Separating Power: The Kenyan Supreme Court’s Judgment on Constituency Development Funds

The separation of powers is assumed to be an integral element of contemporary democratic constitutionalism. However, mapping the ideal of the separation of powers onto the complex reality of the modern administrative State is a challenging task. Enforce separation too rigidly, and governance will become impossible. Allow for too much leeway, and you risk a drift towards concentration and centralisation of power. How and where to draw the line has been a vexed question, which constitutional courts across the world have been forced to grapple with.

Introduction

In this context, the judgment of the Supreme Court of Kenya in The Institute for Social Accountability vs The National Assembly (8th August 2022) is a landmark judicial contribution to this global conversation. At issue before the Supreme Court was the constitutionality of the Constituency Development Fund Act of 2013 (as amended by Act No. 36 of 2013) [the “CDF Act”]. In short, the CDF Act created a fund [the “Constituency Development Fund”, or “CDF”], with money up to 2.5% of national government revenue collected in the financial year. The CDF would be used to fund various “community-based projects”, for the benefit of “a widespread cross-section of the inhabitants of a particular area” (s. 22(1)). The implementation of these projects would be monitored by the Constituency Development Fund Committee of the particular constituency (s. 31(3)). Importantly, eight out of ten members of the CDF Committee were to be appointed by the local member of parliament (who was, himself, an ex officio member of the Committee) (s. 24(3)).

The Issues

If we take a step back, therefore, we can see that in simple terms the CDF was (a) a national fund, (b) to be deployed for developmental projects on a constituency-wise basis, and (c) the implementation of the projects was under the effective control of the local MP. To Indian readers, this will be rather familiar: it is quite similar to the MPLAD scheme.

The CDF Act was challenged before the High Court of Kenya, which found it to be unconstitutional. The High Court’s judgment was partially upheld and partially reversed by the Court of Appeal. The case then traveled to the Supreme Court of Kenya, which – by its judgment on 8 August 2022 – also found the CDF Act to be unconstitutional in its entirety.

The gravamen of the substantive challenge before the Kenyan courts can be summed up through the following two propositions: first, the CDF Act undermined the devolved system of government under the Kenyan Constitution, by setting up a parallel, third level of government (at the constituency level), in addition to the national and the county levels, without constitutional sanction (this is essentially a federalism challenge, although – as we shall see – the Court did not analyse it in federal terms); and secondly, the CDF Act violated the separation of powers by granting MPs – who are part of the legislature – essentially executive powers of administration and implementation of developmental projects. There were other – procedural – challenges as well: for instance, it was argued that the CDF Act substantially affected the functioning of county governments. This required it to be scrutinised by the Kenyan Senate (the “Second Chamber”), which – under Article 96 of the Constitution – is tasked with representing the Counties, and safeguarding their interests. This, however, had not been done.

The Involvement of the Senate

On the procedural issue, the Supreme Court found that the 2013 amendment to the CDF Act had transferred the constitutional basis of the CDF from Article 202(2) of the Constitution (which authorises the national government to make “additional allocations” to county governments) to Article 206(2) of the Constitution (which authorises withdrawal of money from the Consolidated Fund). The Court found that this alteration of the constitutional basis of the CDF “had an effect on the functioning of country governments” (paragraph 64). In particular, the CDF Act contemplated that projects would pertain to infrastructural development, such as roads, health, agriculture, and trade, which were within the domain of county governments (paragraph 71). For this reason, the Senate’s involvement was a constitutional pre-requisite, before the CDF Act could have been validly passed (paragraph 72).

While this finding is logical enough, there are two interesting aspects. The first is that in this case, the Speakers of the National Assembly and of the Senate had resolved that the CDF (Amendment) Bill – as it then was – did not concern counties, and therefore, did not need to be tabled before the Senate. The Supreme Court’s response to this was straightforward: it upheld the High Court’s finding that while the decision of the Speaker(s) merited due deference, it did not oust the power of the Court to answer a “question regarding the true nature of legislation.” (paragraph 75) In other words, therefore, despite the Speaker’s position as the leader of the House, their decision on the character of legislation would be subject to judicial review. Naturally, this would apply to other situations as well, such as – for example – classification of bills as Money Bills. The importance of this finding lies in the fact that it allows the judiciary to act as a safeguard against partisan speakers, who can help the ruling party in the First Chamber circumvent the participation of the Second Chamber simply by mis-classifying bills as Money Bills (or, as in this case, as not involving county governments). This is particularly significant, as the Kenyan Constitution does not explicitly guarantee or protect the independence of Speakers. And once again, Indian readers will recall that the exact same issue has been pending before the Supreme Court of India for the last four years.

Secondly, it was argued that the CDF Act offended constitutional design by violating federal principles. The Supreme Court rejected this argument by noting that the Kenyan Constitution was not federal, but a “unitary system of government that decentralises key functions and services to the county unit.” (paragraph 80) It is submitted, with respect, that the distinction between a federal system, and a unitary system with devolution is not an iron-clad one, and there are cases where terminology might obscure more than it reveals. Indeed, if we look at the Supreme Court’s actual analysis on the devolution question (which we shall turn to in a moment), we find that is actually far more respectful of core federal principles than many other “formally” federal polities.

On Devolution

As indicated above, the first core substantive argument before the Court was whether the CDF Act offended the division of functions between national and county governments (see Article 6 of the Constitution). In simpler terms, the issue was whether the CDF Act basically undermined the decentralisation of power guaranteed under the Constitution of Kenya. The Court noted that under Article 95 of the Constitution, the powers of the National Assembly included legislation, oversight over national revenue and its expenditure, and allocation of national revenue between levels of government, but not “the power to implement projects as a service delivery unit at the county level” (paragraph 83). The service delivery mandate was essentially an executive function at the county level, and was therefore meant to be exercised by County Executive Committees which, under Article 179 of the Constitution, were meant to exercise the “executive authority of the County.” Thus, according to the Court:

…where a Member of the National Assembly is allowed to play a role related to functions vested in devolved units, then this will compromise the vertical division of powers between the national and county governments. (paragraph 85)

And in particular:

Subsidiarity is the broad presumption that sub-national governments ought to be assigned those functions and powers which vitally affect the life of the inhabitants and allow the development of the country in accordance with local conditions of sub-national units, while matters of national importance concerning the country as a whole and overarching policy formulation are assigned to the national government. (paragraph 88)

The Supreme Court thus held that the Constitution did not authorise the “national government to … usurp the mandate of the county governments.” (paragraph 90) Nor did it authorise a “third level” of governance, tied to the constituency. Crucially, the Court noted that this was because the constituency – in an electoral system – was tied to the idea of political representation, and not service delivery: in essence the constituency is an electoral unit, with its function tied to the functions vested in an MP; and that role, essentially, is a legislative role. (paragraph 92) For this reason, the CDF Act could not be saved by tying it to the unit of the constituency, as the whole purpose of having “constituencies” in the first place was entirely different. I would respectfully submit that this is a very important finding: a clear separation between the constituency as a unit for political representation, and as a unit of service delivery, provides the conceptual foundation for preventing the concentration of power at the level of the MP: it prevents a situation where MPs serve both as legislators, but also as dispensers of project-linked patronage in their constituencies, and – arguably – prevents the incumbency bias that comes along with placing MPs in charge of disbursal of funds for project development within the constituency.

On the Separation of Powers

Indeed, this last bit was an important feature of the Supreme Court’s separation of powers analysis. Arguments before the Court on this point followed a familiar theme, with the Appellants arguing that the CDF Act violated the separation of powers by vesting executive functions with legislators, and the Respondents arguing that there was no such thing as “pure separation of powers.” However, the Court’s response to this is of particular significance. The Court accepted that the Kenyan Constitution did not follow a “pure” separation of powers model, where the branches of government were hermetically sealed off from one another (indeed, which Constitution does?). However, that did not resolve the question in favour of the Respondents. The crucial question that needed to be asked was what purpose separation of powers was meant to serve in a particular constitutional system, and to derive its content from that analysis.

Here, the Court then found that the purpose of the separation of powers was essentially to prevent concentration:

Kenyans having witnessed excesses of absolute power vested in the Executive branch which operated with abandon and riding roughshod over other state institutions sought to constrain and temper the exercise of public power. Citizens during the pre-2010 dispensation chose to respond to excesses of that legacy by explicitly dividing state power into three branches of government to preclude the exercise of arbitrary power. (paragraph 116)

Keeping this in mind, the Supreme Court proposed a two-pronged test for determining when, in a given case, the separation of powers had been violated: first, ask whether a state agency was straying into the “nucleus, core functions, or pre-eminent domain” of another branch of government, from a functional point of view (as discussed in the previous paragraph); and secondly, ask whether the exercise of the impugned power would threaten the values and principles articulated in the Constitution. (paragraph 118) Applying this two-pronged test, the Supreme Court then found, first, that the Constitution was clear about what legislative power entailed: it was representation, legislation, and oversight over the government (paragraph 120). Under the CDF Act, however, through the Constituency Development Fund Committee, MPs were “in effective control [of the Committee] and that means that he/she influences the selection, prioritization of projects, allocation of funds and also monitors the implementation of the projects.” (paragraph 124) Therefore:

This means that the Fund, as conceived under the CDF Act 2013, vested in the Legislature and its personnel – being the Members of the National Assembly, functions that typically fall within the nucleus, core function, or pre-eminent domain of the Executive branch. (paragraph 124)

What of the separation of powers in terms of constitutional values and principles? Here, the Court found that a core function of the separation of powers was to bring about a system of checks and balances, leading to accountability and good governance. At the heart of this was the avoidance of conflict of interest. However, the CDF Act created an open conflict of interest by giving to MPs a personal stake in the determination and implementation of projects out of the National Assembly’s CDF fund. In other words, MPs could not effectively perform their oversight functions over the use of the Fund, if they themselves stood to benefit politically from decisions about its implementation (paragraph 127). Thus, the Court summed up by holding that:

We, therefore, find that a Fund operating outside the strictures of separation of powers and the system of checks and balances would not be constrained given the absence of legislative oversight and therefore would be prone to be abused. In effect, a Fund that allows personnel from the Legislative branch to exercise executive powers is problematic from a constitutional lens. In the context of this case, we adopt the view that the constitutional scheme on separation of powers should be upheld given its implication for underlying constitutional values; that is, the maintenance of accountability and good governance. Were we to adopt a contrary approach, as urged by the respondents, even for the best of policy reasons, these constitutional values and principles will be eroded. (paragraph 129)

Comparing Institute for Social Accountability and Bhim Singh

The rigorous and in-depth analysis of the Supreme Court of Kenya stands out particularly starkly when we compare it with the judgment of the Indian Supreme Court in Bhim Singh, where the constitutionality of the MPLAD scheme was challenged (I have briefly analysed this case here). On the issue of the separation of powers, the Supreme Court repeated the mantra of there being no “strict” separation of powers, that “each one of the arms at times perform other functions as well“, and that “it is quite logical for the Member of Parliament to carry out developmental activities to the constituencies they represent” (needless to say, there was no explanation forthcoming for why this proposition is “quite logical”, because – unlike the Supreme Court of Kenya, there was no analysis of the role played by the “constituency” in the political process).

The Supreme Court also repelled the separation of powers challenge by noting that under the scheme the power of the MP was a “recommendatory” power, with the decision about which projects to implement lying with the district authority. Once again, though, the judgment of the Kenyan Supreme Court shows us how a Court need not equate form with substance: even under the CDF Act, the relevant MP was not directly implementing projects, as though he or she was a personal administrator. Rather, what the Court found was that the scheme, as a whole, gave to an MP a measure of effective control over how projects were selected and implemented. It is abundantly clear that MPLAD – in slightly different ways – has the same effect.

The federalism challenge was dealt with by the Supreme Court in similarly superficial fashion, by noting that India is a “quasi-federation”; indeed, it is particularly ironic that the Supreme Court of India used the mantra of the “quasi-federation” to avoid any serious analysis of whether the MPLAD scheme violated the Constitution, while on the other hand, the Supreme Court of Kenya – even while insisting that the Constitution of Kenya is unitary – engaged in a much more detailed consideration of whether the CDF Fund violated the devolved scheme of powers between national and county governments set up under the Constitution of Kenya. One can only wonder what the outcome of Bhim Singh would have been, had the Indian Supreme Court taken a principled approach towards the separation of powers and federalism under the Constitution, rather than a box-checking exercise.

Conclusion

In my view, the judgment of the Supreme Court of Kenya in Institute for Social Accountability vs The National Assembly is a landmark judgment, that makes many significant contributions to the global conversation around constitutional democracy. Among the highlights are: (a) the Supreme Court’s finding that the Speaker’s classification of bills is subject to judicial review, especially in situations where the participation of the Second Chamber turns upon how a bill is classified; (b) the Supreme Court’s clear analysis of the role of the constituency as a unity of political representation, and not of service delivery – and the consequences this has for the powers of MPs; (c) the Court’s principled, two-pronged test for when functional separation of powers is violated, and – in particular – its emphasis on preventing concentration of power and enabling accountability as the basis of the doctrine; and (d) its application of the principle to the case at hand, including the articulation of the distinction between legislative functions and executive functions.

Indeed, if we read the judgment as a whole, what comes through most clearly is the Supreme Court’s pushback against a blurring of legislative and executive functions in a way that makes the constitutional terrain the site of a centralising drift. Although the Court doesn’t say so in as many words, its insistence on articulating the doctrine of separation of powers in a way that gives it “analytical bite” shows a clear preoccupation with preserving the Constitution as a check upon the centralisation of power. In this, there are lessons for all of us, around the world.


