A friend should be one in whose understanding and virtue we can equally confide, and whose opinion we can value at once for its justness and its sincerity- Robert Hall
Year 2012, which has now been consigned to history books, was not a very encouraging year. With govt. being accused of policy paralysis on one hand – cancellation of 2G spectrum licenses by the Supreme Court due to criminal bending and manipulation of legal framework, allegations of corruption across political parties, certain ill advised budgetary proposals which upset the foreign investors and the economy in its aftermath – on the other, ended with one of the most tragic and barbarous incidents which exposed the soft underbelly of the nation and left us all fuming, sulking and being irrationally vengeful.
The principal political parties/alliances at the centre, remaining at loggerheads trading allegations and counter allegations and motivated by the desire to outshine and score a point against one other, ensured that the Parliament remained largely dysfunctional and unable to transact much legislative business. The political deadlock kept on adding to the restive mood of the nation. And that restlessness and rage finally burst out on the streets, in response to the sad, unfortunate and barbaric death of ‘Nirbhaya’, clamouring for justice.
Amidst all the incoherence and cacophony, there was this need for a friend, philosopher and guide who could help in reaching decisive action and channel our aspirational nation towards the ideals of Justice, dignity and respect for law enshrined in our constitution and solemnly expressed in famous Sanskrit hymn: Sarvepi sukhinah santu sarve santu niramaya sarve bhadrani pashyantu ma kashchit dukha bhag bhavet. (“Let all be happy, let all be free from diseases, let all see auspicious things and let nobody suffer from grief”).
The present story largely is a brief account of some notable judgments in 2012 by the Hon’ble Supreme Court recounting how it through its judgments provided a firm guidance to the nation and staked the claim to the epithet “conscience keeper of the nation”.
With the assertion in 2011 that ‘sky is the limit of its power’ to reach injustice anywhere, the Hon’ble Court, on 22 August, 2012, in Devinder Singh Narula vs Meenakshi Nangia (Civil Appeal No. 5946 of 2012), while granting a divorce and reflecting upon the legislative objective of Section 13-B(2) of the Hindu Marriage Act, 1955, the enunciated the doctrine of “complete justice” that “there may be occasions when in order to do complete justice to the parties it becomes necessary for this court to invoke its powers under Article 142 in an irreconcilable situation.” That is if the need be under Article 142 of the Constitution to do “complete justice”, it may go beyond the express provisions of the law.
In a scathing indictment of the errant members of the union govt., associated functionaries and some of the prominent people from the corporate world, the Hon’ble Court in centre for Public Interest Litigation (PIL) and others vs. Union of India not only cancelled the licenses granted in favour of the private companies but also imposed fine on the culprit corporates. While observing that “The exercise undertaken by the officers of the DoT between September, 2007 and March 2008, under the leadership of then Minister of IT was wholly arbitrary, capricious and contrary to public interest apart from being violative of the doctrine of equality. The material produced before the court shows that the Minister of IT wanted to favour some companies at the cost of the public exchequer.” Not only the judgment was critical of the manner and method in which the licenses were granted, but also sent a very strong message that it is the time that manipulators of the system stop playing around with the law and not indulge in crony capitalism.
In Sahara India Real Estate Corporation Limited & Ors. vs. SEBI, The Hon’ble Court in its Judgment not only directed the two Sahara companies to refund the money of the investors to the tune of approximately Rs. 24,000 crore but also clarified the powers of SEBI, meaning of a public issue and also when a company must list its securities.
In Para 71 of the judgment it held that “so far as the provisions enumerated in the opening portion of Section 55A of the Companies Act, so far as they relate to issue and transfer of securities and non-payment of dividend is concerned, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India.” In a nutshell, the court held that “Sahara’s acts and omissions have clearly violated the provisions of Section 73, their failure to list the securities offer to the public was, therefore, intentional and the plea that they did not want their securities listed, is not an answer, since they were legally bound to do so. The duty of listing flows from the act of issuing securities to the public, provided such offer is made to fifty or more than fifty persons.”
