Hot Off The PressNews

After hearing the much-debated Aadhaar matter for 38 days, the 5-judge bench of Dipak Misra, CJ and Dr. AK Sikri, AM Khanwilkar, Dr. DY Chandrachud and Ashok Bhushan, JJ has reserved the judgment. The hearing had begun on January 17, 2018.

Below are the highlights from the arguments advanced on the last day of the Aadhaar Hearing:

  • Senior Advocate Gopal Subramanium: 
    • Is Aadhaar really affirmative action? Is the act an enabler or is it in the guise of enabler? The act is not an instrumentality to deliver services. It is only a means of identification. We have to read the true purpose of law and whether the law seeks to achieve that purpose. Dignity and autonomy is not preserved by section 7 of the Aadhaar Act.
    • Aadhaar Act does not have a proper purpose. A claim to a proper purpose is not proper purpose. Authentication is at the heart of the Act. Failure of authentication is a ground for denial of services.
  • Chandrachud, J: An act like Aadhaar needs a regulator which is absent.
  • Gopal Subramanium: The state seeks to take away our data without the backing of a strong data protection framework. Words like “grant of subsidies, benefits and services” are expressions of condescension in Section 7. They are not treated like an entitlement. The burden is on the people to authenticate and establish their identity. Should the State logically be the holder of such information?
  • Chandrachud, J: Is “subsidy” a benefit or a right, that has to be decided.
  • Gopal Subramanium: 
    • Private players have access to Aadhaar data. There is no regime of protection. There is no vertical protection.
    • Section 7 has been interpreted to be mandatory. Can’t make citizens subservient under section 7 and call rights, benefits.
    • The Act is to be struck down completely as it fails all three tests laid down in Puttaswamy. There’s no legitimate state aim as the real aim is different from the purported aim. There was no law when Aadhaar was implemented and there’s no proportionality.
    • This Court consciously overruled ADM Jabalpur. The doctrine of possibility of misuse does not apply here because there is actual denial of rights in the case of Aadhaar.
    • Aadhaar Act should be completely struck down and the architecture and database must be destroyed.

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  • Senior Advocate Arvind P. Datar:
    • Aadhaar cannot be a money bill. At most, it can be a financial bill of category 3 under Article 117(3) of the Constitution.
    • Doctrine of severability will not apply to Aadhaar, since the doctrine is only applicable to validly enacted laws.
    • Mohd.Saeed Siddiqui and Yogendra Jaiswal should be overruled. Finality of speaker’s decision doesn’t mean that the bill cannot be subject to judicial review.
    • Under PMLA, Aadhaar is not just confined to banks but has gone beyond it’s scope. Aadhaar is needed for mutual funds, insurance policies and credit cards as well, among other things.
    • Only magic words like black money, national security and terrorism are being thrown around by the State. The justification of a law for proportionality cannot be a ritualistic exercise. Aadhaar is not justified under Article 300A of the Constitution.
    • Linking Aadhaar will never solve problems of money laundering and black money because the source of such money is different. This is colorable exercise of power. Black money and money laundering is being used as a ruse to collect people’s biometrics.
    • Section 57 should go completely. Anything outside Section 7 is completely violative of the Puttaswamy judgement. S.139AA of the income tax act is inconsistent with the Aadhaar Act.
    • There should be an option of opting out of Aadhaar.

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  • Senior Advocate P. Chidambaram:
    • AG’s reading of the word “only” in Article 110(g) is erroneous. There is no need to tamper the language of the Article.
    • Section 57 travels beyond Article 110 of the Constitution. Clause (g) of 110 (1) must be read very restrictively. The provision has to be incidental to (a) to (f) to come under (g). Clause (g) is not a substantive provision.
    • The implications of passing a non money bill as a money bill are very serious: One half of the parliament is virtually disabled from making any amendments. It denudes the highest constitutional authority of the country, the President of India.
    • There is no provision in the Constitution which gives the court the power of severability in case of an invalidly enacted legislation. The Australian constitution has such a provision.
    • The bill was passed without the effective participation of the Rajya Sabha and without assent from the President. The court cannot save a legislation that is fundamentally unconstitutional.
    • Pith and Substance doctrine cannot be applied in cases where the applicability of Article 110 is being interpreted. Only limited to entries of legislative lists.
    • The Court must strike down the Aadhaar Act as it is not a money bill. It is a mockery of Article 110.

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  • Senior Advocate K.V Vishwanathan: 
    • Respondents’ argument that the least intrusive method is not a facet of proportionality is completely erroneous. You can’t balance your own bundle of rights. Balancing Right to food and right to privacy is wrong.
    • Section 59 doesn’t protect Aadhaar during the time it was not an Act. Its a wrong submission made by the state. To rely on the exception handling mechanism is ultra vires the Act.
    • If it’s my rights and their duty, then they cannot discharge their duty by subjecting the poor and downtrodden of this country to a technological menace.
    • There can be no data collection and digitalization of records. The underpinning of the Aadhaar Act is authentication of individuals.
    • Harmonization of rights is being mis-applied by the respondents.

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To read the highlights from the rejoinder submitted by the petitioners, click here and here.

To read the highlights from the submissions of AG KK Venugopal on the issue of money bill, click here.

To read the highlights from the submissions of Advocate Zoheb Hossain, click here.

To read the highlights from the submissions of Advocate Gopal Sankarnarayanan and Senior Advocate Neeraj Kishan Kaul, click here.

To read the highlights from the submissions of Senior Advocate Rakesh Dwivedi, click here , here , here , here and here.

To read the highlights from the submissions by ASG Tushar Mehta, click here and here.

To read the highlights from the submissions by the Attorney General, click here, here , here and here.

To read the highlights from the PowerPoint Presentation made by the CEO of UIDAI, click here.