[My thanks to Joshua Malidzo Nyawa for giving this piece a once-over.]

Guest Post: Fiscal Federalism and the Centralising Drift – The Supreme Court’s GST Judgment

[This is a guest post by Suhrith Parthasarathy.]


In July 2017, the Government of India heralded a goods and services tax regime by bringing forth the 101st amendment to the Constitution through an unusual midnight session of Parliament. The government claimed the new tax would unify the Indian market. Any fears that the tax would disrupt Indian federalism were sought to be eased by describing the effort as an example in cooperation between the states and the Union. The then chief economic adviser to the government of India, Arvind Subramanian, described the move as a “voluntary pooling of sovereignty”.

The phrase “pooled sovereignty” owes its origins to the creation of the European Union, where member states agreed to delegate some of their decision-making powers to the council. In the case of the GST, the idea was that both Parliament and the state legislatures would delegate some of their power to a newly formed GST Council that would help make a unified law for the nation. All along, it was believed that the Council’s decision would be binding on each of the states and that any dispute that a state wanted to raise would have to be resolved within the structures built into the system. 

This idea, seen as foundational to the functioning of the GST, has come under threat from a judgment of the Supreme Court, in Union of India v. Mohit Minerals, where a 3-judge bench, presided by Justice DY Chandrachud, has held that the GST Council’s decisions are not binding on legislative bodies and that both Parliament and the state legislatures possess plenary powers to make laws as they deem fit. How states react to this finding and to what extent they choose to amend their respective GST legislations might come to have a deep bearing on the future of Indian federalism.

In framing the Constitution, the Constituent Assembly was conscious of making careful divisions of power between the Union and the state governments. Although there were certain areas in which the Union was accorded pre-eminence, when it came to taxation, the framers were keen to vest in the States substantial responsibility. The compartments that were drawn out ensured that the powers of taxation were not mutually exclusive. Income tax (excepting tax on agricultural income) was offered to the Union, along with some indirect taxes such as customs and excise duties. State governments, on the other hand, were given the exclusive authority to tax both sale of goods and the entry of goods into a state. This division was made by inserting these subjects respectively into Lists I and II of Schedule VII of the Constitution. Critically, the concurrent list, that is List III, did not contain any taxing subject. Therefore, on a reading of Articles 245 and 246 and the entries in Lists I and II of Schedule VII, a clear division of power between the Union and the states could be gleaned out.

The 101st amendment toppled this arrangement. It removed from List II a slew of subjects over which hitherto the state government had enjoyed absolute power. These included, for example, entry 52, which was “taxes on the entry of goods into a local area for consumption, use or sale therein”; and entry 55, which dealt with taxes on advertisements. Entry 54 was substituted by a new entry, which had the effect of removing the power to tax on sale or purchase of goods excepting certain categories of products, such as fuel, natural gas, and liquor. The amendment also introduced a new provision, Article 246A, which would, as a stand-alone clause, provide a power to tax goods and services. Article 246A reads as follows:

“(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.

(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council.]”

As we can see, Article 246A begins with a non-obstante clause. It overrides the general power to legislate vested in Parliament and the state legislatures through Article 246. It also overrides Article 254, which deals with inconsistencies—including repugnancy—between laws made by Parliament and a state legislature. To give effect to the proposed exercise of unification the 101st amendment introduced a Goods and Services Tax Council through Article 279A. The GST Council comprises the Union Finance Minister (who shall act as a chairperson), the Union Minister of State in charge of Revenue or Finance and the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government.

Article 279A(4) stipulates that the GST Council “shall make recommendations to the Union and the States on (a) The taxes, cesses and surcharges levied by the Union, the states and the local bodies which may be subsumed in the Goods and Services tax; (b) The goods and services that may be subjected to, or exempted from the GST; (c) Model GST Laws, principles of levy, apportionment of Goods and Services tax levied on supplies in the course of inter-state trade or commerce under Article 269A and the principles that govern the place of supply; (d) The threshold limit of turnover below which goods and services may be exempted from GST; (e) The rates including floor rates for specified period, to raise additional resources during any natural calamities or disaster; (f) Special provision with respect to the states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand and Himachal Pradesh (Referred as Special Category States (g) Any other matter relating to the goods and services tax, as the council may decide.” [Emphasis is mine].

Article 279A(9) states that “Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:— (a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.” [Emphasis supplied].

Article 279A(10) and (11) read as follows:

“(10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of— (a) any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a Member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case. (11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute— (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other side; or (c) between two or more States, arising out of the recommendations of the Council or implementation thereof.]”

The language used in Article 279A is somewhat puzzling. The provision uses the word “recommendation” to refer to the GST Council’s advice (which includes advice on a model law) but it also terms the results of the Council’s deliberations as decisions. What is more, it establishes a mechanism to adjudicate disputes that might arise between governments on any decision taken by the council. If one thinks of the GST as a unitary tax, and if the GST has to work in the manner in which it was conceived by the Union government, any advice proffered by the GST Council would necessarily have to be binding on the states—there is no question of allowing a variation in laws, as that would defeat the idea of having a single tax and a single market. This would, of course, mean that the 101st amendment will have to be seen as dismantling the nature of fiscal federalism that the Constitution in its original form established.

But perhaps because there was no other way the government’s idea could be workable, almost right from its inception, the GST Council’s decisions were viewed as binding on the states. Even when states seriously contested a piece of advice that had been offered, they nonetheless acted on such advice. And for this reason, many states also believed that the Council and its workings impinged on powers vested in the states by the Constitution. In other words, it was thought that the 101st amendment violated the federal arrangement in a manner that had the effect of effacing one of the basic features of the Constitution.       

The judgment now delivered in Mohit Minerals does not concern itself directly with any of these questions. The case arose out of an appeal filed by the Union government against a judgment of the Gujarat High Court. The High Court had declared a levy of Integrated Goods and Services Tax [IGST] imposed on importers, on ocean freight charges paid by foreign sellers to foreign shipping lines. The court had found that the importers were already paying a tax on the composite supply that was made and that to impose an additional levy on just the ocean freight would be tantamount to a form of double taxation. Moreover, in the case of CIF contracts (Cost, Insurance and Freight contracts), both the service provider and the service recipient were outside the territory of India, and the tax itself was being cast on an importer, who, in the first place, was not the recipient of the service.

During arguments in the Supreme Court, the Union government argued that this decision to levy tax on ocean freight had been made by the GST Council and that the government was, as such, bound by it. In examining this question, the Supreme Court considered the purport of Article 279A and made a series of findings, which could potentially dismantle the idea of GST, as understood through the 101st amendment. The court did not explicitly premise these findings on the Constitution’s basic structure—its analysis was largely predicated on the text of the Constitution and on what it regarded as Parliament’s intention behind the 101st amendment. But the underlying philosophy of the basic structure doctrine was nonetheless at play. The court found that to hold the GST Council’s recommendations as binding would have the effect of impinging on legislative powers granted by the Constitution, and would, in the process, alter “fiscal federalism”.

The court recognised that there were two chief arguments in favour of seeing the GST Council’s recommendations as binding. First, if one sees the recommendations as just that, the “GST will collapse as each State would then levy a conflict tax and collection mechanism”; second, if the recommendations are non-binding there would be no dispute to resolve under Article 279(11) as the States would be free to disregard the recommendations. In the same vein, the court also recognised the two chief arguments against seeing the GST Council’s recommendations as binding. First, it would violate the supremacy of Parliament and the state legislatures since both have been afforded “simultaneous” legislative power on GST; second, the virtual veto given to the Union in the GST Council would lead to a violation of fiscal federalism.

Having recognised these arguments, the court proceeded to analyse and lay down the broad contours of India’s federal structure. It cited, among others, HM Seervai who in arguing that India was a federal state, pointed to important powers that had been vested exclusively in the state governments. “The view that unimportant matters were assigned to the States cannot be sustained in face of the very important subjects assigned to the States in List II, and the same applies to taxing powers of the States which are made mutually exclusive of the taxing powers of the Union so that ordinarily the States have independent source of revenue of their own,” wrote Seervai. “The legislative entries relating to taxes in List II show that the sources of revenue available to the States are substantial and would increasingly become more substantial. In addition to the exclusive taxing powers of the States, the States become entitled either to appropriate taxes collected by the Union or to a share in the taxes collected by the Union.”

The Court then proceeded to examine the language used in Article 246A. It saw that the provision granted to both Parliament and the state legislature co-equal power. That is, the legislative bodies were given simultaneous authority to legislate on GST within their respective jurisdictions. This was, the court said, a sui generis provision, containing “unique features” of federalism. “Article 246A treats the Centre and States as equal units by conferring a simultaneous power of enacting law on GST. Article 279A in constituting the GST Council envisions that neither the Centre nor the States can act independent of the other.” The court said that it was aware that there are certain areas in the Constitution where the division of power is lopsided, where the arrangement provides for a centralising drift. But that such provisions exist cannot take away from the fact that there might be other areas where the central and state governments are given equal power. The court also noted that the Constitution, after the 101st amendment, does not provide for a mechanism to resolve any repugnancy or inconsistency between a parliamentary and state law. This would mean that the GST Council would have to strive to work in a harmonised manner, but at the same time this cannot mean that the GST Council’s decisions will override the basic legislative power vested in the state governments.

Contrary to the much vaunted idea of cooperative federalism that was seen as underlying the GST, the court held—cited scholarship by Jessica Bulman-Pozen and Heather K. Gerken—that what the regime in fact promotes is a form of “uncooperative federalism.” This contestation, Justice Chandrachud wrote, is “valuable since ‘it is desirable to have some level of friction, some amount of state contestation, some deliberation-generating froth in our democratic system.’ Therefore, the States can use various forms of contestation if they disagree with the decision of the Centre. Such forms of contestation are also within the framework of Indian federalism. The GST Council is not merely a constitutional body restricted to the indirect tax system in India but is also an important focal point to foster federalism and democracy.” If the GST Council works not merely through cooperation but also through contestation, and arrives at decisions in a democratic manner, there will be, the court believed, no need for any fears that the taxing regime will crumble as a whole.

To augment this holding the court referred to the bare language used in Article 279A. The word “recommendation”, the judgment found, is used in an array of different constitutional provisions. And the meaning ascribed to it is invariably contextual. In this case, it was impossible to see the word “recommendation” as meaning “binding recommendation” because if that was Parliament’s intention behind the 101st amendment, a qualification to that express account would have been included in Articles 246A or 279A. “Neither does Article 279A begin with a non-obstante clause nor does Article 246A provide that the legislative power is ‘subject to’ Article 279A,” the court held. But the Union also claimed that the legislatures, both Parliament and the states’, had effectively ceded their power. An analysis of many of the provisions of the Central Goods and Services Tax Act, and, for that matter, the state GST legislations, expressly stipulate that the rule-making power delegated to the Government will be exercised on the recommendations of the GST Council. As examples, the Supreme Court cited Section 5 of the IGST Act, which provides that the taxable event, taxable rate, and taxable value shall be notified by the government on the “recommendations of the Council”. Similarly, the power of the Central Government to exempt goods or services or both from levy of tax shall be exercised on the recommendations of the GST Council under Section 6 of the IGST Act. Section 22 provides that the Government may exercise its rule making power on the recommendations of the GST Council. The CGST Act also provides for similar provisions in Sections 9, 11 and 164. Apart from these, a look at the state GST legislations also showed that similar mandates were made by state legislatures. For instance, Section 9(1) of the Tamil Nadu GST Act reads as follows:  “Subject to the provisions of sub-section (2), there shall be levied a tax called the Tamil Nadu goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.”

A reading of this clause would indicate that the state government is bound by the advice of the Council. For that matter, this clause and each of the provisions of the State GST Act was incorporated on the basis of the model law prescribed by the Council. But what if the legislature amends Section 9(1) and allows the government to deviate from the recommendation made by the council? According to the Supreme Court, the scheme of the 101st amendment does indeed allow for such amendments to be made, because the GST Council’s recommendations can never constrain the basic legislative power prescribed in Article 246A. A reading of Paragraph 59 of the Supreme Court’s judgment is instructive:

“59. The provisions of the IGST Act and CGST Act which provide that the Union Government is to act on the recommendations of the GST Council must be interpreted with reference to the purpose of the enactment, which is to create a uniform taxation system. The GST was introduced since different States could earlier provide different tax slabs and different exemptions. The recommendations of the GST Council are made binding on the Government when it exercises its power to notify secondary legislation to give effect to the uniform taxation system. The Council under Article 279A has wide recommendatory powers on matters related to GST where it has the power to make recommendations on subject matters that fall outside the purview of the rule-making power under the provisions of the IGST and CGST Act. Merely because a few of the recommendations of the GST Council are binding on the Government under the provisions of the CGST Act and IGST Act, it cannot be argued that all of the GST Council’s recommendations are binding. As a matter of first principle, the provisions of the Constitution, which is the grundnorm of the nation, cannot be interpreted based on the provisions of a primary legislation. It is only the provisions of a primary legislation that can be interpreted with reference to the Constitution. The legislature amends the Constitution by exercising its constituent power and legislates by exercising its legislative power. The constituent power of the legislature is of a higher constitutional order as compared to its legislative power. Even if it is Parliament that has enacted laws making the recommendations of the GST Council binding on the Central Government for the purpose of notifying secondary legislations, it would not mean that all the recommendations of the Council made by virtue of its power under Article 279A have a binding force on the legislature.”