Pursuant to its many previous directions under the Bonded Labour System (Abolition) Act, 1976 whereby identifying and freeing bonded labourers and to draw up a scheme or programme for a better and more meaningful rehabilitation of the freed bonded labourers and to ensure implementation of the Act, fresh directions in Public Union for Civil Liberties vs. State of Tamil Nadu & Ors. have been issued to conduct fresh surveys by fine tuning the methodology periodically triennially in all the States/UTs in accordance with the provisions of the Act. Computerisation of the findings of the survey and making the same to be made available on the websites. Besides, local Panchayats and local bodies have also been directed to identify children who are working as domestic help in the urban, town and rural areas with no chance to go to schools in order to enable them to avail benefits under Right of Children to Free and Compulsory Education Act, 2009.
Concerned over the fact that, ‘the guidelines in Vishaka are followed in breach in substance and spirit by state functionaries and all other concerned’, the Hon’ble Supreme Court in Medha Kotwal Lele & Ors vs. UOI directed the states and Union Territories which have not yet carried out adequate and appropriate amendments in their respective Civil Services Conduct Rules, Industrial Employment (Standing Orders) Rules, and also to form adequate number of complaints committees so as to ensure that they function at taluka level, district level and state level. Besides, the state functionaries and the private and public sector undertakings/organisations/bodies/institute ons etc. have been directed to put in place sufficient mechanism to ensure full implementation of the Vishaka guidelines.
Apart from that, all professional bodies including Bar Council of India, State Bar Councils, Medical Council of India, Council of Architecture, Institute of Chartered Accountants, Institute of Company Secretaries and other statutory institutes have been directed to ensure that the organisations, bodies, associations, institutions and persons registered/affiliated with them follow the guidelines laid down by Vishaka Judgment. And all this has to be done within two months of the judgment.
In Society for Un-aided Private Schools of Rajasthan vs. UOI, the Hon’ble Court holding the Constitutional validity of the Act of 2009 stated that “We hold that the Right of Children to Free and Compulsory Education Act, 2009 is constitutionally valid. The Act envisages that each child must have access to a neighbourhood school. The Act has been enacted keeping in mind the crucial role of Universal Elementary Education for strengthening the social fabric of democracy through provision of equal opportunities to all. The sections Section 12 (1) (c) read with Section 2(n) (iii) and (iv) of the Act, which mandate that every recognised school imparting elementary education, even if it is an unaided school, not receiving any kind of aid or grant to meet its expenses from the appropriate government or the local authority, is obliged to admit any child in Class I, to the extent of at least 25% of the strength of that class. Children belonging to weaker section and disadvantaged group in the neighbourhood are provided free and compulsory elementary education. “Thereby children from weaker sections of the society have been enabled to seek education at the institutions wherein they could never have set foot in.
The Constitutional Bench of the Supreme Court headed by CJI Kapadia, as he then was, in its introduction to the judgment in, Sahara India Real Estate Corp. Ltd. & Ors. vs. Securities & Exchange Board of India & Anr. Respondents with I.A. Nos. 14 and 17 in C.A. No. 733 of 2012, wrote that “finding an acceptable constitutional balance between free press and administration of justice is a difficult task in every legal system.”
Reflecting on the significance of the judgment, Dr. Bharti of National Law University, Delhi, opined in one of our articles that “the judgment has thus conferred a significant right to the accused or aggrieved person, who apprehends an infringement of law under Article 21 as regards fair trial, to approach the appropriate writ court and seeks an order of postponement of offending publication/broadcast or of reporting of certain phases of trial. The court may then grant such preventive relief after considering the relative strengths of right to fair trial vis-à-vis freedom of speech and expression, in case of real and substantial risk of prejudice to proper administration of justice or to fairness of trial. It may be noted here that even fair and accurate reporting of a trial is a cause of concern to the judiciary.”