To read the highlights from submissions of Senior Advocates Meenakshi Arora, Sajan Poovayya, CU Singh, Sanjay Hegde and Counsel Jayna Kothari, click here.

To read the highlights from submissions of Senior Advocates KV Viswanathan and Anand Grover, click here.

To read the highlights from Senior Advocate Arvind Datar’s submissions, click here, here and here.

To read the highlights from Senior Advocate Gopal Subramanium’s submissions, click herehere and here.

To read the highlights from Senior Advocate Kapil Sibal’s arguments, click here, here and here.

Looking for the detailed submissions of Senior Advocate Shyam Divan? Read the highlights from Day 1Day 2, Day 3, Day 4 , Day 5, Day 6 and Day 7 of the hearing.

Source: twitter.com/SFLCin

Case BriefsHigh Courts

Gujarat High Court: The Court  heard a petition filed by two Chartered Accountants, challenging the constitutionality of the National and State/ Regional Goods and Services Tax (GST) Appellate Tribunals, which are to be established as per guidelines in Section 109 of the Central GST Act. It was argued by the petitioners that the section in question and the constitution of the Tribunals the section seeks to create infringe upon the independence of the judiciary and are hence unconstitutional.

S. 109 (3) of the CGST Act reads:

“The National Bench of the Appellate Tribunal shall be situated at New Delhi which shall be presided over by the President and shall consist of one Technical Member (Centre) and one Technical Member (State).”

The following sub-section makes a similar provision for regional Benches of the Tribunal. Further, S. 109 (11) of the same Act states:

“If the Members of the National Bench, Regional Benches, State Bench or Area Benches differ in opinion on any point or points, it shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President or as the case may be, State President for hearing on such point or points to one or more of the other Members of the National Bench, Regional Benches, State Bench or Area Benches and such point or points shall be decided according to the opinion.”

It was the contention of the petitioners that owing to the majority rule for taking decisions, and the outnumbering of the judicial member by the technical members at all levels, is an attempt to encroach upon the judiciary’s domain, and hence the section be declared ultra vires Articles 13, 14, 19, and 50 of the Constitution and hence void. The petition made reference to the case of Union of India v. R. Gandhi, (2010) 11 SCC 1), where a 5-Judge Bench of the Apex Court held,

“Two member Benches of the Tribunal should always have a Judicial Member. Whenever any larger or special benches are constituted, the number of Technical Members shall not exceed the Judicial Members.”

This was a departure from the constitution of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which, before the introduction of GST, served as an appellate authority in matters relating to indirect taxes. The CESTAT consisted of one judicial and one technical member each. The petitioners also brought to the Court’s notice that over ten months have passed since the implementation of the GST regime but no such Appellate Tribunals had been constituted yet. To this effect, the Court issued a notice to the Union Government, Gujarat Government, and the GST Council. [Pratik Satayanarayan Gattani v. Union of India, R/Special Civil Application No. 7129 of 2018, order dated 5.5.2018]

Hot Off The PressNews

As the Aadhaar Hearing reached Day 16, Senior Advocate P. Chidamabaram concluded his arguments on the issue of Aadhaar Act, 2016 being introduced as a Money Bill before the 5-judge bench of Dipak Misra, CJ and Dr. AK Sikri, AM Khanwilkar, Dr. DY Chandrachud and Ashok Bhushan, JJ. The most important take away from Day 16 hearing was that the Court scrapped the present deadline for linking Aadhaar stand extended till the final disposal of the matter.

Below are the highlights from Day 16 of the Aadhaar Hearing:

P. Chidambaram’s Submissions on Money Bill issue:

  • Speaker’s decision is not final. It is subject to judicial review.
  • (Reads S R Bommai v. Union of India) The satisfaction ofthe President mentioned in clause (1), shall be final and conclusive and shall notbe questioned in any court on any ground.
  • Any bill if passed in the guise of money bill strucks at the basic feature of Constitution i.e. federalism.
  • (Reads Raja Ram Pal v. Speaker) Validity of any proceeding in the Parliament on grounds of irregularity of procedure cannot be looked into by the court. However, illegality can be a ground for the courts to exercise judicial review. If the impugned procedure adopted in Parliament is illegal and unconstitutional, judicial review lies.
  • The question why it was termed as money bill was raised by MP Jairam Ramesh in the discussions. He had moved for amendments in the bill which were adopted in Rajya Sabha, however, these amendments were not considered by the Lok Sabha and it was passed in original.
  • The apparent object of the Aadhaar Bill is to make a law that will fit into Article 110(1)(c) & (g).
  • Chandrachud, J: If we cross the threshold of justiciability, which are the provisions are relatable to Art. 110?
  • Chidambaram: Question should be is there any provision in the Act which doesn’t fall under Ar. 110 (a) to (g). Because money bill can’t have any provision beyond (a) to (g). Provisions such as Section 57, 54, 23 go beyond the scope of Article 110. And hence it is not a money bill but merely a financial bill. It wasn’t a money bill when introduced or certified.
  • Chandrachud, J:  Does the entirety of the bill has to go or the portions can be severed-those provisions which fall under Art. 110?
  • Chidambaram: It will go in entirety. The provisions are not severable.
  • The provisions make it clear that it was not a money bill, then how could it have been passed as a money bill and the scrutiny of Rajya Sabha been bypassed. If this could slip through as a money bill, virtually any bill could slip as a money bill. It sets a very dangerous precedent. Money bill is an extremely narrow subset of financial bill. This bill goes far beyond the intended purpose of delivery of subsidies.

Submissions on issue of Aadhaar being made mandatory for Tatkal Passport:

  • Arvind Datar: Government can’t make Aadhaar mandatory in violation of SC order. (Further asks the court to consider extension of deadlines.)
  • AG KK Venugopal: There are other IDs eg. water bill, electeicity bill which can be taken. Aadhaar is only for expediting the procedure. Says that in case of passport under tatkal scheme, Aadhaar is required for out of turn consideration to expedite the process. (Requests that the extension of deadlines should not affect section 7- the subsidies.)