It is my submission that this finding by the Supreme Court in paragraph 59, which has a potentially far-reaching effect, is correct and laudable. Critics of the judgment may well point to the fact that in allowing the state legislatures plenary power to legislate beyond the Council’s recommendations the court has potentially allowed a pathway for a collapse of the GST regime. But the court’s interpretation is predicated on two things: one, the bare text of the Constitution, in that Article 279A uses the word “recommendation” and in that Article 246A does not limit in any manner the equal power granted both to the Parliament and the state legislatures; two, that any other interpretation would allow the federal compact, as originally conceived by the framers, to collapse. In other words, what is at stake here is the Constitution’s basic structure. Upholding that structure requires us to see both the Union and the state governments as equal partners.

The judgment in Mohit Minerals is not a comment on fiscal policy or on the merits of a unified taxing regime. If such a regime is desirable, then it is up to the Union and the state governments to arrive at a consensus through democratic deliberation, whether within the confines of the GST Council or outside of it. But if a state government believes that it must disregard some decision or the other of the Council, its basic legislative power to do so cannot be arrogated. To ascribe any other meaning to the 101st amendment would only render it a nullity.

Guest Post: Compulsory “Borrowing” of State Administrative Officers by the Central Government – Impact Upon the Federal Structure

[This is a guest post by Yash Sinha.]


The central government has recently proposed amendments to the Indian Administrative Service (Cadre) Rules, 1954 (‘the 1954 Rules’). Succinctly, they enable the Central Government to compulsorily “borrow” an officer from the Indian Administrative Service (‘IAS’) serving a state government. This article argues that the probable impact will be damaging to two ideas underlying Indian federalism. Firstly, there is a breach of ‘centripetal federalism’, which is specific to the provisions on civil services. Secondly, there is an assault on the principles of quasi-federalism as found in the remaining Constitutional text.

As necessary preface to the argument advanced, Part I describes the present framework to contextualise the amendment’s implications. It maps the present degree of administrative control possessed by both the Centre and the states over such officers. It demonstrates that the framework provides for a titular inclination towards central discretion. Simultaneously, the density of the states’ weightage in power is shown to be residing in the concerned rule. Part II explains the Constitutional intent behind the distribution of such controls. It argues that the intent was to favour the states’ interests by having the centre supervise manpower. It links this to the Constitutional desire of having a centripetal force for enhanced cohesion and better functioning of the state executive. This centripetal force is shown to come from a titular, as opposed to an actual, central preponderance. Eventually, Part III discusses relevance of quasi-federalism as revealed by other parts of the Constitution. It argues that centripetal federalism fits perfectly in Ambedkar’s model of quasi-federalism, and is meant to have a cumulative effect of prioritising state interests in its IAS officers. Consequently, the amendments are shown to be (impermissibly) re-arranging Constitutional allocation of power.

The framework and the amendment

The All India Services Act, 1951 (‘AIS’) requires direct recruitment of freshly minted IAS officers to state governments. This recruitment is made in the President’s name, with the Department of Personnel and Training as its controlling authority.

The centre has conclusive discretion in more substantial aspects of the process as well. These illustratively include allocating recruits to each state cadre, determining those numbers, reserving a few for itself, imparting training to them, and exercising the power to selectively extend career-durations.

Furthermore, it has unequivocal priority in matters pertaining to suspension. The centre’s will is binding in spite of a state’s differing opinion on the same. The same arrangement governs disagreements about disciplinary proceedings, except that the state needs prior permission from the centre to initiate those. The centre also has the sole discretion in compulsorily and prematurely retiring IAS officers in state or central cadres.

The states, however, have a wide array of incentives/disincentives with which they govern the behaviour of their IAS officers. The officers’ transfers, reallocation of territorial units for administration and elevation to coveted posts, are the primary tools of control. Pertinently, the states have a sufficient deterrent in initiating an interim suspension till the centre’s final decision. To compete with the centre’s power of career-extensions, the states have devised their own workaround: the civil servant may choose to wait till the organic expiry of her tenure comes about, and subsequently function as an aide/advisory to the state government.

Regardless, it is seen that the centre has greater say till the stage of allocation to the state government, and then directly in ending the careers of IAS officers. However, the centre faced one significant handicap. The number of officers drawn by way of the present version of rule 6 was low in quanta. Therefore, it introduced the Central Staffing Scheme (‘CSS’). This ‘scheme’ was brought in through a government resolution, bypassing the All India Services Act (‘AIS’). Sec. 3 of this enactment requires that every amendatory rule be first scrutinised by the Parliament. Since the scheme was not a ‘rule’, it was considered to be an exercise of residuary executive power.

Under this scheme, the centre may choose to declare certain officers as fit to work directly under its administration. This process is referred to as ‘empanelment’, and earmarks possible candidates for future/immediate deputation. Regardless of the intent behind CSS, it serves favourably for the states. The state officers eluding empanelment are given the more strategic posts, minimising the possibility of disruption in functioning.

Simultaneously, the centre continues to face a handicap. Migration of empanelled officers is still contingent on the satisfaction of rule 6(1) of the 1954 Rules. By virtue of this, the centre cannot forcibly borrow a recruited state officer, regardless of empanelment. In 1969, a proviso was introduced to tweak this arrangement. It states that any differences regarding central deputation will see the centre’s view as binding. However, this does not denote the centre’s will as ‘overriding by default’. Rather, it was stated to be suggesting a dispute resolution mechanism, with the centre as an independent arbiter.

This proposed amendment is to negate the current rule 6(1) and forcibly recruit empanelled/non-empanelled IAS officers in states. This is ensured through two key changes. Firstly¸ the pre-requisite of the states’ consent is sought to be done away with. Secondly, the centre will have complete discretion to determine the number of such officers it may so wrest away.

Thus, this amendment effectively entitles the centre to expropriate members of the state administration. Combined with the significant power to additionally determine the numbers, the dispossessing impact renders it Constitutionally offensive.

Striking at the edifice of civil services: centripetal federalism

Given that IAS recruitment happens largely for the states, the centre’s role of a manager seems incongruous. This feature, however, is laden with Constitutional purpose.

Alongside other articles pertaining to the civil services, Art. 311 was formulated by Sardar Patel. Essentially, it compels pause and deliberation in the removal of Indian bureaucrats. Cl. 1 ensures that IAS officers are removed only by the centre. Art. 310(1) requires the centre to have strong reasons before affecting such removals. Simultaneously, Art. 311(2) mandates that the states follow a proper inquiry procedure before initiating a request for removal. Succinctly put, the design ensures that the states have the power to initiate penalties, without attaching it with any finality. It is these bounds that the statutory framework discussed in Part I are adhering to.

The underlying reasoning is present in the Constituent Assembly Debates. Few members were opposed to the state’s say in removal of officers, given certain provinces’ past loyalty to the British. Simultaneously and regardless, another set of members nurtured the very same suspicion about the bureaucracy itself. Both the groups demanded that there be no constitutional mention for the officers’ ‘removal’. By specifying a singular and tortuous procedure in the Constitution, Patel was accused of giving them a certain amount of protection. Patel refused to budge, citing the IAS’ potential to protect the Constitution. The bureaucracy, he stated, remains rooted in governance even if the political domain goes through severe flux. Officers unfailingly abiding by executive orders suggested to him institutional strength, and not moral vacuity. The bureaucracy-conduced stability during the crises thrown by the Partition and transition to independent governance were cited as footnotes to this assertion. More significantly, accession of some provinces was secured entirely on the assurance of preserving their internal freedom. Patel argued that this essentially denoted preserving their bureaucratic structure.

The grist of his argument, however, is packed in one significant portion of his rebuttal:

This Constitution is meant to be worked by a ring of Service which will keep the country intact […] we shall have this model wherein the ring of Service will be such that will keep the country under control.

Evidently, Patel envisaged the centre’s say on states’ officers as a source of national cohesion. This design seems further consolidated in light of another vital aspect of Indian Constitutional history. When the Government of India Act, 1935 introduced federalism to British India, it created an administrative office to singularly oversee and manage bureaucratic recruitments to the provinces. Termed as the ‘Establishment Officer’ and now within the DoPT, it is additionally tasked with handling the CSS.

Hence, Patel envisaged ‘centripetal federalism’: a counterintuitive concept wherein the centre has an overriding say, but in order to achieve effective decentralisation. The centre’s role in managing IAS officers of the states was to preserve and further federal cohesion. The limited preponderance it enjoys is only cosmetic and essentially bestows greater power on the states. But contrary to this, the amendments are aimed at creating an actual tilt towards the centre and at the states’ expense.

Quasi-federalism’s overlap with centripetal federalism

Ambedkar was distrustful of a liberal approach towards decentralisation in India. So while Patel argued for enhanced federalism, Ambedkar disagreed, and favoured a pseudo-unitary system of governance. The eventual Constitutional inclination towards the centre across different parameters has come to be identified – by the decisions in State of Karnataka, Shamsher Singh, Kuldip Nayar and Bhim Singh – as quasi-federalism.

It stands on a different footing than centripetal federalism, in the following manner. The latter weaves vertical federal units into one single thread of cohesion, whilst retaining the vital powers of the states. It brings in an effective central discretion to the fore, while still prioritising state-interests in the federal-vertical. On the other hand, the quasi-federal model is best understood as a bundle of different federal arrangements. It encompasses federal collaboration, unit-exclusive functioning, and permissible circumstances for the centre’s domination.

According to Ambedkar, this dominance denoted ‘circumscribing’ the states’ power in legislative and executive concerns. In elaboration, he asserted that the overriding power of the centre was to be kept strong in intensity, yet minimal in occurrence. Accordingly, the centre was conferred with legislative preponderance only in disagreements pertaining to concurrent and residuary subjects. However, as espoused in V. Hariharan and consolidated in GNCTD, it is the states which have executive preponderance in concurrent subjects, except where Constitutional or parliamentary law specify exceptions.

It is at this point where flanks of both the models of federalism confluence. Centripetal provisions on civil services are cocooned by Ambedkar’s exemptions from central dominance for a cumulative impact.

It is to be noted that IAS officers in a state are bound to execute and handle laws under List II. These officers, insofar as they constitute the state executive, are not tasked with implementing central laws due to Ambedkar’s ‘exclusive priority’. Art. 256 and 257 reservedly ask state officers to neither hinder such laws’ implementation, nor the centre’s functioning. This indicates mutual exclusivity between the functioning of state and central executives. Additionally, the Constitutional text also bears out his intention to minimise the hijacking of state executives. At present, only under Art. 352 and 356 can the state executive machinery be taken control over by the centre. That apart, Art. 324(6) has been judicially interpreted as the only other provision that permits a temporary and non-consensual expropriation of a state’s executive machinery.

Thus, the cumulative impact of both the models is to impart states’ executive with a high degree of exclusivity. Central preponderance therein would be a fickle proposition, except when permitted by the Constitution.  Presently, its text suggests the contrary.

Conclusion

In its present form, rule 6(1) embodies a Constitutional allocation. It encapsulates the core of decentralisation by granting states a decisive hold over their in-service civil servants. In parallel and by intelligent design, the Constitution protects these officers from politically motivated state-level reprimands.

Both the safeguards exist due to two different ideas of federalism.  The centripetal model stresses on unity to advance greater decentralisation. It exists to generate a unifying factor, but prioritises states in doing so. Contrarily, the pseudo-unitary model prioritises the centre, and goes beyond merely supplying an appellation of unity. It is best viewed as a wide spectrum of federal arrangements, with slight inclination to the centre and complete substitution of state powers as the two extreme ends. The crux of both, however, is the asymmetry in the federal-vertical. 

As far as civil services within the states is concerned, the two versions reinforce each other to have a curious constitutional impact: both cement plenary powers of the state executive. The cohesive intent ensures that no state is dispossessed of its administrative instruments. Simultaneously, the specificity in areas for central dominance makes it rare for the centre to interfere with the everyday functioning of state executives. Combined, they make states’ consent all the more indispensable.

Without rule 6(1) in its present form, the country shall move closer to a unitary operation under the facade of an operative quasi-federal system.

Land, Citizens, and Farmers: Recognising Political Constitutionalism

Indian political and legislative processes are far from perfect. Recently, this has led to arguments (on this blog, and elsewhere) exploring the possibility of increased judicial intervention in the legislative process – where the judiciary ‘examines the validity of procedures leading to enactment’. In this post, I suggest that judicial scrutiny of legislative activity should not underestimate the power of democratic processes to produce respect for the rule of law and rights. However, this approach requires us to locate the ‘constitutionality’ of legislative action in the legitimate decision-making processes of the political system (as opposed to the legal system). Through an examination of the events surrounding the Land Acquisition Bill (2015), the Citizenship Amendment Act (2019), and the three agricultural laws (2020), I highlight how actors beyond courts may impact the constitutionality of legislation.

I briefly outline the two approaches to ‘constitutionality’ under the rubrics of legal and political constitutionalism and then analyse the three legislative events from the lens of political constitutionalism. I do not suggest a wholesale bar on judicial interventions in the legislative process (nor do authors who advocate judicial interventions suggest abandoning other means to improve the legislative process). I also do not delve into how political or legislative reforms may be achieved. The purpose of this post is merely to highlight how democratic processes can also be an avenue to achieve constitutional goods.

Legal and Political Constitutionalism

Legal constitutionalism suggests that because citizens and legislators may not always embrace the values necessary for constitutional democracy, the respect for these values needs to be protected by judges. Therefore, judges serve as a key restraint on legislative power – evaluating whether legislation satisfies constitutional values. (E.g., the Supreme Court invalidating legislation that violates the freedom of speech.) Stepping outside the grammar of rights, such exercises of legislative power typically involve substantive and fundamental competing interests (e.g., public order v free speech), and legal constitutionalism suggests that judges are best situated to settle these crucial issues. However, dissenting opinions and overruled judgements indicate that judges themselves disagree over which outcomes uphold constitutional values. Therefore, the ‘correctness’ of these outcomes largely stems from legal structures that confer jurisdiction on courts to settle these disputes and confer finality on judicial determinations on competing societal interests.

