential Article 14 enquiry into the relationship between the stated purpose and the classification. Unfortunately, it is limited to two paragraphs, and the Court does not explain what standard of scrutiny it is applying, what degree of deference is due to the government, and what evidence it considers relevant.

Ultimately, the Court’s decision is – arguably – correct. The reasoning however, only extends the ad hoc jurisprudence that has come to characterise one of the most important fundamental rights of our Constitution. That is a pity.

(Gautam Bhatia blogs at Indian Constitutional Law and Philosophy.)