Hence, Court passed an interim order directing that the order passed on earlier occasion stands extended and that this extension would also cover the issue of passports.

To read the highlights from Senior Advocate Arvind Datar’s submissions, click here and here.

To read the highlights from Senior Advocate Gopal Subramanium’s submissions, click herehere and here.

To read the highlights from Senior Advocate Kapil Sibal’s arguments, click here, here and here.

Looking for the detailed submissions of Senior Advocate Shyam Divan? Read the highlights from Day 1Day 2, Day 3, Day 4 , Day 5, Day 6 and Day 7 of the hearing.

Source:  twitter.com/SFLCin

Case BriefsSupreme Court

Supreme Court: Upholding the constitutional validity of Section 21A of the Banking Regulation Act, 1949, the Bench of RF Nariman and Navin Sinha, JJ held that Section 21A of the Banking Regulation Act is valid as it is part of an enactment which, in pith and substance, is relatable to Entry 45, List I of the Seventh Schedule to the Constitution.

The Bench, however, said that where Section 21A of the Banking Regulation Act incidentally trenches upon the State Debt Relief Acts, enacted under Entry 30, List II, so far as relief of agricultural indebtedness is concerned, where there is State legislation on the same subject matter which directly clashes with Section 21A, Section 21A will have to give way to the State Debt Relief Acts insofar as relief from agricultural indebtedness due to banks is concerned.

It said:

“The non-obstante clause in Section 21A cannot override a State Debt Relief Act in this situation, as Parliament cannot give itself supremacy over State legislation where none exists under the Constitution. If this were not the case, the exclusive power of the States to make laws within List II would become illusory, and “Parliamentary paramountcy” would trap many a beneficent State legislation made within its exclusive domain.”

Hence, the bench said that insofar as Section 21A incidentally encroaches upon the field of relief of agricultural indebtedness, set out in Entry 30, List II, it will not operate only in States where there is a State Debt Relief Act which deals with the subject matter of relief of agricultural indebtedness, where the State Debt Relief Act covers debts due to “banks”, as defined in those Acts.

It was further held that in States where the State Debt Relief Act does not apply to banks at all, or applies only to certain specified banks, Section 21A will, in the former situation, apply in such States, and, in the latter situation, apply only in respect of loans made to agriculturists where such loans are given by banks other than the banks specified or covered by the concerned State Debt Relief Act, as the case may be.

The said Section that deals with “Rates of interest charged by banking companies not to be subject to scrutiny by courts”, was introduced into the Banking Regulation Act by the Banking Laws (Amendment) Act of 1983 with effect from 15.2.1984. Section 21A interdicts the reopening by courts of a debt between a banking company and its debtor, on the ground that the rate of interest charged by the banking company, in respect of a loan transaction, is excessive. [Jayant Verma v. Union of India, 2018 SCC OnLine SC 124, decided on 16.02.2018]

Case BriefsSupreme Court

Supreme Court: Noticing that there is a need to reconsider the earlier judgments on the Constitutional validity of Section 497 IPC, regard being had to the social progression, perceptual shift, gender equality and gender sensitivity, the 3-judge bench of Dipak Misra, CJ and AM Khanwilkar and Dr. DY Chandrachud, JJ referred the matter to the Constitution Bench.

The Court took note of the rulings of various judgment of the Supreme Court including Yusuf Abdul Aziz v. State of Bombay, 1954 SCR 930 and Sowmithri Vishnu v. Union of India and Another, (1985) Suppl. SCC 137, wherin it was held that the impugned provision does not violate Articles 14 and 15 of the Constitution as there is a:

“reverse discrimination in ‘favour’ of the woman rather than ‘against’ her.”

The Court, in earlier judgments, had held that Section 497 only punishes the ‘outsider’ who breaks into the matrimonial home and occasions the violation of sanctity of the matrimonial tie by developing an illicit relationship with one of the spouses. It was hence said that Section 497:

“does not arm the two spouses to hit each other with the weapon of criminal law. That is why neither the husband can prosecute the wife and send her to jail nor can the wife prosecute the husband and send him to jail. There is no discrimination based on sex.”

The 3-judge bench, hence, was of the opinion that the provision seems quite archaic and especially, when there is a societal progress. The Court said that, apart from that there has to be a different kind of focus on the affirmative right conferred on women under Article 15 of the Constitution.

On 08.12.2017, the Court had said that the provision creates a dent on the individual identity of woman as:

“the fulcrum of the offence is destroyed once the consent or the connivance of the husband is established. Viewed from the said scenario, the provision really creates a dent on the individual independent identity of a woman when the emphasis is laid on the connivance or the consent of the husband. This tantamounts to subordination of a woman where the Constitution confers equal status. A time has come when the society must realise that a woman is equal to a man in every field.”

The matter will now be heard by a Constitution Bench. [Joseph Shine v. Union of India, 2018 SCC OnLine SC 2, order dated 05.01.2018]

Case BriefsSupreme Court

Supreme Court: In the case where the competence of Assam Legislature to make the Assam Parliamentary Secretaries (Appointment, Salaries, Allowances and Miscellaneous Provisions) Act, 2004 was in question, the bench of R.K. Agrawal and A.M. Sapre, JJ held that the State Legislature is not authorized to create offices of Parliamentary Secretaries.

Explaining the scope of Article 194 of the Constitution, the bench said that while clause (1) declares that there shall be freedom of speech in the Legislature subject to the limitations enumerated therein, clause (2) provides immunity in favour of the members of the Legislature from any legal proceedings in any court for anything said or any vote given by such members in the Legislature or any Committees etc. Sub-clause (3) deals with the powers, privileges and immunities of a House of the Legislature and its members with respect to matters other than the ones covered under clauses (1) and (2). Hence, it is clear that Article 194 idoes not expressly authorise the State Legislature to create offices such as the one in question.