Political constitutionalism argues that ‘the democratic process is equally, if not more legitimate and capable than courts at resolving these substantive and fundamental disagreements.’ Rather that suggesting judicial oversight, it focuses inter alia on: (i) improving the democratic process through improving electoral and parliamentary systems (e.g., proportional representation and parliamentary scrutiny); (ii) creating multiple inflection points where power is balanced (federalism, off-set election cycles, and independent bodies); and (iii) political parties competing for the support of diverse interest groups who themselves have cross-cutting interests, compelling political parties to listen varied viewpoints and often compromise. Crucially, it ‘locates the ‘constitutionality’ of legislation within the political and not the legal system’ by focusing on how decision making procedures can be made legitimate through balancing institutions and ensuring transparent participation. Where legal constitutionalism may emphasise judicially policed rights as central to constitutional culture, political constitutionalism sees democratic participation as causing citizens to identify with a constitutional system.

This may sound idyllic, and caveats must be made in the Indian context. India’s political and legislative structures contain several democratic weaknesses (role of the governor, ordinance powers, anti-defection, partisan speakers, lack of intra-party democracy, imbalanced federalism). As a result, the efficacy and visibility of constraints on power envisioned by political constitutionalism may vary or be entirely absent. In all the three legislative instances discussed below, there was immense public pressure in the form of demonstrations, speeches, strikes, and vigils despite fragile protections for civil liberties. The need for such resistance to hold power accountable does not undermine the argument for political constitutionalism (such actions are firmly within the democratic process envisioned by political constitutionalism) but rather points to the urgent need to reform our political structures to allow for public opinion, contestation, and compromise through elected officials without blood having to be shed.

Readers will forgive my painfully brief explanation of three complex legal issues. The goal here is merely to identify when the structures of political constitutionalism are at play (I tag them in italics for brevity).

Land Acquisition Bill

On 24 February 2015, the Government introduced a bill (Land Acquisition Bill) to replace an ordinance which amended the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Land Acquisition Bill identified certain situations when the government did not need to obtain landowners’ consent or conduct a social impact assessment before acquiring land. The Land Acquisition Bill passed the Lok Sabha on 10 March but the government did not advance the Bill in the Rajya Sabha because it lacked a majority in the upper house (bi-cameralism and federalism). The existing ordinance was due to expire on April 5, but the Rajya Sabha session continued till 8 May. As ordinances cannot be passed when Parliament is in session, the ordinance looked certain to expire until, on 28 March, the President prorogued (terminated the session of) the Rajya Sabha, allowing the government to re-issue the ordinance on April 3, effectively circumventing Parliamentary approval. These actions were challenged in the Supreme Court as an ‘abuse of the President’s ordinance powers’.  

The Land Acquisition Bill was referred to a Joint Parliamentary Committee. In the BJP chaired committee, it was reported that all eleven BJP MPs moved amendments reinstating the need to acquire landowners consent and conduct social impact assessments (parliamentary scrutiny and intra-party contestation). However, the Land Acquisition Bill never passed the Rajya Sabha, and in August 2015 the ordinance was allowed to lapse two months before the 2015 Bihar elections (staggered electoral cycles). The Supreme Court would eventually dismiss the court challenge as infructuous.

Citizenship Amendment Act

The Citizenship Amendment Act, 2019 (CAA) allows illegal migrant to apply for citizenship if: (i) they entered India before 31 December 2014; (ii) they receive exemptions under the Passports and Foreigners Acts; (iii) they are from Afghanistan, Bangladesh, or Pakistan; and (iv) they are Hindu, Sikh, Christian, Parsi, Jain, or Buddhist. The Government claimed the intention of the law was to protect religious minorities in Afghanistan, Bangladesh, and Pakistan from persecution, and the exclusion of Muslim migrants was a ‘reasonable classification’ within the legislature’s discretion given that Muslims constituted a majority in these three countries.

However, critics of the CAA argued that for the Act to be constitutional, the classification must be connected to the purpose of the legislation. If the goal of the CAA was to protect individuals from religious persecution, then the test under the Act must be – is the individual being persecuted? In other words, the law cannot (without basis) presume that Muslims are not persecuted in Afghanistan, Pakistan, and Bangladesh. The exclusion of Muslims was thus disconnected from the goal of protecting individuals from persecution, and hence violated Article 14 (equality before law). It was also pointed out that the exclusion of Rohingya Muslims from Myanmar suggested an unprincipled (and potentially discriminatory) use of legislative power.

The adoption of the CAA led to sustained nationwide protests. The CAA was also opposed by several states and the Union Government received resolutions the legislatures of Meghalaya, West Bengal, Tamil Nadu, Kerala, and Punjab denouncing the CAA (federalism). Kerala and Rajasthan would go on to sue the Union Government under Article 131 of the Constitution over the CAA. The Government has not repealed the CAA. However, despite Parliamentary manuals requiring that subordinate legislation (rules) for the legislation be adopted within six months of a law passing, two years later, the Union Government is yet to adopt any rules for the CAA (as of writing, the Home Ministry has requested time till January 2022). In the two years since the passage of CAA, 140 petitions have been instituted challenging the constitutionality of the legislation, but the Supreme Court has yet to render a verdict.

Agricultural Laws

In 2020, the Government introduced three laws aimed at reforming the agricultural sector (Farm Laws), discussed in detail here. The laws were passed in the Rajya Sabha using a voice vote instead of a division vote. A voice vote is where the chairperson places the issue before the house and decides the vote based on whether the yes’s or no’s are louder. This may be fine to quickly dispose of issues on which there is significant consensus. However, for more closely contested votes, the process of a division vote exists (where MPs vote electronically). It stands to reason that any vote that is won during a voice vote should also be able to pass in a division vote (otherwise the vote is wholly illegitimate as the chairperson has usurped the collective decision-making of the house and replaced it with their own singular discretion). To guard against this risk, the Rajya Sabha Rules expressly provide that if the outcome of a voice vote is challenged, there must be a division vote (r. 253).

The Farm Laws were passed amongst pandemonium in the Rajya Sabha, and the Chairperson contended that opposition MPs were not in their seats when they challenged the voice vote (a claim contradicted by video footage of the day but an issue also not helped by the fact that the audio feed from the Rajya Sabha was cut for half an hour). After the Farm Laws were passed, the leader of the opposition met the President who protested the breaches of parliamentary procedure and requested the President to refuse assent (another structural inflection point). Soon after, the NDA Government lost its oldest coalition partner (the SAD) (coalitions as a restraint on power). The yearlong protests by farmers and the incident at Lakhimpur Kheri have sufficiently entered the popular consciousness that they need not be repeated here. Towards the end of this stalemate, an MP from the ruling party introduced a private members bill to secure some of the protections sought by protesting farmers (intra-party contestation). Eventually, in December 2021 the Farm Laws were repealed in the lead-up to state elections in Uttar Pradesh and Punjab (staggered electoral cycles).

Conclusion

This piece began by noting that the shortfalls in our political and legislative system to meet our needs for legitimate government can be addressed both through judicial interventions and through political structures. The goal of the above examples is to highlight how political structures such as bi-cameralism, federalism, staggered elections, coalition politics, intra-party democracy, and public protests can restrain power, arrive at decisions about contentious issues in legitimate ways, and respond to breaches of the rule of law. These structures are by no stretch perfect. However, reform of political structures must begin from an understanding that they are worth reforming. At a bare minimum, this requires a discourse which situates the constitution in the political system beyond courts. It also requires us to be able to look past political double-speak and understand when political structures are at play.

There is also reason to be cautious of increased judicial intervention. It is notable than in all three of the above examples, constitutional courts have been conspicuous in their inability or unwillingness to intervene. It is always possible to examine individual situations and argue that a court acting as it is supposed to, could have done better. But this ignores the reality that just as political actors do not always act in conformity with their roles, courts are also not perfect functionaries. Arguments for increased judicial intervention must address the reality that constitutional courts in India have their own structural and behavioural weakness. Lastly, where judicial interventions may vest more power in judges, a focus on reforming electoral systems and structuring institutions so that governmental power is constantly subject to meaningful competition and accountable to cross-cutting interests creates space for a broader set of actors to engage in constitutional authorship.

Guest Post: A Critique of the Supreme Court’s Maratha Reservation Judgment – III: The Constitutionality of the 102nd Amendment

[This is a guest post by Vrishank Singhania.]


In the previous two posts (Part I and Part II), Bhatia discussed the Supreme Court’s holding on the 50% cap and the interpretation of the 102nd Amendment, in the Maratha Reservation judgement. With regard the interpretation of clause 4 of the 102nd Amendment, the Supreme Court held that the power to identify socially and educationally backward classes [“SEBCs”] vested solely with the centre, to the exclusion of the states. While Bhatia argues this is an incorrect interpretation, Bhardwaj in response argues that it is correct. In this post, I take as a given the Majority’s interpretation. The next issue that the Supreme Court (specifically the majority) then had to decide was whether, on this interpretation, the 102nd Amendment was constitutional or not.  

There were two arguments advanced on the issue of the constitutionality of the Amendment. First, given that the Amendment takes away the power of the states to identify SEBCs, it should have been passed in accordance with the proviso to Article 368(2) i.e. it should have been ratified by at least one half of the legislative assemblies of all states. Since this procedure was not followed, the Amendment is unconstitutional. Second, that the Amendment is contrary to the basic feature of federalism. Justice Bhat rejected both of these arguments and upheld the constitutionality of the Amendment. I agree that the Amendment does not fall foul of the Constitution’s basic structure. However, I argue that the Supreme Court erred in its decision on Article 368(2). Assuming the Supreme Court’s interpretation of the 102nd Amendment is correct, the Amendment is unconstitutional qua Article 368(2). 

This essay has five sections. In the first section, I look at J. Bhat’s reasoning on the applicability of the proviso to Article 368(2). In the second and third sections, I draw out the test for the applicability of the proviso from its purpose and past Supreme Court precedent. In the fourth section, I apply the test determined in the previous sections to the 102nd Amendment. In the fifth section, I provide a brief analysis of J. Bhat’s reasoning on the basic structure argument. 

I. Bhat J.’s interpretation of Article 368(2)

The power of the Parliament to amend the Constitution is derived from Article 368. Article 368(2) states that –

(2) An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill: 

Provided that if such amendment seeks to make any change in— 

(a) article 54, article 55, article 73, article 162, article 241 or article 279A or 

(b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI,or 

(c) any of the Lists in the Seventh Schedule, or 

(d) the representation of States in Parliament, or 

(e) the provisions of this article, 

the amendment shall also require to be ratified by the Legislatures of not less than one half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.

Article 368(2) thus provides for two different types of amendments –

  1. Amendments to the Constitution pertaining to the parts specified in Article 368(2) sub-sections (a) to (e); and 
  2. Amendments to all other parts of the Constitution. 

The second type of amendment has to be passed by a majority in each House of the Parliament. However, the first type of amendment, in addition, also needs to be ratified by the legislatures of not less than one half of the states [as per the Proviso to Article 368(2)]. Thus, Article 368(2) limits the powers of the Parliament to bring about certain types of amendments, and if such procedure is not followed, then the amendment would be unconstitutional. 

As mentioned above, the proviso to Article 368(2) [hereinafter referred to as “the proviso”] applies only when any of the parts or provisions specified in sub-sections (a) to (e) [hereinafter referred to as “specified provisions”] are amended. In the present case, the 102nd Amendment had not directly amended any of the specified provisions. There are two questions that then arise. First, whether the applicability of the proviso, requires a direct amendment to the specified provisions, or would an indirect amendment, that in effect amends the specified provisions also qualify. Second, if an indirect amendment qualifies, would an incidental effect on the specified provisions also suffice to trigger the proviso.  

J. Bhat does not consider this complexity, and consequently his decision on Article 368(2) is lacking in its reasoning. It is unclear as to what the test for the applicability of the proviso is according to him. However, from my reading of his judgement, the following paragraphs indicate his holding on this issue – 

181. In this regard what is noticeable is that direct amendments to any of the legislative entries in the three lists of the Seventh Schedule to the Constitution requires ratification. Thus, the insertion of substantive provisions that might impact future legislation by the State in an indirect or oblique manner would not necessarily fall afoul of the Constitution for not complying with the procedure spelt out in the proviso to Article 368(2).

182. The majority judgment [in Sajjan Singh], therefore decisively held that an interpretation which hinges on indirect impact of a provision, the amendment of which needs ratification of the states, does not violate the Constitution and that unless the amendment actually deletes or alters any of the Entries in the three lists of the Seventh Schedule, or directly amends an Article for which ratification is necessary, recourse to the proviso to Article 368 (2) was not necessary. 

It would seem that according to J. Bhat, the proviso is triggered only when there is an actual or direct amendment to the specified provisions. However, in paragraph 181 above, he also looks at the impact (or in other words the effect) of the Amendment on the specified provisions. A harmonious reading of these would suggest that according to J. Bhat, unless there is an actual or direct amendment, the impact on the specified provisions would be considered incidental, and thus, the proviso would not apply. This formalist interpretation of Article 368(2), in my opinion, is incorrect. 

In the next two sections, I shall  look at the purpose of the proviso and Supreme Court precedent on its interpretation to argue that – first, a direct amendment is not necessary i.e. that an in effect amendment is sufficient; and second, that the effect cannot be merely incidental. I will then apply the test to the 102nd Amendment to argue that the proviso is applicable in the present case.

