Guest Post: The Bounded Deliberative Model of Judicial Review against Legislative Inertia in Campaign Finance

[This is a guest post by Tanmay Durani.]

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Introduction

A lot has transpired since the electoral bonds verdict was passed, with calls to establish, or perhaps reinstate, a level playing field for all political parties concerning their election campaigning. Senior Advocate Kapil Sibal has emphasized the significance of the electoral bonds verdict, but also acknowledged that it has not had a transformative or practical impact, as it failed to address the substantial sums already amassed through donations. Most of the money was already been spent, in advance of the 2024 elections. In future elections, there’s a little ray of hope that, with electoral bonds no longer being valid, there will be less scope for uneven money power in election campaigning. However, it is not entirely assured.

Why? Because there is still lack of a maximum cap on campaign spending by a political party. Section 77 of the Representation of the People Act, 1951 faced judicial scrutiny, and the argument presented was that the absence of such a cap undermines the principles of free and fair elections and political equality, as financial resources can be used to influence electoral outcomes.

[Before proceeding, a clarifying note is warranted: Section 77 of the RPA imposes a cap on the amount that can be spent by a candidate for their own campaigning. However, concerning political parties and their advertisements, if an advertisement does not endorse a specific candidate but rather a particular party, it is not subject to a maximum cap.]

The Supreme Court dismissed the petition on grounds of judicial restraint, holding that to bring any change in this regard is the sole prerogative of the legislature. In the analysis of the separation of powers within the context of electoral expenditure, I shall purposefully refrain from engaging in the debate over whether a maximum cap on political party expenditures should be instituted, a proposition advocated by former bureaucrats. This article’s primary aim does not encompass such discussions. I argue that, given court’s prior observations and empirical research of think-tanks, the Supreme Court can, and holds the potential to address this issue judicially, in pursuit of establishing political equity.

Level Playing Field: Is this a rule in itself?

In M/S.Sri Adinath Traders vs The Union Of India, the classification of importers into Category ‘A’ and Category ‘B’ was challenged due to its impact on creating a non-level playing field. Category ‘A’ comprised importers who had consistently imported poppy seeds for three out of the preceding five financial years, while Category ‘B’ included importers who did not meet this criterion. The objective of this classification was to distribute the country cap on poppy seed imports among numerous applicants. However, the nexus between the classification and the lack of a level playing field became evident, as it favored Category ‘A’ importers who had imported for more years, even if some Category ‘B’ importers had imported higher quantities. This disparity disadvantaged Category ‘B’ importers, as they faced challenges in obtaining allotments and were unlikely to transition to Category ‘A’, leading to unfair monopoly and discrimination. Ultimately, the Court decided that classification of importers into Category ‘A’ and Category ‘B’ failed the test of reasonableness, and did not uphold the principles of a level playing field and fair competition.

From this, the Doctrine of the Level Playing Field emerged, which can perhaps shed light on a fundamental aspect of political dynamics- highlighting the inherent discrimination resulting from the absence of an objective expenditure limit. This lack of regulation disproportionately disadvantages parties with limited financial resources, particularly in comparison to the ruling party, which, historically speaking, and for structural reasons, receives the majority of donations. The resulting financial disparity between the ruling party and its challengers leads to an inequitable influence on electoral outcomes.

In support of this argument, summary of Paragraphs 47-51 of the Electoral Bonds verdict is reproduced, which elucidate the significant impact of financial resources on electoral results:-  

Vote Buying: Directly purchasing votes.

Campaign Expenditure: Spending on ads, events, and canvassing, which significantly impact voter behaviour.

Innovative Campaigning: Sponsoring events and competitions to engage voters, especially the uninformed.

Entry Barriers: Favouring self-financing candidates, disadvantaging socio-economically weaker candidates.

Exclusion of New Parties: Financial constraints force new and marginalized parties to form coalitions, diluting their ideologies and reducing democratic participation.

(For reading more on the impact of money in electoral politics, refer to these hyperlinks – 1, 2, 3, 4)

Even in Kanwar Lal Gupta v. Amar Nath Chawla, the court long back had recognized the profound impact of substantial financial resources on electoral outcomes. Wealth grants political parties a significant advantage, enabling them to promote their agendas more effectively than their competitors, which leads to political inequality and significant discrimination. Consequently, voters are deprived of an equal voice, and candidates are denied an equal opportunity in the electoral process due to the overwhelming influence of financial power. This situation contradicts the principles of participatory democracy and political equality, prejudicing parties competing on an uneven playing field and disenfranchising voters by impeding their ability to make well-informed electoral decisions.

In this context, although the doctrine of a level playing field could have undoubtedly provided assistance, its potential limitation – if by any chance it arises – will arise from its compatibility with Article 19(1)(g). The case of Reliance Energy Limited characterizes the doctrine as a derivative and embodiment of Article 19(1)(g), which guarantees the right to engage in any profession, occupation, trade, or business.