Taking note of Article 187 of the Constitution, which makes stipulations even with reference to the secretarial staff of the Legislature, the Court said that on the face of such elaborate and explicit constitutional arrangement with respect to the Legislature and the various offices connected with the legislature and matters incidental to them to read the authority to create new offices by legislation would be a wholly irrational way of construing the scope of Article 194(3) and Entry 39 of List II. It was Stating that such construction would be enable the legislature to make a law which has no rational connection with the subject matter of the entry, the Court said that “The powers, privileges and immunities” contemplated by Article 194(3) and Entry 39 are those of the legislators qua legislators. [Bimolangshu Roy v.  State of Assam,  2017 SCC OnLine SC 813, decided on 26.07.2017]

Case BriefsSupreme Court

Supreme Court: Deciding the validity of the Karnataka Determination of Seniority of the Government Servants Promoted on the Basis of Reservation (To the Posts in the Civil Services of the State) Act, 2002 which provides for grant of consequential seniority to the Government servants belonging to Scheduled Castes and the Scheduled Tribes promoted under reservation policy, the bench of A.K. Goel and U.U. Lalit, JJ declared the provisions of the impugned Act to the extent of doing away with the ‘catch up’ rule and providing for consequential seniority under Sections 3 and 4 to persons belonging to SCs and STs on promotion against roster points to be ultra vires Articles 14 and 16 of the Constitution.

In the present case where the Assistant Engineers of SC/ST category recruited in the year 1987 were promoted to the cadre of Assistant Executive Engineers while in general merit,Assistant Engineers recruited in 1976 were considered for promotion to the said cadre, the appellants argued that the SC/ST candidates got promotion early and on account of consequential seniority, percentage of SC/ST candidates was much higher than the permitted percentage and all top positions were likely to be filled up by SC/ST candidates without general merit candidates getting to higher positions. The appellant had also argued that as a consequence of accelerated seniority to the roster point promotee, the roster point promotee would reach the third level by the age of 45 and fourth, fifth and sixth level in next three, two and two years, however, the general merit promotee would reach the third level only at the age of 56 and retire before reaching the fourth level. This would result in reverse discrimination and representation of reserved category would range between 36% to 100%.

The exercise for determining ‘inadequacy of representation’, ‘backwardness’ and ‘overall efficiency’, is a must for exercise of power under Article 16(4A) of the Constitution. Mere fact that there is no proportionate representation in promotional posts for the population of SCs and STs is not by itself enough to grant consequential seniority to promotees who are otherwise junior and thereby denying seniority to those who are given promotion later on account of reservation policy. If the State wishes to exercise its discretion under Article 16(4A), it is to collect quantifiable data showing backwardness of the class and inadequacy of representation of that class in public employment in addition to compliance with Article 335. Even if the State has compelling reasons, the State will have to see that its reservation provision does not lead to excessiveness so as to breach the ceiling limit of 50% or obliterate the creamy layer or extend the reservation indefinitely. The Court said that the plea that persons promoted at the same time were allowed to retain their seniority in the lower cadre is untenable and ignores the fact that a senior person may be promoted later and not at same time on account of roster point reservation. Depriving him of his seniority affects his further chances of promotion.

The Court, however, clarified that the judgment will not affect those who have already retired and will not affect financial benefits already taken. Consequential promotions granted to serving employees, based on consequential seniority benefit, will be treated as ad hoc and liable to be reviewed. Seniority list may be now revised in the light of this judgment within three months. [B.K. Pavitra v. Union of India, 2017 SCC OnLine SC 109, decided on 09.02.2017]

 

Case BriefsSupreme Court

Supreme Court: Stating that sections 305, 306 and 387 of the Madhya Pradesh Municipal Corporation Act, 1956 are quite reasonable, the Court said that reasonable compensation is payable by the Corporation for building or part thereof excluding the land under proviso to section 305(1) and compensation for inclusion of land in public street is payable under section 306(3) of the Act. Rejecting the contention that no time period was prescribed for payment of compensation, the Court said that law envisages speedy action without unreasonable delay and that is what is expected of the concerned authorities, in respect of the obligation imposed on them to be discharged. Due to this, the provision cannot be struck down as arbitrary nor can it be said to be confiscatory in nature. The Court was hearing the matter relating to ‘Bus Rapid Transit System Corridor’ where the land was being acquired for widening of roads.

The Court further explained that after the abolition of ‘the right to property’ as a fundamental right, the provisions are quite consistent with Article 300A of the Constitution and reasonable compensation is paid under sections 305 and 306 which if not acceptable, the remedy of arbitration and approaching the District Court under section 387 is available to seek the compensation which has to be on the basis of procedure prescribed in the Land Acquisition Act. Article 300A of the Constitution enables the State to put restrictions on the right by law but the same should not be arbitrary or excessive or beyond what is required in public interest. The imposition of restriction must not be disproportionate to a situation or statute. Legislation providing for deprivation of property under Article 300A must be just, fair and reasonable. Thus, it cannot be said that illusory compensation is provided under section 306 read with section 387 of the Act.

The bench of Jagdish Singh Khehar and Arun Mishra, JJ said that there is restriction put on the ownership rights and in the area no construction can be raised derogatory to the development plan/master plan. When the property vests is clearly culled out in section 305, however the property is held by owner once a development plan is prepared, subject to that use and it is not necessary to acquire the land for the purposes mentioned under section 305. Section 305 is otherwise also a reasonable method of acquisition of the property and it follows a detailed procedure for preparation of development plan/master plan or a town improvement scheme, as the case may be, which involves adjudicatory process and once action is taken under section 305, reasonable compensation follows, special procedure as prescribed, is a complete Code in itself and even if a person is not satisfied, he can claim adjudication under section 387 of the Act where the procedure of the Land Acquisition Act, 1894 is applicable.