II. Nature of the Amendment – Direct or In Effect?

The first question to be determined is whether the applicability of the proviso requires a direct amendment to the specified provisions, or would an indirect amendment, that in effect amends the specified provisions also suffice. I argue, that based on both the purpose of the proviso and Supreme Court precedent, an in effect amendment would also suffice to trigger the proviso

According to Dr. Ambedkar, the purpose of the proviso was as follows – 

If Members of the House who are interested in this matter are to examine the articles that have been put under the proviso, they will find that they refer not merely to the Centre but to the relations between the Centre and the Provinces. We cannot forget the fact that while we have in a large number of cases invaded provincial autonomy, we still intend and have as a matter of fact seen to it that the federal structure of the Constitution remains fundamentally unaltered. We have by our laws given certain rights to provinces, and reserved certain rights to the Centre. We have distributed legislative authority; we have distributed executive authority and we have distributed administrative authority. Obviously to say that even those articles of the Constitution which pertain to the administrative, legislative, financial and other powers, such as the executive powers of the provinces should be made liable to alteration by the Central Parliament…without permitting the provinces or the States to have any voice, is in my judgment altogether nullifying the fundamentals of the Constitution.

As Dr. Ambedkar mentions, the proviso includes provisions that have a bearing on the federal structure of the Constitution, such as the elections of the President, the representation of States in the Parliament, the executive and legislative powers of the States vis-à-vis the Union, and the amending power itself. The purpose of the proviso is to ensure that the Parliament cannot unilaterally amend the federal structure of the Constitution, without the consent of the States. 

A formalist interpretation, such as the one suggested by J. Bhat, would allow the Parliament to in effect alter the federal structure, without directly amending any of the specified provisions. This would defeat the purpose of the proviso. It would also negate the well-established doctrine of colourable legislation – what cannot be done directly cannot also be done indirectly. A purposive interpretation to Article 368(2) has been upheld by the Supreme Court in Sajjan Singh and Kihoto Hollohan – cases which J. Bhat incorrectly relies upon to justify his formalist interpretation. 

Sajjan Singh dealt with the validity of the 17th Constitutional Amendment which had amended Part III of the Constitution and had taken away the Supreme Court’s and High Court’s power of judicial review with respect to legislations included in the Ninth Schedule. The petitioners argued that this amounted to modifying the High Court’s powers under Article 226 [a specified provision under Article 368(2)(b)] and thus the amendment required ratification by the states. Similar to the present case, the constitutional amendment did not directly amend any of the specified provisions. While the Supreme Court held that the proviso did not apply, it did not confine itself to looking merely at whether the specified provisions had been directly amended. Instead it formulated the test as follows – 

The proviso would apply where the amendment in question seeks to make any change, inter alia, in Article 226, and the question in such a case would be: does the amendment seek to make a change in the provisions of Article 226? The answer to this question would depend upon the effect of the amendment made in the fundamental rights. (Paragraph 8, Gajendragadkar C.J.)

If the effect of the amendment made in the fundamental rights on Article 226 is direct and not incidental and is of a very significant order, different considerations may perhaps arise.” (Paragraph 14, Gajendragadkar C.J.)

Thus, the Supreme Court was concerned with the “effect” of the amendment and not merely the formal provision it amended. 

A similar issue was at stake in Kihoto Hollohan – the Supreme Court had to decide upon the validity of the 52nd Constitutional Amendment, which had introduced the Tenth Schedule, and in paragraph 7, had taken away the Courts’ power of judicial review in matters of disqualification of a Member of a House. The test formulated by the Supreme Court was as follows –

The test applied was whether the impugned provisions inserted by the constitutional amendment did ‘either in terms or in effect seek to make any change in Article 226 or in Articles 132 and 136’. Thus the change may be either in terms i.e. explicit or in effect in these articles to require ratification. (Paragraph 158, Verma J.).

In this case, similar to the Maratha Reservation case, Article 226 had not been directly amended by the 52nd Amendment. Nevertheless, the Supreme Court held that paragraph 7 of the Tenth Schedule was unconstitutional because in effect it amended Article 226, but without following the procedure in the proviso

It is unclear then as to how J. Bhat arrived at the conclusion that Sajjan Singh and Kihoto Hollohan require a direct or actual amendment, when they clearly held to the contrary. Thus, a direct amendment is not necessary – an in effect amendment can also trigger the proviso.

III. Effect of the Amendment – Does it include incidental effects?

Having established that an in effect amendment can trigger the proviso, the next question, is whether any effect, including incidental effects, are sufficient to trigger the proviso. The Supreme Court in both Sajjan Singh and Kihoto Hollohan held that an incidental effect on a specified provision would not trigger the proviso. The Court justified this decision on the basis of the purpose and structure of Article 368(2). In Sajjan Singh, it held that – 

It is urged that any amendment of the fundamental rights contained in Part III would inevitably affect the powers of the High Court, prescribed by Article 226, and as such, the bill proposing the said amendment cannot fall under the proviso; otherwise the very object of not including Part III under the proviso would be defeated.

Given that the Constitutional provisions do not operate in silos, it is likely that an amendment to a non-specified provision will effect a specified provision, thereby triggering the proviso if every effect was considered sufficient. Thus, a harmonious interpretation of the two parts of Article 368(2) requires that amendments which in their true effect seek to amend non-specified provisions, do not trigger the proviso, merely because of an incidental effect on a specified provision.  

It was this question of incidentality, that distinguishes Sajjan Singh and Kihoto Hollohan. In the former, the Court held that the effect on Article 226 was incidental, whereas in the latter it was held that the effect was not incidental. The determination of whether an effect is incidental is based on which provision the amendment truly purports to effect a change in. As mentioned above, if its true effect is on a non-specified provision, then a mere incidental effect on a specified provision, would not trigger the proviso

The Court in Kihoto Hollohan used this test to draw a distinction with the facts of Sajjan Singh – 

159. Distinction has to be drawn between the abridgement or extinction of a right and restriction of the remedy for enforcement of the right. If there is an abridgement or extinction of the right which results in the disappearance of the cause of action…in the absence of which there is no occasion to make a grievance and invoke the subsisting remedy, then the change brought about is in the right and not the remedy. To this situation, Sankari Prasad and Sajjan Singh apply. On the other hand, if the right remains untouched…and, therefore, the cause of action subsists, but the remedy is curtailed or extinguished…then the change made is in the remedy and not in the subsisting right.

According to the Court, in Sajjan Singh, the 17th Constitutional Amendment’s objective was to amend the fundamental rights in Part III – that is where its true effect was. Its purpose was not to amend the remedy i.e. Article 226 and thus the effect on Article 226 was merely incidental. On the other hand, according to the Court, in Kihoto Hollohan, the true effect of paragraph 7 of the 52nd Constitutional Amendment was to remove the power of judicial review, and not to change the underlying cause of action itself. The true effect was on the remedy i.e. Article 226 and the thus the effect was not incidental.

Therefore, the determination of incidental effect is not based on the degree of change to the specified provision, but rather on the true effect of the amendment. 

IV. Evaluation of the 102nd Constitutional Amendment

As mentioned earlier, according to J. Bhat, clause 4 of the 102nd Constitutional Amendment grants exclusive power to the Centre to identify SEBCs, taking away the power that the States have enjoyed for over seven decades. Applying the two-pronged test for the application of the proviso to Article 368(2), there are two questions that arise – first, whether the Amendment has the effect of amending any of the specified provisions; and second, if it does, is the effect merely incidental. 

In respect of the first prong, I argue that the Amendment has the effect of amending the specified provisions – specifically, the States’ legislative powers under Article 246 and the Seventh Schedule [as specified in sub-clauses (b) and (c) of the proviso] and their executive powers under Article 162 [specified in sub-clause (a) of the proviso].  

Articles 15(4) and 16(4), authorize the “State” to make reservations for SEBCs. According to the Supreme Court in Indra Sawhney, this includes both the Parliament and the State Legislature, as well as the Executive (both Centre and State). However, the question of which authority is competent to provide for reservations in a specific context, is dependent on the legislative competence of the Parliament/Legislature per Article 246. For instance, the regulation of State public services, as per Entry 41, List II, is within the State Legislature’s domain. Thus, the a provision of reservations for SEBCs in the context of State public services, would come within the competence of the State Legislature and not the Parliament. Further, according to Article 162, the State’s executive powers are co-extensive with the State Legislature’s powers. Since the power to regulate State public services belongs to the State Legislature, in the context of executive power, it belongs to the State. 

However, the Amendment takes away both the legislative and executive power of the States to provide for reservations in contexts such as State public services, which before the Amendment had been in their domain as per Article 246 and 162. Thus, even if the Amendment does not directly amend the specified provisions, it does have an effect on them. 

The second prong then is whether this effect is incidental or not. As mentioned above, this requires a determination of which provisions clause 4 of the Amendment truly seeks to effect a change in. To evaluate this, it is useful to compare the 102nd Amendment to the 93rd Constitutional Amendment, which inserted Article 15(5), authorizing the “State” to make reservations for SEBCs even in private educational institutions. The 93rd amendment does have an effect on the powers of States. However, its true purpose was to effect a change in Article 15, and the effect on the states’ powers was merely incidental.  

On the other hand, according to J. Bhat, the true purpose of clause 4 of the 102nd Amendment could not merely have been to continue status quo and grant constitutional authority to the National Commission for Backward Classes. Instead, per his interpretation the true effect and purpose of clause 4 was to shift the power that hitherto States exercised to the Centre (paragraphs 147-152). Unlike the 93rd Amendment, the 102nd Amendment did not seek to effect change in the right in Article 15(4) and 16(4), but sought to effect change in the distribution of powers between the Centre and the States to enforce that right. Thus, the effect on the distribution of legislative and executive powers between the Centre and the States was the main purpose of the Amendment. Therefore, it cannot be said that the Amendment’s effect on Articles 162 and 246 was merely incidental. 

Thus, both prongs of the test are satisfied, and the proviso to Article 368(2) is applicable. However, this does not make the 102nd Constitutional Amendment unconstitutional as a whole. As was held in Kihoto Hollohan, an amendment is invalid only in so far as it would have required ratification by States under the proviso. In that case for instance, applying the doctrine of severability, the Court held that only paragraph 7 of the Tenth Schedule was unconstitutional. Similarly, in the present case, only clause 4 of the 102nd Amendment would be unconstitutional. Alternatively, the Supreme Court could, as it does when exercising its powers of judicial review under Article 13, read-down clause 4 and interpret it in a manner that does not trigger the proviso i.e. interpret the Amendment as not taking away the powers of States to identify SEBCs. 

V. Basic Structure Argument

It was argued that the 102nd Amendment falls foul of the basic structure of the Constitutions in so far as it seeks to change the federal division of powers. However, J. Bhat rejected this argument, holding that – 

187. …the alteration of the content of state legislative power in an oblique and peripheral manner would not constitute a violation of the concept of federalism. It is only if the amendment takes away the very essence of federalism or effectively divests the federal content of the constitution… that the amendment would take away an essential feature or violate the basic structure of the Constitution. 

In my opinion, J. Bhat was correct to hold that the 102nd Amendment could not have been struck down on the grounds of a basic structure challenge. As Bhatia notes, the threshold for a basic structure challenge is quite high. As held in Nagaraj, a basic structure challenge stands only when the constitutional amendment makes the Constitution unrecognizable – not merely when there has been a change in the Constitution. 

Further, the Constitution itself tolerates changes in the distribution of powers between the Centre and States. This has been explicitly provided for in Article 368(2). Thus, even if the Amendment takes away the power of the States to identify SEBCs, this would not be enough to meet the threshold of a basic structure challenge. 

Conclusion

The proviso to Article 368(2) is a fundamental protection against the unilateral usurpation of power by the Parliament. It goes to heart of the federal structure of our Constitution. It is unfortunate, then, that this issue was treated somewhat cavalierly by the Majority judgement, even though it held that a power hitherto exercised by States for seven decades, had been exclusively taken over by the Centre.  According to J. Bhat, the ratification of States per the proviso to Article 368(2) is necessary only when there is a direct amendment to the specified provisions. This is in my opinion is a dangerous precedent – it allows the Parliament to amend the federal structure of the Constitution by stealth, while seeking shelter in the fact that no direct amendments have been made to the provisions specified in the proviso.This formalist interpretation, is yet another instance of what Bhatia calls the Supreme Court’s anti-federal tradition.

A Critique of the Supreme Court’s Maratha Reservation Judgment – II: Federalism

[Editor’s Note: Justice is an indivisible concept. We cannot, therefore, discuss contemporary Supreme Court judgments without also acknowledging the Court’s failure – at an institutional level – to do justice in the case involving sexual harassment allegations (link) against a former Chief Justice. This editorial caveat will remain in place for all future posts on this blog dealing with the Supreme Court, until there is a material change in circumstances (e.g., the introduction of structural mechanisms to ensure accountability)].


In the previous post, we discussed the Supreme Court’s holding on the 50% cap in the Maratha Reservation judgment. In this post, we shall discuss the second set of issues that came before the Court, i.e., the interpretation of the 102nd Amendment to the Constitution, and whether the power to identify socially and educationally backward classes [“SEBCs”] was vested only with the centre, or with both the centre and the states. By a 3:2 majority, the Supreme Court held in favour of the former view, and thus denuded the states of their power to identify SEBCs for the purposes of reservation, going forward.