A bare reading of Article 19(1)(g) and the pattern of cases involving the application of the doctrine reveal that it has predominantly been active in matters related to contractual disputes within business operations. For instance, in the Reliance Energy case, the central issue was the fairness of the bidding process, emphasizing that all bidders should have an equal opportunity to participate without financial advantages. This case significantly contributed to the development of the doctrine. Similarly, in other cases where this doctrine has been applied (like Sri Adinath Traders), the focus has remained on ensuring a level playing field in business contexts. However, here’s the catch: the case recognises the “right to a fair opportunity” under Article 21, coupled with the principle of non-discrimination. The court in Reliance Energy case observed (para 22):

“…We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of “non-discrimination”. However, it is not a free- standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to “right to life”. In includes “opportunity”.”

… there is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of “level playing field”. According to Lord Goldsmith – commitment to “rule of law” is the heart of parliamentary democracy. One of the important elements of the “rule of law” is legal certainty. Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of “reasonableness”, then such an act or decision would be unconstitutional.”

The second part of Para 22 goes on to show that while the doctrine of a level playing field aims to create a fair and equal competitive environment, it’s not a standalone principle. It draws its strength from three key legal conceptions: the Right to Equality (Article 14), Right to Fair Opportunity (Article 21) and the Test of Reasonableness. Unreasonable laws can disrupt this level playing field. For example, overly complex regulations that unfairly burden small businesses or laws that give certain entities special advantages without justification would be unreasonable. The Test of Reasonableness acts as a filter, ensuring that laws are fair, logical, and achieve their goals without creating unfair advantages or disadvantages. Thus, considering that the doctrine of a level playing field is merely another construct stemming from the Test of Reasonableness, there exists no reason for the court, notwithstanding its acknowledgment of the influence of financial resources on electoral outcomes and resultant political inequality, to not extend the application of the Doctrine of a Level Playing Field into the electoral domain.

Bounded-Deliberative Review and Legislative Inertia

The Supreme Court’s refusal to entertain the petition lies in the principle of separation of powers. According to the court, it is Parliament, not the judiciary that should be responsible for initiating, debating, and ultimately formulating laws on this matter, if deemed necessary.

As a matter of fact, however, Indian courts have frequently engaged in collaborative governance, often addressing legislative deficiencies through judicial intervention. This approach is known as the “bounded-deliberative” model of judicial review. As argued here, Dixon’s model of responsive judicial review endorses bounded-deliberative model of judicial review by acknowledging the inherent legislative inertia and prioritization burdens faced by parliaments in context of law-making. In such instances, it becomes imperative for the court to step in. But what do they courts do after stepping in? Do they direct the Parliament to bring about a change in Section 77 of RPA in light of political inequality? Or do they themselves make a law on this? Perhaps the latter would be a clear violation of the doctrine of separation of powers.

In the same vein, there is a popular (mis)conception that courts wield unbounded authority to mandate parliamentary enactment of legislation on any subject, in order to direct the State to discharge its positive obligations. Instances frequently cited in this context include Vishakha and Common Cause (A Regd. Society) v Union of India, where the court delineated guidelines or laws in the absence of legislative provisions and/or directed parliament to promulgate legislation concerning the matter.

These views are incorrect, and I do not suggest that the Court proceed in this manner. In these cases, the Union of India implicitly consented to this power-sharing exercise (para 9, Vishakha; para 5, Common Cause) despite the existence of institutional incapacity on part of courts. By not objecting to the court’s intervention, the government essentially acknowledged the power vacuum on these matters it had chosen not to address legislatively. Deva observes that such conduct is common in cases of judicial review, where the legislative body or the government, which holds the power to pass laws, often delegates matters to the discretion of the court. This implies that the dynamics of power-sharing can only be realized if such a mode of governance has received endorsement from the legislature – a condition seemingly absent here, particularly in relation to Section 77 of the Representation of the People Act, where the ruling party appears reluctant to relinquish its advantage in an uneven playing field, maintaining a superior position in terms of economic resources and other factors.

What Is To Be Done?

Borrowed from South African constitutional jurisprudence, a suspended declaration of invalidity (the “Fourie Remedy”) can potentially be deployed to address this problem. This remedy entails the court acknowledging the unconstitutionality of specific provisions within the existing legal framework – on grounds of either unreasonableness, or the state not fully discharging its positive obligations (see here). However, rather than immediately striking down these provisions and potentially creating a legal void, the Court affords Parliament an opportunity to rectify the deficiency. Through this, the court issues directives for upholding constitutional rights, and temporarily suspends the enforcement of its decision, which grants Parliament a designated period to amend the impugned provisions to align with constitutional principles. By taking this cautious approach, the courts can largely avoid accusations of overstepping their bounds and interfering with the legislature’s lawmaking role.