The Court also said that development plan itself is binding and has to be implemented by the Corporation not only under the provisions of section 292 but also under the provisions of section 66(1)(y) of the Act of 1956 which mandates a duty upon the Corporation for fulfilling any obligation imposed by the Act or under any other law for the time being in force. [Ravindra Ramchandra Waghmare v. Indore Municipal Corporation, 2016 SCC OnLine SC 1405, decided on 29.11.2016]

Case BriefsSupreme Court

Supreme Court: In the petition dealing with the legality of the Vidhayak Nidhi Scheme in the State of Uttar Pradesh which provides for annual budgetary grants to Members of the Legislative Assembly and Legislative Council for facilitating development work in their constituencies, the Court said that the Scheme does not per se violate Article 243ZD or the U P Planning and Developmental Act, 1999 as the elected representatives have a vital role in democracy.

The 3-judge bench of T.S. Thakur, CJ and A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ, however, said that certain safeguards which form a part of the Members of Parliament Local Area Development (MPLAD) Scheme should be duly considered so as to ensure that the role which is ascribed to the district planning authorities and institutions of local self-governance is not denuded. The following guidelines were issued by the Court:

  • the role of the elected representatives would be to recommend the work of a developmental nature in their constituencies within the budget allotted under the Scheme;
  • the feasibility of the work, estimate of funds, selection of the implementing agency and supervision of work must be independently determined by a nominated authority or body of the State government;
  • panchayati raj institutions in rural areas and municipal bodies in urban areas may be considered as preferred implementing agencies having regard to the entrustment of responsibilities under Parts IX and IXA of the Constitution;
  • the plans prepared by the District Planning Committees under Article 243ZD read with the U P District Planning Committee Act, 1999 may be made available by every district Collector to elected representatives to enable them to decide whether any developmental work which has already been identified in the above plan should be executed in pursuance of the funds made available under the Vidhayak Nidhi Scheme; and
  • sufficient safeguards should be provided to ensure against conflicts of interest such as the allocation of funds to institutions controlled by an elected representative or a member of his or her family; and
  • The scheme must include sufficient safeguards to ensure financial transparency, such as proper supervision of work, monitoring quality and timely completion besides procedures to ensure proper audit and utilization of funds.

The Court was of the view that the guidelines which have been formulated by the State Government should be revisited and the directions set out above should be complied with so as to ensure that the guidelines are in conformity with the spirit and underlying purpose of Parts IX and IXA of the Constitution in terms as held by the Constitution Bench of this Court in Bhim Singh v. Union of India, (2010) 5 SCC 538. It was directed that the revised guidelines should apply to all projects to be undertaken hereafter under the Vidhayak Nidhi Scheme not later than a period of two months. [Lok Prahari v. State of U.P., 2016 SCC OnLine SC 1290,  decided on 21.11.2016]

 

Case BriefsSupreme Court

Supreme Court: Writing down a long judgment of 883 pages, the 9-judge bench, by a 7:2 majority, upheld the validity of the entry tax imposed by the States on goods imported from other States. It was held that taxes simpliciter are not within the contemplation of Part XIII of the Constitution of India and that the word ‘Free’ used in Article 301 does not mean “free from taxation”.

T.S. Thakur, CJ and Dr.  A.K. Sikri, S.A. Bobde, Shiva Kirti Singh, N.V. Ramana, R. Banumathi and A.M. Khanwilkar, JJ, giving the majority view said that States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Article 304(a) of the Constitution. Only such taxes as are discriminatory in nature are prohibited by Article 304(a). It follows that levy of a non-discriminatory tax would not constitute an infraction of Article 301. A tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing state.

It was further explained that Clauses (a) and (b) of Article 304 have to be read disjunctively. A levy that violates 304(a) cannot be saved even if the procedure under Article 304(b) or the proviso there under is satisfied. It was held that Article 304 (a) frowns upon discrimination of a hostile nature in the protectionist sense and not on mere differentiation. Therefore, incentives, set-offs etc. granted to a specified class of dealers for a limited period of time in a non-hostile fashion with a view to developing economically backward areas would not violate Article 304(a). [Jindal Stainless Ltd v. State of Haryana, 2016 SCC Online SC 1260, decided on 11.11.2016]

Case BriefsSupreme Court

Supreme Court: On a request made by President of India for an advisory opinion to this Court under Article 143 (1) of the Constitution of India, in relation to enactment of the Punjab Termination of Agreement Act, 2004, the Constitution bench of Anil R. Dave, Pinaki Chandra Ghose, Shiva Kirti Singh, Adarsh Kumar Goel and Amitava Roy, JJ held that one State, which is a party to the litigation or an Agreement, cannot unilaterally terminate the Agreement or nullify the decree of the highest Court of the country, the State of Punjab cannot discharge itself from its obligation which arises from the judgment and decree dated 15th January, 2002 and the judgment and order dated 4th January, 2004 and terminate the Agreement dated 31.12.1981 which deals with sharing of waters of Ravi and Beas rivers and all other Agreements relating to sharing of waters of rivers Ravi and Beas.

It was held that the Punjab Act cannot be considered to be legal and valid and the State of Punjab cannot absolve itself from its duties/liabilities arising out of the Agreement in question. There is a legal sanction to the said arrangement and once a binding decree has been passed by a Court of law, a party to the litigation cannot unilaterally act in a manner which would nullify the effect of the decree. Instead of approaching the appropriate authority, namely, the Tribunal for appropriate relief, the State of Punjab exercised its legislative power by enacting the Punjab Act so as to nullify the effect of the Decree.