The 102nd Constitutional Amendment made three significant changes to the Constitution. First, through a new Article 338B, it created a National Commission for Backward Classes with constitutional status. Article 338B largely followed the scheme of Article 338 (National Commission for Scheduled Castes) and 338A (National Commission for Scheduled Tribes). Secondly, through a new Article 342A, it specified a process for the identification of SEBCs that closely followed the process of identification set out in Articles 341 (Scheduled Castes) and 342 (Scheduled Tribes) – albeit, with one significant difference, to which we will come to in a moment. Thirdly, it added a new sub-clause (26C) to the Constitution’s definitions clause (Article 366), which stated that the term “SEBC” means “such backward classes as are so deemed under Article 342A for the purposes of this Constitution.”

There were two competing interpretations of these changes. According to the first interpretation, the new constitutional provisions did not substantively alter the status quo, according to which the centre and the states exercised joint and separate powers to identify SEBCs (a central list and several state lists), for their own purposes (educational institutions and public employment). According to the second interpretation, however, these provisions created a new structure that was identical to the situation of Scheduled Castes and Scheduled Tribes (SCs and STs): the power to identify beneficiaries now lay solely with the centre, and no longer with the states.

At the outset, there were two textual reasons in support of the first proposition. First, unlike in the case of SCs and STs, the existing arrangement – i.e., state and centre exercising powers separately – had been in existence since the beginning of the Constitution. It was therefore implicit that if a constitutional amendment intended to change that to a drastic degree, it would do so in express terms, and not by implication. Notably, at no point did Article 338B or 342A state that the process it was codifying was the sole process of identifying SEBCs. Secondly, there was one notable difference between Articles 341 and 342 on the one hand, and Article 342A on the other. All three articles, in their first sub-clause, authorised the President to notify the list of beneficiaries (SC, ST, or SEBC). In their second sub-clause, Articles 341 and 342 clarified that a Presidential notification could only be amended by Parliament. Article 342A(2), however, used the following language: “Parliament may by law include in or exclude from the Central List of socially and educationally backward classes specified in a notification issued under clause (1) any socially and educationally backward class…

The reference to the Central List is new, and strongly indicates that the new constitutional arrangement was limited in its operation to the existing process only at the central level, i.e., with respect to the Central List of SEBCs (and not the state lists). If the intention of the new scheme was to do away with state lists altogether, then Article 342A(2) would have followed the wording of 341(2) and 342(2), which only used the terms “list of Scheduled Castes” and “list of Scheduled Tribes.” The phrase “Central List” made sense only in a context in which there existed state lists to start with.

As we have seen, however, by a 3:2 majority, the Supreme Court disagreed with this reading. Let us first examine the judgment of Justice Bhat, with which Justices Gupta and Rao agreed. As Bhat J. insisted that the wording of the amendments was unambiguous, and a literal reading pointed to only one possible interpretation, I will – for the moment – set aside the extensive references to Parliamentary Committee reports and to policy reasons underlying the constitutional changes, and focus on textual and structural arguments. A close examination of Justice Bhat’s judgment reveals the following reasons for disagreement: first, Article 366(26C) defined SEBCs by referring to Article 342A, “for the purposes of this Constitution.” The phrase “for the purposes of this Constitution” was to be interpreted broadly, and – following precedent on the interpretation of Articles 341 and 342 – read to include the entirety of the Indian Constitution, which therefore also included Articles 15(4) and 16(4) (the reservation provisions). Consequently, Article 342A now exclusively governed the field with respect to the identification of SEBCs. Secondly, previous amendments to the definitions clause had been given effect to “in their broadest manner”, including in situations where this would cut down the powers of the several states. Thirdly, given that, under the National Commission for Backward Classes [“NCBC”] Act, the central government already had the power for publishing lists of SEBCs for union employment and central PSU posts, there was no reason to amend the Constitution and provide for a power that already existed; fourthly, the word “central” was used at various places in the Constitution, and therefore only signified a list prepared by the President at the behest of the central government, and not a list for employment under the central government; fifthly, Parliament intended, through the 102nd Amendment to replicated the regime for identification of SCs and STs, for SEBCs as well, and that is why Article 338B was a “mirror image” of Articles 338 and 338A. The “total alignment” between the three processes was then achieved by Article 342A.

With respect, each of these arguments is flawed.

The problems begin with the first argument (“for the purposes of this Constitution”), which was – indeed – the lynchpin of Bhat J.’s interpretation (and therefore reiterated by him throughout the judgment). The problem is a simple one: in essence, Bhat J.’s reading puts the cart before the horse. Article 366(26(C)) states that SEBCs, for the purposes of this Constitution, mean the backward classes deemed so under Article 342A. But it is the interpretation of Article 342A itself that is under dispute, because of the use of the term “Central List”. If, for the purposes of argument, we assume that the correct interpretation of “Central List” is, indeed, the list that refers to union employment and central PSUs, and not the list prepared by the centre, then Article 342A itself contemplates separate powers for the centre and the state, in identifying SEBCs. Justice Bhat’s argument might have been correct if Article 366(26(C)) had referred back only to Article 342A(1) – which is about the Presidential notification of SEBCs. But Article 342A contains two sub-clauses – (1) and (2), (2) refers to the “Central List”, and 366(26(C)) refers to both 342A(1) and (2). It therefore follows that the implication of the term “for the purposes of this Constitution” under Article 366(26(C)) will change depending upon how you first interpret Article 342A, on its own terms. Instead, Bhat J. used Article 366(2C)) to settle the issue of the interpretation of Article 342A. This, then, would have a knock-on effect on a lot of other arguments deployed by him, such as, for example, giving an exhaustive meaning to the word “means” under Article 366(26(C)) as well. And if Bhat J.’s first argument falls, then the second argument – giving amendments to the definition clause their “full impact” falls as well, because we don’t know what the definitions clause actually refers to until we have first interpreted Article 342A, autonomously.

The third argument works no better. It is equally plausible to argue that Parliament wanted to provide constitutional status to what had hitherto been only a statutory procedure under the NCBC Act. Constitutional bodies exercise greater prestige than statutory bodies (recall the whole debate about the necessity of having a putative NJAC under the Constitution, and not left to statute). Without further evidence of Parliamentary intent, neither interpretation can be favoured over the other.

Justice Bhat’s fourth and fifth arguments can be taken together, as they both pertain to the phrase “central list.” On his fourth argument, the fact that the Constitution uses the word “central” at various points does not help the case: the issue is not with the word “central”, but with the term “central list”, and with the fact that Articles 341(2) and 342(2) do not use that phrase, and instead, use the phrase “lists of…” If, indeed, the term “central list” meant a list prepared by the central government (through the President), then the exact same phrase should have been used in Articles 341(2) and 342(2) as well – because the list of SCs and STs is also prepared by the central government. This also addresses Justice Bhat’s fifth argument, about the “mirror image” and “total alignment”: this argument is simply belied by the textual differences between 341(2), 342(2), and 342A(2): the moment Article 342A(2) uses the phrase “central list” – a conscious departure from “lists of…”, there is evidently no “total alignment.”

In my view, these arguments demonstrate that the textual evidence is clear for the other interpretation of these provisions: that they were not meant to disturb the status quo and denude the states of their powers to identify SEBCs. At the very least, however, these arguments reveal that the provisions are ambiguous, and therefore require extrinsic aids to interpretation. In this context, I do not have much to add to Bhushan J.’s discussion of the Parliamentary debates and reports that led up to the 102nd Amendment, as I find it both persuasive and compelling. In brief, objections were raised as to how the Amendment, in its presently worded form, might take away the states’ powers, and the minister piloting the amendment made it clear that the purpose was not to take away states’ powers, but to codify central powers. Bhat J. points to the fact that proposed amendments aiming to set this out in express terms were rejected. The rejection of an amendment, however, can be motivated by two reasons: on the one hand, it could be because Parliament did not agree with the substance of the amendment. On the other hand, it could be because Parliament was of the view that the amendments did not alter or add to anything that was already there – and obviously so – in the original text. Repeated assurances by government ministers that the Bill was not altering the status quo suggests the latter reading. Bhat J. also draws a distinction between assurances that states’ powers would not be diluted, and states’ interests would be taken care of. A look at the legislative history makes it clear, however, that both sets of assurances (not just one) were made.

One could argue, of course, that the parliamentary history – like the text – is inconclusive. A final point then remains: that of federalism. Let us say, for the purposes of argument, that the text of the provisions admitted of no definite interpretation, and neither did parliamentary history. In such a context, faced with two equally plausible interpretations of the text, it was at least abundantly clear that one interpretation would advance federalism (a part of the basic structure of the Constitution), while the other would undermine it. As in the famous UK Supreme Court judgment in Miller II, constitutional principles can – and often do – serve as implied limitations upon constitutional power, where more than one reading of a text is possible. It is my submission that as long as Article 342A could bear a plausible interpretation that would support federalism, it was the Court’s duty to give effect to that interpretation.

Unfortunately, however, not only did Bhat J.’s judgment not do this, but also found this to be a policy reason in support of his anti-federal reading. Bhat J. made references to how a single, central list would help to prevent politicisation of the process, and ensure objectivity in identifying beneficiaries. Not only are these claims evidence-free, however, they are also quite bizarre: why would one think that taking power away from state governments and giving it to the central government would remove politicisation, instead of just shifting its locus from point A to point B (there is, furthermore, a latent prejudice here against the idea of politics, and in favour of an apolitical, technocratic process, but let us leave that discussion for another day)? Justice Bhat’s arguments reveal an unfortunate bias that has long been part of Indian judicial discourse: the assumption that state governments are prone to corruption, rent-seeking, and institutional capture, while the central government stands aloof and objective. There is, however, no historical basis to this claim, and indeed, in the case of SEBCs, there are powerful arguments to be made that local governments are best positioned for the purposes of identification.

Whatever the final reasons, however, the Marathe Reservation judgment only adds to what is now a fairly long anti-federal judicial tradition of interpreting constitutional ambiguities so as to transfer power from the states to the centre. In the long run, this belies our courts’ rhetorical commitment to the principle of federalism and is, in my view, an unfortunate part of our constitutional jurisprudence.

Guest Post: Legislative Privilege and Competence – Facebook (and the Union of India) vs the Delhi Assembly)

[This is a guest post by Rahul Narayan.]


When the Delhi Assembly summoned Facebook honcho Ajit Mohan to depose before its Peace and Harmony Committee, it unwittingly provoked a litigation that may have far-reaching implications on Federalism, the Separation of Powers and Fundamental Rights in India.

Parliamentary privileges

Parliamentary Privileges are a set of rights and immunities that are essential for the functioning of Parliament. The right to free speech in the House, guaranteed to the Commons since 1688, and the right to call for evidence and witnesses, are central to the role of the legislature. In our Constitution, both Parliament and State Assemblies were conferred with the same privileges as the Commons. Apart from discussions about judges, no other speech is barred for legislators in the text of the Constitution. Unlike the devolved legislature of Scotland under Section 23 of the Scotland Act 1998, the power of discussion is not limited to fields where the state legislature is competent to legislate.

The case made by the Union of India is that legislative privilege is a function of legislative power. The Union relies upon several judgments of the Supreme Court to make this case- MSM Sharma, Keshav Singh, State of Karnataka v. Union of India, Kalpana Mehta and Raja Ram Pal. It is contended that since the Delhi Assembly specifically does not have power under items 1 and 2 of the State List, it has no privilege to call for witnesses or evidence apropos the same. The Union then goes on to argue that in “pith and substance” the inquiry by the Delhi Assembly relates to something beyond its powers under the Legislative Lists. It also argues that this is an “occupied field” by the Union and that accordingly the Delhi Assembly has no authority to call for witnesses in the present case.

The sequitur of the Union’s arguments is that the Delhi Assembly lacked the competence to call Ajit Mohan to depose before the Peace and Harmony Committee because they could not have passed a law on “peace and harmony” in Delhi- the powers to so legislate being with the Union Government. This logic also inexorably leads to the contention, though this has not been categorically stated, that State Assemblies do not have the competence even to discuss such issues since such discussions would be the sole preserve of Union Parliament.

On the face of it, as argued by the Union, Federalism imposes an insuperable challenge to the traditional broad reading of Parliamentary Privilege. The broader argument goes: Unlike the House of Commons, the powers of State Assemblies are more limited. If the State Assembly cannot pass a law on a subject, how can it claim a right to discuss it or call witnesses for it?

However, this framing is misleading. First, legislation is not the only goal of Assembly discussions. Legislatures also have a separate non-judicial power of inquiry which has been judicially regarded as being inherent to the Legislature, flowing perhaps from what Walter Bagehot would call the expressive and informative function of the House. Politically, the Assembly is the voice of the people of a State and their discussions are an expression of popular will. Atomic energy is the exclusive preserve of the Union. Does that mean a State Assembly cannot inquire into the possible ecological implications of a nuclear waste site within the State? Cannot State legislatures hear testimony from soldiers and pass resolutions to honour the armed forces? At least six States have passed resolutions against the Citizenship (Amendment) Act as affecting their people. Parliament may not be bound by discussions in State Legislatures but it is entirely reasonable to assume that discussions will have a persuasive value for them. 

Second, the Legislative Lists in Schedule VII frequently overlap and Courts resolve any conflict by adopting a test of pith and substance of the law in question. But how would this apply pre-emptively at the inquiry stage when the discussions may or may not lead to legislation? In fact it is also possible that the State Assembly may recognise that the discussions are not fruitful and end the same.

Third, we live in the era of co-operative federalism. How can the Union and the States cooperate if they are barred from even discussing or taking evidence on issues beyond their limited legislative competence? It must be remembered that the Constitution does not seem to envisage such strict limits. The union has the right to pass legislation on state subjects pursuant to international treaties or on the request of 2 or more states. States have been given the explicit right to discuss formation of new states or alteration of state boundaries even if they have no power to bind Parliament to their will.