While deliberating upon the law right to protest and the power of the state to control the same enshrined in Articles 19(1)(a) and 19(1)(b) of the Constitution of India and the parallel restrictions contemplated under Articles 19(2) and 19(3) respectively, and the dimensions of legal provisions in relation to the exercise of jurisdiction by the empowered officer in passing an order under Section 144 of the Code of Criminal Procedure, 1973 (for short `Cr.P.C.’). In Re: Ramlila Maidan v. Home Secretary, the court held that “the state and the police could have avoided this tragic incident by exercising greater restraint, patience and resilience. The orders were passed by the authorities in undue haste and were executed with force and overzealousness, as if an emergent situation existed. The decision to forcibly evict the innocent public sleeping at the Ramlila grounds in the midnight of 4th/5th June, 2011, whether taken by the police independently or in consultation with the Ministry of Home Affairs is amiss and suffers from the element of arbitrariness and abuse of power to some extent. Thus, the restriction was unreasonable and unwarrantedly executed.”
Answering the fundamental question, in Special Reference No.1 of 2012, on the permissible method for disposal of all natural resources, across all sectors and in all circumstances is by the conduct of auctions, in the negative in Para 116- “…Auctions may be the best way of maximizing revenue but revenue maximization may not always be the best way to sub serve public good.” Thus, “the auctions are not the only permissible method for disposal of all natural resources across all sectors and in all circumstances.”
On the issue of permissible scope for interference by courts with policy making, the court in Para 139 and 140 of its opinion opined that “only legal validity and not the wisdom of an economic policy may be challenged, because first it is beyond its jurisdiction and secondly it lacks the necessary expertise. And allegations that a legislation is troubled with crudities, inequities, uncertainties or the possibility of abuse cannot be a basis for judicial review.” Further the Hon’ble Court in Para 149 held that “Rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case.”
The much discussed and debated Vodafone case wherein the revenue sought to tax the capital gains arising from the sale of the share capital of CGP Investments Holding Ltd, a Cayman Islands Company on the basis that CGP, whilst not a tax resident in India, holds the underlying Indian assets. While clearly holding that a “look through provision” will not shift the situs of an asset from one country to another as the shifting of situs can be done only by express legislation.
Justice Radhakrishnan in his concurring judgment held that it would amount to imposing capital punishment for capital investment since it lacks authority of law. As he found that the transaction was between two non-resident entities through a contract executed outside India, consideration was also passed outside India. That transaction has no nexus with the underlying assets in India. In order to establish a nexus, the legal nature of the transaction has to be examined and not the indirect transfer of rights and entitlements in India.
In short, the Hon’ble Supreme Court in its verdict determined that there cannot be a place for irrationality devoid of any sound economic logic and legislative sanction.
The judgment, in Bharat Aluminium Co. vs. Kaiser Aluminium Technical Services Inc. C.A No 7019 of 2005, which has been welcomed by international arbitration community as a positive development in Indian jurisprudence concerning international commercial arbitration as misgivings about Indian courts not being arbitration friendly, has finally laid to rest which had arisen after Bhatia International vs. Bulk Trading S.A 2002 4 SCC 105 and Venture Global Engineering v. Satyam Computer Services Ltd2008 4 SCC 190.
The Constitutional Bench in Bharat Aluminium Co. v. Kaiser Aluminium Service, Inc, Civil Appeal No. 7019 of 2005(“Bharat Aluminium”) observed that section 2(2) of the arbitration Act clarified that the legislative intent was to restrict the applicability of Part I to arbitrations held in India thereby keeping it in consonance with the UNCITRAL Model law. It further observed that the omission of word ‘only’ in section 2(2) did not mean to depart from the territorial principle and extend the scope of Part I to arbitrations held outside India.
Often called the ‘court of last resort’, being free from the compulsions of electoral politics, I believe the Hon’ble Court is better placed to guide the creation of a rule based society in India which it has amply demonstrated this year as well, as always. And with the outburst of anger on the streets of Delhi, the message is loud and clear to the political executives of the country to get their act together against the trust and governance deficit.
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