The Court also said that if a legislation is found to have breached the established constitutional limitation such as separation of powers, it has to go and cannot be allowed to remain. The said Agreement could not have been unilaterally terminated by one of the parties to the Agreement by exercising its legislative power and if any party or any State does so, such unilateral action of a particular State has to be declared contrary to the Constitution of India as well as the provisions of the Inter State Water Disputes Act, 1956.

The President is authorized to refer to this Court a question of law or fact, which in his/her opinion is of such a nature and of such a public importance that it is expedient to obtain the opinion of the Supreme Court upon it. [IN RE: THE PUNJAB TERMINATION OF AGREEMENT ACT, 2004, 2016 SCC OnLine SC 1252, decided on 10.11.2016]

 

Case BriefsSupreme Court

Supreme Court: Expressing serious concern over the issue pertaining to government bungalows occupied by former Chief Ministers of the State of Uttar Pradesh, the 3-judge bench of A.R. Dave, N.V. Ramana and R. Banumathi, JJ held that such an act is bad in law and the concerned respondents shall hand over possession of the bungalows occupied by them within two months from the date of this order  and the State Government shall also recover appropriate rent from the occupants of the said bungalows for the period during which they were in unauthorized occupation of the said bungalows.

Examining the question that whether the provisions of Ex-Chief Ministers Residence Allotment Rules, 1997 are valid or contrary to the provisions of the Uttar Pradesh Ministers (Salaries, Allowances and Miscellaneous Provisions) Act, 1981, the Court held that the position of the Chief Minister and the Cabinet Ministers of the State cannot stand on a separate footing after they demit their office. Moreover, no other dignitary, holding constitutional post is given such a facility. For the afore-stated reasons, the 1997 Rules are not fair, and more so, when the subject of “salary and allowances” of the ministers, is governed by Section 4 (1) (a) of the 1981 Act. Stating that the 1997 Rules are not statutory but only executive instructions, it was held that when the 1981 Act enables the Chief Minister to have residential accommodation only during his tenure and for 15 days after completion of his tenure, the 1997 Rules providing for an accommodation for life to the Chief Minister cannot be said to be legal and valid as If there is any variance in statutory provision and executive instruction, the statutory provision would always prevail.

It was further held that public property cannot be disposed of in favour of any one without adequate consideration. Allotment of government property to someone without adequate market rent, in absence of any special statutory provision, would also be bad in law because the State has no right to fritter away government property in favour of private persons or bodies without adequate consideration and therefore, all such allotments, which have been made in absence of any statutory provision cannot be upheld. If any allotment was not made in accordance with a statutory provision at the relevant time, it must be discontinued and must be treated as cancelled and the State shall take possession of such premises as soon as possible and at the same time, the State should also recover appropriate rent in respect of such premises which had been allotted without any statutory provision. [Lok Prahari v. State of U.P., 2016 SCC OnLine SC 750, decided on 01.08.2016]

Case BriefsSupreme Court

Supreme Court: In the matter where apart from the constitutional validity of the law on criminal defamation under Section 500 IPC and Section 199 CrPC, but also the concept of fair criticism, discernment and dissection of activities of the State Government and disapproval of views taken in the matters of administration and policy decisions, it was vehemently argued by the petitioner that the office of the Public Prosecutor has its own independence; and the Public Prosecutor has been conferred an independent role under the provisions of the CrPC and he cannot become a post office in the hands of the authorities to file prosecutions for criminal defamation without scrutinizing whether a case is made out or not.

Mr. G.S. Mani, appearing for the petitioner, argued that the citizenry right to criticize cannot be atrophied by constant launching of criminal prosecution for defamation on each and every issue to silence the critics because when criticism in a vibrant democracy in this manner is crippled, the democracy which is best defined as the “Government of the People, by the People, for the People” would lose its cherished values.

Mr. Ranjit Kumar, Solicitor General submitted that apart from the Public Prosecutor who has a definitive role under Section 199(2) of the CrPC, the sanctioning authority also has a significant and sacred role under sub-section (4) of the said provision and, therefore, a complaint cannot be filed in a routine manner to harass a citizen.

The bench of Dipak Misra and C.Nagappan, JJ, after hearing the arguments from both sides,  issued notice to the respondents i.e. the Public prosecutor and Chief Minister of Tamil Nadu among others and listed the matter on 24.08.2016. [A. VIJAYAKANTH v. PUBLIC PROSECUTOR, DHARMAPURI DISTRICT, 2016 SCC OnLine SC 708, Order Dt. 15.07.2016]

Case BriefsHigh Courts

Madras High Court: While deciding upon the issues involving the constitutionality of Section 18 of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 vis-à-vis Article 14 of the Constitution and whether the Parliament can legislate in respect of Micro, Small and Medium Scale industries as the subject falls within the scope of Entry 24 of List II of the 7th Schedule of the Constitution, the Division Bench of S.K. Kaul, C.J., and R. Mahadevan, J., dismissing the petition, held that Section 18 of the MSMED Act does not violate Article 14 with respect to the right to approach the courts for dispute settlement. The Court further held that the present case falls within the purview of Entry 52 of List I of the 7th Schedule of the Constitution by way of which the Parliament can legislate in respect of the industries in the manufacturing or production sector, as well as the industries engaged in the service sector.

The petitioner’s company placed with the respondent for the supply of Galvanized Steel Structures/Solar Module Mounting Structures. However disputes arose between them due to the respondent making further demands, without making any correlative supplies. According to the petitioner the respondent filed a claim petition under Section 18 of the MSMED Act, 2006, before the Micro Small Medium Enterprises Facilitation Council and the facilitation council, despite the objections from the petitioner, referred the matter to arbitration. While the arbitration is still pending, the petitioner has filed the present petition questioning the validity of Section 18. The petitioner contended that Section 18 is ultravires Article 14 of the Constitution as it takes away the right to approach the Courts for dispute resolution. It was further contended that ‘industry’ is a subject of the State List upon which the Parliament cannot legislate.

