Judiciary Facing Conflict of Interest

In Depth

Judiciary Facing Conflict of Interest

Kanupriya Malhotra | December 2009

A spate of recusal from the judiciary makes it mandatory to ponder over the moot question: When faced with a conflict of interest what standard should judges follow? Kanupriya explores…

Going along with the international judicial principles and ethics, Supreme Court had readily adopted the Unsponsored Bangalore Principles of Judicial Conduct in 2002. Also, Restatement of Values of Judicial Life was adopted by full bench of the Supreme Court on May 7, 1997. The basic principles and values adopted under these charters are independence, impartiality, integrity, propriety, equality, competence and diligence. This is expected from the judicial officers all around the world and so is in India. However, these principles have recently become the bone of contention among various interest groups in the country, especially being the judges’ conflict of interest, where they have a financial stake. Universally accepted principle of natural justice is that ‘no man can be a judge in his own cause’.

Howsoever ethical a judge may be, even a single instance may bring disrepute to his career, character and to judiciary as a whole. The trust and the confidence that the public reposes in the judges are balanced on a very weak pillar that can be demolished even by the slightest tremor.

REASONS FOR RECENT UPHEAVAL

The controversy arose after the Supreme Court issued notice for initiation of contempt proceedings against advocate Prashant Bhushan on the plea of amicus curiae Harish Salve for the former’s allegation against Justice S H Kapadia for indulging in corrupt practices.

Lately, Hon’ble Justice Kapadia recused himself from hearing the case of Vedanta Resources citing that he held shares in Sterlite, Vedanta’s sister concern. He had earlier disclosed his interest and offered to recuse himself. Since no counsel for the parties raised any objection, he continued to remain on bench. However, Prashant had accused him of lowering the dignity of the judiciary and undermining the public confidence in the court.

Just few days back, two other judges of Supreme Court also recused from high profile corporate cases. Justice R V Raveendran recused from the RNRL and RIL battle citing that his daughter works for a law firm that had advised RIL on a matter. Justice M. Katju also recused himself from the hearing of dispute between RIL and BPCL, since he holds shares in RIL. Considering the gravity of responsibility of the judges towards the public, owing to the impartiality, integrity and independence expected of them, this step of the top judges will have far reaching effects towards arousing greater confidence in the strongest pillar of democracy.

Along with all these concerns, various other sectors of the economy are also facing conflict of interest. Be it related to Mr. C.B.Bhave’s conflict of interest on the proceedings related to the alleged involvement of NSDL in the 2005 IPO scam when it was headed by him, or be it the conflict of interest faced by medical practitioners to accept or avoid gifts, or sponsorships from pharmaceutical firms, as highlighted by the World Medical Association in its recent meeting in Delhi.

Hon’ble Justice (Retd.) I Venkatanarayana, former Judge Andhra Pradesh High Court and Senior Advocate, Supreme Court of India, comments, “Recently the three Supreme Court Judges have recused themselves from hearing cases on the ground that either they or their family members held shares in the company or non-pecuniary connection with the party to the litigation. A lawyer has gone to the extent of writing in a periodical accusing one of the judges of misconduct known for his integrity and character. Another advocate moved a contempt petition against the lawyer who alleged misconduct. This is a very disturbing trend affecting the dignity and decorum of the Bench and the Bar. A routine investment by most of our judges in corporate share holding need not result in recusing themselves from hearing the cases. At this rate it would result in large number of judges being disqualified and there will be disruption of judicial work. Our judges need not recuse themselves erely to give an impression of non-bias where there is no real possibility of bias.”

RECUSAL: SHALL OR MAY

The judge must ordinarily recuse himself or herself from any case in which the judge is in a position to gain or lose financially from its resolution. There is no doubt that the Indian collegiums of judges has readily accepted financial interest as an absolute disqualification.

“This is a very disturbing trend affecting the dignity and decorum of the Bench and the Bar. A routine investment by most of our judges in corporate share holding need not result in recusing themselves from hearing the cases. At this rate it would result in large number of judges being disqualified and there will be disruption of judicial work. Our judges need not recuse themselves merely to give an impression of non-bias where there is no real possibility of bias.”

Senior Advocate I Venkatanarayana

Former Judge, Andhra Pradesh High Court

Keeping up with the global norms and the international practices, judges should take upon themselves the responsibility of shining in the ethical scenario, leaving no stone unturned that may cast any doubt on the impartiality and independence of judiciary.

“Time has come to formulate a code of conduct, which should be publicly discussed amongst all stakeholders, including judiciary and consumers of justice. Thereafter, it should be finally laid down as to what would be the manner in which judges should disclose their assets and recuse themselves.”

Prashant Bhushan

Considering the gravity of responsibility of the judges towards the public, owing to the impartiality, integrity and independence expected of them, this step of the top judges will have far reaching effects towards arousing greater confidence in the strongest pillar of democracy.

Article 11 of the 1997 Restatement of Values of Judicial Life provides, “A judge shall not hear and decide a matter in a company in which he holds shares unless he has disclosed his interest and no objection to his hearing and deciding the matter is raised.”

Similarly, Article 2.5 of the Bangalore Principles of Judicial Conduct provides, “A judge shall disqualify himself or herself from participating in any proceedings in which the judge is unable to decide the matter impartially, or in which it may appear to a reasonable observer that the judge is unable to decide the matter impartially. Such proceedings include, but are not limited, instances where the judge, or a member of the judge’s family, has an economic interest in the outcome of the matter in controversy.” Prashant Bhushan, Advocate & Public Interest Activist opines, “Nobody takes this shareholding issue very seriously. This is a serious issue of conflict of interest. Judges take it very lightly; they are not even exposing that they hold shares in the company. There are judges, who have presided over the company matter without disclosing their shareholding.”

JUDICIAL DEVELOPMENT OF THOUGHT

The oldest case reflecting on this issue is a British case of 1852: In Dines vs. Proprietors of Grand Junction Canal, where the scope of maxim ‘nemo judex in causa sua’ was discussed to include financial interest by way of shareholding.

In India, in the famous Bhopal Gas Leak case, Hon’ble Justice M H Kania recused himself after disclosing his shareholding in the Union Carbide Company. He sought no consultation, or objection from the parties, or their counsels, but withdrew himself so as not to give any chance whatsoever to anyone to point any finger later.

The principle of recusal has also been established in many later cases, describing that the action should be self induced and automatic rather being left for formal declaration or consideration. The famous 1999 Pinochet Case in Britain, where Lord Hoffman was disqualified to hear the case; cases of Kumaon Mandal Vikas Nigam vs Girija Shankar Pant (2000) and State of Punjab vs V.K.Khanna (2000) before the SC, and the latest case of Inderpreet Singh vs State of Punjab (2006), have all declared that the action should entail compliance in letter and spirit.

The issue of automatic disqualification is not limited to cases, where judges have pecuniary interest, but also to cases, where the outcome will bring some benefit of any sort by forwarding any interest of the concerned judge. Prashant Bhushan points out, “Time has come to formulate a code of conduct, which should be publicly discussed amongst all stakeholders, including judiciary and consumers of justice. Thereafter, it should be finally laid down as to what would be the manner in which judges should disclose their assets and recuse themselves.”

The nature of responsibility, the gravity of confidence reposed, the perception of integrity, apprehension of impartiality and respect for public trust – all these factors demand that the recusal should be automatic, so that justice not only appears to be done but is actually done.