Fourth, there is the delicate issue of whether the courts can or ought to sit in judgment on the proceedings of State Assemblies determining what can or cannot be discussed based on the courts’ view of the topic. As a “watchdog of the Constitution”, it is undoubtedly the role of the Court to uphold the federal separation of powers and fundamental rights, but this has never meant a wholesale intervention into legislative proceedings as would be needed to enforce any bars on discussions or witnesses in any legislative proceeding. In Keshav Singh’s case, the issue was the power of the State Assemblies to punish for contempt Judges who granted bail to a publisher who had allegedly been in contempt of the House. The issue was relatively clear cut and a bright line rule could be laid down- contempt of a House is an issue touching upon the fundamental rights of people and can, and must, be examined by the Courts. The fact situation presents a stark contrast with the present case. The Court here is faced with a claim that calling a witness is a fundamental right violation per se because the State Assembly lacks the legislative power to pass a law on the subject of inquiry. Calling witnesses to Assembly proceedings or Parliamentary proceedings is not a fundamental right violation per se, and arguments about the right against self-incrimination or right to silence don’t work as well merely at the stage of a summons for a non-judicial hearing. It would be startling if the Court were to hold that Parliament or State Assemblies have no right to call for witnesses to assist lawmaking, or inquiries based on the right to silence or the right against self incrimination. 

How is the court to interpret the discussions in a State Assembly to make a judgment about legislative power before a law that finally expresses the will of the house is passed? Consider that even recourse to Parliamentary discussions was verboten for the Courts for purposes of interpreting a law for the longest time. No theory of judicial review would justify such a deep dive into the “political thicket” to examine the proceedings of the House with a view to determining whether the discussion has a reasonable nexus with its legislative powers. Such an inquiry would also be in the teeth of the Constitution as judicial examination of proceedings in the house is something our Constitution expressly bars.

The judgments cited by the Union to support the argument that legislative power limits legislative privilege do not actually appear to do so. It seems clear that in the State of Karnataka judgment, what was argued was that the “powers” of the State Assemblies under 194(3) were argued to be inclusive of the sole right to judge for bribery of the CM and that the Grover Commission could  not have looked at the same. The Court rejected this argument holding that the State Assemblies had no right to conduct judicial or quasi-judicial inquiries under our Constitution or even in England. It is clear that the Court did not address the issue of legislative inquiries independent of quasi-judicial ones because it was careful enough to observe that the powers were “quite apart from its recognised powers of punishment for its contempt or the power of investigations it may carry out by the appointment of its own committees.”  

The experiences of Canada and Australia, both Common Law Federal jurisdictions, are also instructive. The Canadian chronicler Maingot hints about restrictions based on legislative competence but is careful to add that they are self-imposed, not court mandated. In Australia, the Privy Council in appeal from the High Court held that “it is hardly possible for a Court to pronounce in advance as to what may and what may not turn out to be relevant to other subjects of inquiry on which the Commonwealth Parliament is undoubtedly entitled to make laws”.

In 1397, Sir Thomas Haxey presented a petition criticising the household costs of King Richard II in Parliament and was punished for treason with his property seized. In 1399, the new King Henry IV reversed this judgment as being against the traditions of Parliament, recognising a privilege that was eventually crystallised in the Bill of Rights in 1688 from whence it travelled to the US, Canada, Australia, New Zealand and to India. The privilege is a landmark of liberty as it allows elected representatives to challenge the most powerful people of the land on behalf of commoners. This ancient tradition would be effaced if the court were to appoint itself an arbiter of legislative discussions. It is difficult to craft any discernible principle upon which such unprecedented power could be judiciously exercised without inhibiting free speech that is the hallmark of our legislative tradition.

Coronavirus and the Constitution – XXIX: Sub-National Debt & Art. 293(4) – Some Constitutional Concerns [Guest Post]

[This is a Guest Post by Harshil Watson.]


Recently, the Finance Minister, while declaring the final tranche of the Covid-19 economic package, acceded to the request of the States, and raised their borrowing limit to 5 per cent of Gross State Domestic Product (“GSDP”), up from 3 per cent before, fixed by the Union Government (hereinafter referred to as “Center”) under the Fiscal Responsibility and Budget Management Act, 2005. In itself, this is a welcome move. Allowing States to borrow an additional Rs 4.28 lakh crore this year will provide them with the resources to fight COVID-19 and perhaps, help them maintain their budgeted expenditure allocations. However, this increment comes with certain attached conditions.

As per the announcement, the first tranche of additional borrowings from the Center amounting to 0.5 per cent of GSDP will be unconditional. However, the next 1 per cent of borrowing will be allowed in four tranches, linked to reforms in the areas of ease of doing business, implementation of the Center’s ‘one nation one ration card’ scheme, implementation of power sector reforms to be brought in through Electricity Amendment Act, 2020, and working towards increasing revenues of urban local bodies. States will be allowed to borrow the final tranche of an additional 0.5 per cent only if they ‘completely’ achieve the targets in three of the four reform areas.

The two types of conditions imposed, out of which one is tied to specific purposes and the other is an implementation-based performance condition, form the subject matter of this post.

Concept of Borrowing under the Constitution

293. Borrowing by States

(1) Subject to the provisions of this article, the executive power of a State extends to borrowing within the territory of India upon the security of the Consolidated Fund of the State within such limits, if any, as may from time to time be fixed by the Legislature of such State by law and to the giving of guarantees within such limits, if any, as may be so fixed

(2) The Government of India may, subject to such conditions as may be laid down by or under any law made by Parliament, make loans to any State or, so long as any limits fixed under Article 292 are not exceeded, give guarantees in respect of loans raised by any State, and any sums required for the purpose of making such loans shall be charged on the Consolidated Fund of India

(3) A State may not without the consent of the Government of India raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government

(4) A consent under clause ( 3 ) may be granted subject to such conditions, if any, as the Government of India may think fit to impose.”

While States have the authority to borrow under Article 293 (1) of the Constitution, the Center exercises control through Article 293 (3), which requires state governments that are indebted to the Centre to seek its consent before borrowing. While giving such consent, the centre may impose conditions as it may deem fit under Article 293(4). As all the States owe money to the Centre, in effect, today no State can raise loan without the Centre’s consent. The States are also debarred from raising any loan out of India. Foreign loans can be raised exclusively by the Centre.

The imposition of the above-mentioned performance conditions through Article 293(4) by the Government is unprecedented. On a perusal of previous reports of the Finance Commissions (e.g. here and here), one may note that the Finance Commissions, while deciding the quantum of the loans to be granted to the States, have always taken under consideration only financial factors like debt-GSDP ratio, debt to revenue ratio, fiscal deficit etc. Thus, it is only the first time that the Government, without any such recommendation of the Finance Commission, has decided to impose implementation-based performance goals.

Therefore, the unprecedented use of Article 293(4), clubbed with its widely worded language, poses various Constitutional concerns such as:

  1. By directing the States to implement Central schemes, whether the Center has confused its financial power under Art. 293, with its administrative power of control under Art. 256?
  2. By tying the borrowed funds of the State to specific purposes, whether the Center has encroached upon the financial autonomy of the States, and in effect disturbed the Federal character of the Constitution?
  3. By coercing States into implementing Central schemes, whether the Center has violated the inherent limitation of ‘consent’ and ‘cooperation’ in Art. 293?

Colourable Exercise of Power under Article 293(4)

With respect to the first question, I argue that power under 293(4) to impose conditions is purely a financial power of the Center, which exists by virtue of it being an existing lender, and this financial power must not be confused with its general power of control over the States under Art. 256.

The underlying premise of the power under Art. 293(4) is the outstanding debts of the State. This suggests that a possible purpose of this provision is to protect the rights of the Centre in its capacity as a creditor. Apart from this, a broader purpose of creating a mechanism to facilitate macroeconomic stability may also be discernible, as State indebtedness negatively affects general government debt, i.e. the fiscal health of the nation as a whole. Since clause (4) enables the Central Government to impose conditions only when granting consent under clause (3), reading these two clauses together suggests that such conditions should also be limited to questions of State indebtedness and macroeconomic stability. In other words, conditions which do not pertain to State indebtedness and which have no fiscal stabilising effect would be beyond the ambit of clause (4).

Article 256: Obligation of States and the Union

The executive power of every State shall be so exercised as to ensure compliance with the laws made by Parliament and any existing laws which apply in that State, and the executive power of the Union shall extend to the giving of such directions to a State as may appear to the Government of India to be necessary for that purpose.

If we were to also assume power under Art. 293(4) to mean an administrative power of control, it couldn’t have been the intention of the makers of the Constitution to restrict this power only to States with outstanding loans. This would lead to an absurd conclusion that only the States with outstanding loans are to implement the central schemes and not the others who have no pending debts. There exists no rational connection between outstanding debts and implementation of central schemes. It is only because all the States today are indebted to the Union, that the Centre has misunderstood this limited power of a lender with its administrative power of control under Art. 256.

Federalism and Financial Autonomy of the States

By now, it has been held by numerous judgements that the Courts should not adopt an approach which has the effect of or tends to have the effect of whittling down the powers reserved to the States. In light of this, it may be possible to argue that conditions imposed under clause (4) of Article 293 should not impinge on the federal character of the Constitution, beyond what is strictly required for the purposes of this provision.

I argue that the Center, by directing state spending towards specific central projects, has encroached upon the financial autonomy of the States and has used this power to get a backdoor entry into domains exclusively reserved for the States. Under Art. 266, money received through loans by Central Government, until it is repaid, forms part of the State Consolidated Fund and the States have the autonomy to determine their spending priority. Along with loans, Central assistance also flows to the States through grants under Art. 282.

Art. 282: Expenditure defrayable by the Union or a State out of its revenues The Union or a State may make any grants for any public purpose, notwithstanding that the purpose is not one with respect to which Parliament or the Legislature of the State, as the case may be, may make laws

As these are ‘grants’ by the centre to the States, the States are under no obligation to return these sums. Therefore, essentially being the Center’s money, these are also linked to specific purposes and often used to incentivize States to implement central schemes. However, this is not the case with loans under Art. 293. Because it is borrowed based on State’s needs and because it forms part of the State Consolidated Fund, States have significant autonomy over its spending and any law/exercise of any executive power of the Center, which takes away this autonomy of the State, is antithetical to the principle of Federalism.

For instance, one of the conditions imposed in the current scenario is the reforms to be undertaken in the domain of ease of doing business. Ease of doing business is an ideological condition – what if Kerala, as a communist-run State, does not want to prioritise business? Can the centre essentially impose an economic model under the guise of Article 293? Indeed, the Kerala government may have different priorities for allocating resources. Such conditions, then, conflict with the principle that States have the freedom to determine their spending priorities.

Demarche from Cooperative Federalism to Coercive Federalism

While the Center has, through its powers under Art. 293(4), encroached upon the domain exclusively reserved for the States, the fact that the Center has chosen to practically coerce States in implementing the Central schemes is a greater problem in the Indian Federal landscape. ‘Cooperative Federalism’ may not be a Constitutionally enforceable obligation, but is certainly a principle inherent in the Federal idea and also fundamental to the successful operation of the federation in practice, particularly where the vertical fiscal imbalance is such a dominating feature of that landscape.

The idea of ‘cooperative federalism’ is something which has also now been acknowledged by the Indian Courts in various judgements. (See Jindal Stainless). More so, the Court in the State of Rajasthan, notes the observation of Granville Austin wherein he is of the view that “the Constitution of India was perhaps the first constituent body to embrace from the start what A.H. Birch and others have called “cooperative federalism”. 

‘Cooperative Federalism’, as the Constituent Assembly debates suggest, becomes more important particularly in the context of Art. 293. Article 293 was picked up from Section 163 of the Government of India Act, 1935. Interestingly, that section under the Act had a protective clause, which went as:

(4) A consent required by the last preceding subsection shall not be unreasonably withheld, nor shall the Federation refuse, if sufficient cause is shown, to make a loan to, or to give a guarantee in respect of a loan raised by, a Province, or seek to impose in respect of any of the matters aforesaid any condition which is unreasonable.

While the whole section was picked as it is, this particular subsection was dropped. The only reason that could be gathered on a reading of the Constituent Assembly Debates on Draft Article 269, is, that the adoption of a Constitution brought with itself a paradigm shift from coercive Federalism to cooperative Federalism. On one will notice a sense of security amongst the members and a great trust in the concept of cooperative Federalism. M. Ananthasayanam Ayyangar, in regards to draft Article 268 and 269 remarked:

In the present Government of India Act, there is a clause that this consent ought not to be delayed or unreasonably delayed. There is no such provision in this article, because it is thought such a provision is not necessary. Under the Government of India Act, it was thought there will be a different agency who will not be, a national of this country, in charge of the administration. But now with national governments in the provinces and a national government at the Centre, it is felt that such a provision is not necessary. I hope articles 268 and 269 will meet the situation.

Similarly, Granville Austin in his book “Constitution of India – Cornerstone of a Nation” (9th ed. 2005 at p.233), has stated thus: —

When this Article was under consideration, seven out of the nine provinces had outstanding loans. Yet, the provincial governments evidently did not believe that this put them unduly in the grip of the Union and did not oppose either the Article or the proviso. Nor, it seems, has the working of this Article during the last decades been detrimental to the interests of the States.