Judicial review in this case would also be consistent with the representation-reinforcement theory of judicial review, by John Ely. He contends that judicial review of any governmental action or inaction gains legitimacy in situations where: 1) the ruling government obstructs political change by suppressing opposing voices or votes, and 2) minority interests suffer systematic disadvantage due to majority-favoring policies. The government’s persistence on retaining section 77, despite calls for its amendment to impose a maximum funding cap on political parties, illustrates its resistance to this political transformation – which perpetuates an advantage over other political parties.

In any event, as Bhatia argues (which is perhaps an extension/endorsement of Representation – Reinforcement theory), the basis for limited judicial review and the separation of powers between the legislature and the judiciary relies on the presumption that the legislature represents the popular will. However, when a party’s substantial economic resources can potentially enable it to sway voter allegiance, it raises questions about the democratic process. This scenario results in legislative acts or omissions no longer being a true reflection of the will of the people. Thus, the justification for judicial deference diminishes. Consequently, in cases like this, limited judicial intervention to create a level playing field is warranted.

Usage of SDI by courts can be a classic way of materializing this ‘limited’ Judicial Intervention – which was advocated for in the same-sex marriage case by commentators (here and here) and the Petitioners themselves. Though, in that same case, the court was quick to discard (maybe) this South African import by observing (para 197):

Though facially the case mounted by the petitioners before us is similar to the case mounted by the petitioners in Fourie (supra), the legal and the constitutional regime in South Africa and India varies. First, it must be noticed that unlike the SMA, there was only one provision in the South African Marriage Act (that is, Section 30(1)) which made a reference to heterosexual relationships. However, as indicated above, various provisions of the SMA (Sections 4, 27(1A), 31, 36, and 37) confine marriage to a union between heterosexual persons. Second, various enactments in South Africa already recognised same-sex unions unlike the Indian legal landscape where no law even remotely recognises the union between a same-sex couple. Thus, the canvas of the challenge before the South African Constitutional Court in Fourie (supra) and the legal and constitutional regime in place varies widely from that in India.

Admittedly, there is ambiguity surrounding the potential abandonment of SDI. This stems from the absence of any explicit discussion within the dicta concerning the validity of SDI framework in light of Indian Jurisprudence. Despite the petitioners advocating for the use of SDI through the Fourie route, the court refrained from addressing the procedural legitimacy of this approach—specifically, whether the Fourie procedure, through which SDI is put into application, aligns with the Indian conception of Doctrine of Separation of Powers. Instead, the court adjudicated on the substantive aspects of the Fourie case. Upon comparing it with the Indian position, the court discerned a notable contrast. It highlighted that South Africa’s legal landscape presented a singular legal hurdle, with some existing recognition afforded to same-sex couples. Conversely, India’s legal landscape posed several obstacles, with no established recognition for same-sex partnerships. Thus, despite factual parallels between cases in the two jurisdictions, the court deemed it inappropriate to import the decision rendered in South Africa to India, given the divergent legal contexts and absence of recognition for same-sex relationships in the latter.

Given the absence of explicit rejection concerning the procedural aspect of SDI, and considering its extensive application in cases such as Indira Sawhney and Sampath Kumar and a catena of foreign cases in its support, it could be deemed applicable in the present circumstance. Here, where the legislative function has become impaired to the extent that it fails to adequately represent the will of the people, the principles underlying SDI may and should, be legitimately invoked.

In any case, by taking the Article 32 and 142 route, the powers of the supreme court will be plenary and unfettered to the extent that where political rights in terms of right of fair opportunity under Article 21 (as I submitted while explaining doctrine of level playing field) are violated, the court will be free to mould a new remedy in the interests of achieving equity and justice – which in this case would be, a fair, level playing field for other political parties to advance their agenda, without any influence of money power. Hari Karthik here has perfectly explained how the route of Article 32 and 142 in situations of absent legislative action is suited for the Supreme Court to issue Suspended declarations of invalidity.

Conclusion

In wrapping up, it’s clear that while Parliament holds the reins in legislative matters concerning electoral financing, there are lingering issues within the current system. The doctrine of a level playing field, rooted in fairness, highlights the need for balanced electoral conditions. Although the court refrains from direct legislative intervention, the evolving landscape of political financing calls for thoughtful consideration. Potential avenues for judicial action, like the application of Representation-Reinforcement theory via suspended declarations of invalidity, offer pathways to address systemic imbalances. In the absence of legislative action, the court’s role in upholding democratic principles becomes increasingly vital, requiring a careful approach within legal boundaries and constitutional principles.