Perusing the contentions, the Court examined the provisions of the MSMED Act. Accordingly the Court observed that the definition of ‘enterprise’ as provided in Section 2(e) of the Act includes industrial undertaking or a business concern or any other establishment, engaged in the manufacture or production of goods or engaged in providing or rendering of any service or services. Therefore the definition is wide enough for it to be interpreted as a subject matter of Entry 52 of List I of the 7th Schedule, upon which the Parliament has the right to legislate. The Court further observed that the petitioner’s contention of the impugned Section violating Article 14 of the Constitution is factually erroneous as Section 19 of the 2006 Act provides for the remedy to the person aggrieved by the award or decree to approach the Court. [Refex Energy Ltd. v. Union of India, 2016 SCC OnLine Mad 4912, decided on 02.06.2016]

Case BriefsHigh Courts

Delhi High Court: Disposing of the petition, wherein the challenge was to Rule 5-A(2) of the Service Tax Rules, 1994 [as amended by the Service Tax (Third Amendment) Rules, 2014] to the extent that the amended Rule 5-A(2) empowered departmental officers or audit party deputed by the Commissioner or the Comptroller and Auditor General of India to “demand” production of documents mentioned therein, which is in conflict with Section 72-A of the Finance Act beyond the rule-making power of the Central Government, in a landmark judgment the Court held that the Central Government cannot arrogate to itself powers which were not contemplated to be given to it by Parliament, in the garb of rule-making power.
The petitioner also challenged the constitutional validity of Section 94(2)(k) of the Finance Act and the Circular issued by CBEC as ultra vires. Mr J.K. Mittal, petitioner’s counsel contended that firstly, Rule 5-A(2) expands the list of officers who could seek production of records and none of the safeguards spelt out in Section 72-A are required to be made by the officers under Rule 5-A(2) giving “wide unguided powers” to the officers. Secondly, Section 94(2)(k) of the Finance Act “suffers from the vice of excessive delegation”. Thirdly, the CBEC Circular had no statutory basis. To which Senior Counsel Mrs Sonia Sharma for the respondents contended that Rule 5-A(2) had to be read in continuation with Sections 72, 73, 73-A of the Act and that Section 94(2)(k) only acts as a check on the general powers under unamended Rule 5-A.
Both the notification dated December 28, 2007 inserting Rule 5-A as well as the CBEC Instructions dated January 1, 2008 were challenged in Travelite (India) v. Union of India, 2014 SCC Online Del 3943, whereby the Division Bench of the Delhi High Court struck down Rule 5-A(2) as being ultra vires Section 72-A read with Section 94(2) of the Finance Act. This decision was subsequently stayed by the Supreme Court in a SLP preferred by the Union of India. In the meanwhile the Rules were amended. The Court however in the present petition, examined the constitutional validity of amended Rule 5-A(2) and the circulars and leter in question independent of the decision in Travelite.
The Division Bench comprising of S. Muralidhar and Vibhu Bakhru, JJ. held that Rule 5-A(2) cannot be sustained with reference to Section 94(2)(k) of the Finance Act as the expression “verify” in Section 94(2)(k) cannot be construed as audit of the accounts of an assessee. The Court observed that there is a distinction between auditing the accounts of an assessee and verifying the records of an assessee. Audit is a special function which has to be carried out by duly qualified persons like a Cost Accountant or a Chartered Accountant. It cannot possibly be undertaken by any officer of the Service Tax Department.
The Court categorically held that it had no hesitation in concluding that Rule 5A(2) exceeds the scope of the provisions under the Finance Act. This is the result whether Rule 5-A(2) is tested vis-à -vis Section 72-A of the Finance Act which pertains to special audit or Section 72 which pertains to assessment or Section 73 which pertains to adjudication or even Section 82 which relates to searches. Under the garb of the rule-making power, the Central Government cannot arrogate to itself powers which were not contemplated to be given it by Parliament when it enacted the Finance Act. This is an instance of the Executive using the rule-making power to give itself powers which are far in excess of what was delegated to it by Parliament.
The CBEC Circular No. 995/2/2015-CX dated February 27, 2015 on the subject, Central Excise and Service Tax Audit Norms to be followed by the Audit Commissionerates and the Central Excise and Service Tax Audit Manual, 2015 issued by the Directorate General of Audit of the CBEC was held ultra vires the Act and held to be without statutory backing which cannot be relied upon to legally justify the audit by the officers of the Service Tax Department. [Mega Cabs Pvt. Ltd. v. Union of India, 2016 SCC Online Del 3630, decided on 03.06.2016]

Case BriefsSupreme Court

Supreme Court: In the matter where the validity of the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 was in question, the Court held that the Impugned Regulation is ultra vires the Telecom Regulatory Authority of India Act, 1997 (TRAI Act) and violative of fundamental rights under Articles 14 and 19(1)(g) of the Constitution.

The impugned Regulation states that every originating service provider who provides cellular mobile telephone services is made liable to credit only the calling consumer (and not the receiving consumer) with one rupee for each call drop (as defined), which takes place within its network, upto a maximum of three call drops per day. The Delhi High Court had upheld the said Regulation and held that the Impugned Regulation has attempted to balance the interest of service providers by limiting call drops to be compensated to only three and by limiting compensation to only the calling and not the receiving consumer. The Court said that the High Court’s order was flawed as a penalty that is imposed without any reason either as to the number of call drops made being 3, and only to the calling consumer, far from balancing the interest of consumers and service providers, is manifestly arbitrary, not being based on any factual data or reason.

Considering the fact that the Quality of Service Regulation, 2009 provides for a call drop rate of 2% averaged over a period of one month, the Court held that it was unable to appreciate the reasoning given by the High Court when it said that 2% is a quality parameter for the entire network as opposed to payment of compensation to an individual consumer. The Court further said that the Regulation, in assuming that every call drop is a deficiency of service on the part of the service provider, is plainly incorrect and hence, unconstitutional. [CELLULAR OPERATORS ASSOCIATION OF INDIA v. TELECOM REGULATORY AUTHORITY OF INDIA, 2016 SCC OnLine SC 486, decided on 11.05.2016]

Case BriefsSupreme Court

Supreme Court: Writing down the 268 pages long judgment where the constitutional validity of Sections 499 and 500 IPC and Sections 199(1) to 199(4) CrPC was upheld, the bench of Dipak Misra and P.C. Pant, JJ stated that it is difficult to come to a conclusion that the existence of criminal defamation is absolutely obnoxious to freedom of speech and expression.

The Court, after making an in depth analysis of Section 499 IPC, held that the provision along with Explanations and Exceptions cannot be called unreasonable, for they are neither vague nor excessive nor arbitrary. The Court further said that criminal defamation which is in existence in the form of Sections 499 and 500 IPC, is not a restriction on right to freedom of speech and expression that can be characterized as disproportionate. Right to free speech cannot mean that a citizen can defame the other as protection of reputation is a fundamental right as well as a human right.

Regarding the Section 199 CrPC it was contended by the petitioner that except the President of India, the Vice-President of India, the Governor of a State, the Administrator of a Union territory, mention of the other public servants in the provision puts them in a different class to enable them to file a case through the public prosecutor in the Court of Session which makes the provision discriminatory. The Court rejected the said contention and held the public servants constitute a different class as public function stands on a different footing than the private activities of a public servant. The provision gives them protection for their official acts and there cannot be defamatory attacks on them because of discharge of their due functions.  However, the Court clarified that criticism is different than defamation. [Subramanian Swamy v. Union of India, 2016 SCC OnLine SC 550, decided on 13.05.2016]

Case BriefsHigh Courts

Bombay High Court: Deciding a petition challenging various provisions of Maharashtra Animal Preservation Act 1976 as amended by Maharashtra  Preservation Act 1995, a bench consisting A.S. Oka and S.C. Gupte, J.J., struck down two amendments of  Maharashtra Animal Preservation Act 1976 and upheld the constitutional validity of rest of the provisions.

In the case, where a complete prohibition on slaughter of bulls and bullocks was imposed in addition to the slaughter of cows by an Amendment Act of 1995, the petitioners contended that incorporation of Section 5D infringes upon the right to life and personal liberty under Article 21 which includes right to have food of one’s own choice and section 9B imposes a negative duty upon a person who is found in possession of the meat. To the contrary, it was contended by the Advocate General that right to choose food cannot be expanded to include a particular kind of food. It was further submitted that the amendment was in consonance with  Article 47, 48, 48A and 51A of Directive Principles of State Policy. However, the Court disagreed with the contentions of the Advocate General.

Considering the aforesaid arguments, the Court adopted the principle of ‘conscious possession’ which states that ‘possession with the knowledge that the flesh is of cow, bull or bullock which is slaughtered in contravention of Section 5 of Animal Preservation Act’ and upheld the validity of Section 5C. The Court declared Section 5D and 9B unconstitutional and not fair, just and reasonable. The Court was of the view that prohibition of possession of flesh of cow, bull or bullock which is slaughtered outside the State is an infringement of right to privacy which is embodied in Article 21 which is an integral part of personal liberty. [Sheikh Zahid Mukhtar v State of Maharashtra, 2016 SCC OnLine Bom 2600, decided on May 6, 2016]

Case BriefsHigh Courts

Madras High Court: In the present case where questions were raised on the constitutionality of Section 94A(1) of the Income Tax Act, 1961 on the ground that the impugned provision contravenes Articles 14, 19, 51, 253 and 265 read with Entry 82 of List 1 of VII Schedule of the Constitution and is beyond the legislative competence of Parliament under Articles 246 and 248 read with Entry 10, 14, 82 and 97 of List 1 of VII Schedule of the Constitution, the Division Bench of V. Ramasubramanian and T. Mathivanan, JJ., upheld the constitutionality of Section 94A (1) of the Income Tax Act stating that in the present times when scams like Panama Leaks are being revealed, the provisions related to tax avoidance are the need of the hour.

India had entered into an ‘Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital’, with the Republic of Cyprus in 1994. The challenge against Section 94A (1) came up before the Court as the petitioners via their counsel Arvind P. Datar argued that the provision has conferred sweeping powers upon the Central Government to specify any country as a notified jurisdictional area in relation to transactions entered into by any assessee, irrespective of whether such country is one, with whom a bilateral Treaty has already been entered into or not. It was further contended that since the State has an obligation under Article 51(c) of the Constitution to foster respect for Treaty obligations. So to specify by notification, any country as a notified jurisdictional area, without reference to the existence of a Treaty with that country, violates Articles 14, 19(1)(g), 51, 245, 253 and 269 of the Constitution and suffers from the vice of excessive delegation.

Observing the constitutional scheme and the contentions of the petitioner, the Court at length discussed the Constitutional provisions enshrined in Articles 245-255 and Article 51(c) along with the 7th Schedule of the Constitution. It was observed by the Court that it is clear from the language of Section 94A (1) that the Parliament did not show any disrespect to the bilateral tax avoidance Treaty as the provision was enacted in consonance with the resolution passed by the G-20 Nations to take action against non-cooperative jurisdictions including tax havens. The Court further stated that ‘haven’ practically means ‘a place of safety’, and in the recent past where revelations of stashed money in foreign countries for the purposes of tax avoidance are getting exposed, the term ‘tax haven’ has assumed different connotations. [T. Rajkumar v. Union of India, 2016 SCC OnLine Mad 2001, decided on 12.04.2016]