 

A structuralist reading of the Article suggests that the decision of the members to not include a saving provision like S. 163(4) in the present-day Article 293, on the basis of the coming into being of a cooperative federalist structure, must be taken into account while interpreting the provisions of this Article. The fact that the States were denied foreign borrowing, making the Center their only resort, was accompanied by an inherent expectation that such a dominant position of the Center will not be used to coerce States into implementing Central reforms.

In light of this historical trajectory, the inherent limitation of cooperative federalism must be taken into account in reaching the conclusion that the Center cannot legally compel the States into prioritising their spending to Central reforms, as this would amount to practical coercion.

Way Forward

Unlike Art. 275, wherein the Central Government shall make grants-in-aid to States as per Finance Commission’s recommendations, there is no statutory duty under Art. 293 to consult any specialized body before granting loans or imposing conditions. Conventionally, on the discretion of the Union, the quantum of borrowing and the conditions to be imposed forms part of the Terms of Reference (ToR) to the Finance Commission. However, as this happens only on the discretion of the Union, in the present case, the conditions imposed are without any recommendations from the Finance Commission. Thus, this must pave way for establishment of something on lines of Loan Council, like in foreign jurisdictions.

In this regard, Australia’s efforts in adopting a cooperative fiscal mechanism by establishing an Australian Loan Council are worth noting. The Council meets once a year and consists of the Prime Ministers of the Centre and the States. Each State has one vote, but the Centre has two and a casting vote. All loans are arranged by the Centre and then distributed among the various governments in accordance with an agreed formula. This arrangement has reduced competition among the governments for funds and thus loans can now be arranged on more advantageous terms than was possible before

Conclusion

Hence, based on the above arguments, reading of Article 293 suggests that the conditions imposed by the Centre will not fit into the limited ambit of Article 293(4).

Whether or not the Supreme Court ever gets an opportunity to visit the interpretation of powers under Article 293(4) is yet to be seen. In the event that it does, there may be cause to speculate that the Court may uphold the older regime of strong financial intergovernmental relations between the Center and the States in the light of the robust federal structure – we claim to possess.

The Supreme Court’s Madhya Pradesh Government Formation Judgment – V: A Rejoinder [Guest Post]

[Editor’s Note: Justice is an indivisible concept. We cannot, therefore, discuss contemporary Supreme Court judgments without also acknowledging the Court’s failure – at an institutional level – to do justice in the case involving sexual harassment allegations against a former Chief Justice. This editorial caveat will remain in place for all future posts on this blog dealing with the Supreme Court, until there is a material change in circumstances.]


[This is the fifth post in the series examining the Supreme Court’s judgment in Shivraj Singh Chouhan v Speaker, Legislative Assembly of Madhya Pradesh and Ors. This is a guest post by Anmol Jain.]


We must be careful to remember that the desirability of a particular rule of law, should not in any event by confused with the question of existence of the same, and constitutional morality should never be replaced by political morality, in deciding what the Constitution mandates.

-Shrimanth Balasaheb Patil v. Hon’ble Speaker, Karnataka Legislative Assembly

 

On the Constituent Assembly Debates

In my previous post, I had argued that the action of the Governor in the Madhya Pradesh government formation case, directing the Chief Minister to hold a trust vote in the Assembly, was unjustified. Based on the two responses on my article (here and here), I stand corrected that Article 163 is not the source of the power of the Governor, but that it merely guides the exercise of power vested, for the present matter, under Articles 174 r/w 175(2) of the Constitution. However, while maintaining my argument, I shall attempt to further substantiate it in this post.

Let’s start with the interpretation of the contentious part of Article 163. It states that:

There shall be a council of Ministers with the chief Minister at the head to aid and advise the Governor in the exercise of his functions, except in so far as he is by or under this constitution required to exercise his functions or any of them in his discretion.

Relying on the Constituent Assembly debates, I had argued that the Governor can act in his discretion only in those scenarios where the Constitution specifically empowers her. In the general opinion of the Assembly – also shared by Dr. Ambedkar and T.T. Krishnamachari – these were set out by Articles 175 and 188 of the Draft Constitution. And Dr. Ambedkar had indeed stated on 1st June 1949 that:

I personally myself would be quite willing to amend the last portion of clause (1) of Article 143 if I knew at this stage what are the provisions that this Constituent Assembly proposes to make with regard to the vesting of the Governor with discretionary power. My difficulty is that we have not yet come either to Article 175 or 188 nor have we exhausted all the possibilities of other provisions being made, vesting the Governor with discretionary power. If I knew, I would very readily agree to amend Article 143 and to mention the specific Article, but cannot be done now.

Nivedhitha points out the fact that these two provisions were subsequently amended by the Constituent Assembly to remove the discretionary power of the Governor, and despite Mr. Kamath’s comment on the 3rd of August recalling the Assembly that it must now delete the clause granting discretionary powers upon the Governor, the clause sustained in the Constitution. And thus, she argues:

Therefore, the final text of the Constitution provided for complete ministerial responsibility. It is thus clear that the debates and the final text of Article 163 have no nexus between them.

I argue that there is a nexus between the debates and the final draft. The central argument that was mooted and widely accepted in the Assembly was that being a nominated member, the Governor must not be given discretionary powers that can override the decisions of an elected government. And thus, the discretionary powers of the Governor must be limited. But is such discretion limited to only those provisions that explicitly state that the Governor must act ‘in her discretion’ or it also extends to those scenarios where the Governor does not have the access to the aid and advice of the Council of Ministers and thus, is circumstantially required to act in her discretion? The comments by Dr Ambedkar or Krishnamachari would indicate that the former situation is correct. However, I argue these comments were made based on the narrow study of the provision. It is important here to refer to what Pandit Thakur Das Bhargava had to say about Mr. Kamath’s proposal to delete the clause granting discretionary powers to the Governor:

Sir, I beg to oppose the Amendment of Mr. Kamath. Under Article 143 the Governor shall be aided in the exercise of his functions by a Council of Ministers. It is clear so far. … My submission is that it is wrong to say that the Governor shall be a dummy or an automation. As a matter of fact according to me the Governor shall exercise very wide powers and very significant powers too. If we look at Article 144 it says: “The Governor’s ministers shall be appointed by him and shall hold office during his pleasure.”

So her has the power to appoint his ministers. But when the ministers are not in existence who shall advise him in the discharge of his functions? When he dismisses his ministry then also he will exercise his functions under his own discretion.

Then again, when the Governor calls upon the leader of a party for the choice of ministers, after a previous ministry has been dissolved, in that case there will be no ministry in existence; and who will be there to advise him? Therefore he will be exercising his functions in his discretion. It is wrong to assume that the Governor will not be charged with any functions which he will exercise in his discretion. Article 175 and 188 are the other Articles which given him certain functions which he has to exercise in his discretion.” (Emphasis mine)

And perhaps on a later realization about such situations and the requirement of the Governor to act in his discretion, no amendment was proposed even when Mr. Kamath reminded Dr Ambedkar of his previous speech. Therefore, the debates are very much necessary for us to appreciate the fact that Article 163 vests discretionary powers to the Governor to the extent that there are explicit provisions in the Constitution that requires her to act in her discretion. Such provisions might either clearly state that the Governor must act ‘in her discretion’ or omit so because it is only logical that in the absence of Ministers’ aid and advice, the Governor has to act in her discretion.

Moreover, this understanding not only makes the debates relevant, but also allows us to interpret the Constitution in a workable fashion. Lastly, if Article 163 (or 143 in the draft Constitution) would have been amended only because Articles 175 and 188 were subsequently amended to divest the Governor of her discretionary powers, this would mean that the phrase ‘under the Constitution’, appearing in Article 163, had no purpose to serve.

Before to I move on the specifics of the judgment in the Madhya Pradesh government formation case, it is important to briefly note the developments on the discretionary powers of the Governor. Post 1950, the discretionary powers of the Governor were expanded through certain amendments. Even judicially, the courts have upheld the exercise of discretionary powers of the Governor in exceptional cases in order to avoid ‘complete breakdown of constitutional machinery’. In this regard, Justice Lokur noted in Nabam Rebia that:

As the years have gone by, more and more unusual if not extraordinary situations have arisen. These situations have led, in theory, to greater discretionary powers being conferred on the Governor through decisions rendered by this Court and the High Court. In my view, this is really a step backward and contrary to the idea of responsible government advocated in the Constituent Assembly.

It is in this light that we must approach the decision of the Supreme Court in the Madhya Pradesh government formation case.

On the decision of the Supreme Court

In the introduction to his post, Amlan notes my argument that ‘while directing a government to face a no-confidence motion, initiated inside the house, is within the scope of the Governor’s ‘discretionary directions’ [Part A], independently directing a trust vote when no such motion exists is beyond his discretion. [Part B].’ I shall respond to both these parts in seriatim.

With respect to Part A, the decision of the Supreme Court in Nabam Rebia provides us the necessary guidance. The Court, at ¶152, explicitly notes that in case there is a no-confidence motion against the government, and the Chief Minister and his Council of Ministers advise the Governor to prorogue the Assembly to deny a vote on the motion, then ‘the Governor need not accept such advice.’ The reasoning for this is quite straightforward: the executive must always be accountable to the Legislature and hold its confidence. If the executive recommends any action that denies the Legislature an opportunity to exercise checks on the executive, then the Governor, upholding the larger principle of executive accountability, must act against the advice of the Council of Ministers. This norm attempts to uphold the principle of executive accountability beyond the bare text of the Constitution and I shall come back to this later in this post.

Now coming to Part B, I must initiate our discussion with the Sarkaria Commission and the Punchhi Commission reports regarding the discretionary powers of the Governor with respect to summoning of the Legislative Assembly. At ¶4.11.19 of its report, Sarkaria Commission noted that:

“Normally, the State Legislature is summoned by the Governor on the advice of the Chief Minister. … However, the exigencies of certain situations may require a departure from this convention. The Governor, then, exercises his own discretion to summon the Assembly. He exercises this discretion only to ensure that the system of responsible government in the State works in accordance with the norms envisaged in the Constitution.” (Emphasis mine)

After noting certain situations like ‘where the Chief Minister designedly fails to advise the summoning of the Assembly within six months of its last sitting’, the Commission notes that:

“The exigencies of the situations described above are such that the Governor must necessarily over-rule the advice of his Ministry if he is to ensure that the relevant constitutional requirements are observed both in letter and spirit. … [T]he Governor would, in the special circumstances, be within his constitutional right in summoning the Assembly in the exercise of his discretion. … We, therefore, recommend that, if the Chief Minister neglects or refuses to summon the Assembly for holding a “Floor Test”, the Governor should summon the Assembly for the purpose.” (Emphasis mine)

Similarly, the Punchhi Commission noted that:

4.5.03 … He [The Governor] should advise the Chief Minister to summon the Assembly as early as possible. If the Chief Minister does not accept the Governor’s advice, the Governor may, summon the Assembly for the specific purpose of testing the majority of the Ministry. (Emphasis mine)

These excepts make it amply clear that the Governor must exercise her discretionary powers to summon the Legislative Assembly only in those scenarios where the Assembly is not in session and the Government is not advising the Governor to summon the Assembly as it fears losing the motion of confidence. However, the Madhya Pradesh scenario was different.

Let’s unfold the sequence of events so that I can put forth my argument more clearly. Here is a news report dated February 13, 2020 which notes that ‘[t]he Budget Session of the Madhya Pradesh Assembly shall begin here from March 16.’ Therefore, the Governor had, with the aid and advice of the Council of Ministers, duly summoned the MP Legislative Assembly to meet on March 16th. On account of certain developments – like the submission of resignations by the MLAs – on March 14th, two days prior to the scheduled meeting of the Assembly, the Governor addressed a letter to the Chief Minister directing him to face a trust vote in the Assembly. When the Assembly met on the 16th, the opposition did not move any motion of no-confidence. If the Assembly had lost the confidence in the Government, such a motion should have been moved. After the day’s proceedings, the Assembly was adjourned.

Two important events must be noted. First, the Council of Minister had duly advised the Governor to summon the Assembly. Second, despite certain political events, they stood by their advice and the Assembly met on the 16th. This scenario is completely different from the one noted by the Sarkaria Commission and the Punchhi Commission or even the one noted by the Supreme Court in Nabam Rebia. Therefore, I argue that in the peculiar setting of events in the Madhya Pradesh case, the Governor had no discretion to direct the Government to face a trust vote.

At this stage, we must confront the question regarding adjournment of the Assembly. Amlan argues that the adjournment circumvented the scope of having a ‘political process’ to roll out inside the Assembly and as the Government indulged in ‘delay tactics’, the exercise of discretion by the Governor was justified. Though I agree with him on the first part, I contest that the exercise of discretionary powers was the right answer to this ‘constitutional impasse’.

I argue that when the Assembly was adjourned by the Speaker, and thus effectively denying the Legislature an opportunity test whether the executive government holds the confidence of the Assembly, the opposition must have challenged the adjournment based on the principle of executive accountability. And thereby, a ruling must have come from the Supreme Court, perhaps on the lines of the UK Supreme Court’s prorogation judgment, that the action of adjournment by the Speaker denied an opportunity to the elected legislative body to exercise its constitutional powers as well as the statutory power to move a no-confidence motion in order to check whether the executive holds the confidence of the Assembly.

Concluding Remarks

For a consequentialist, the above arguments might not matter because ultimately – be it through a no-confidence motion or through the exercise of Governor’s discretion – the government would have had to face a trust vote. But when seen from a larger perspective, these are nothing but incremental steps that hinder the development of constitutional conventions. An impasse in the Assembly must be resolved within the Assembly. A ruling must have come on the checks on the power of the Speaker to adjourn the Assembly when the ruling party stands in a weak position. The creation of another situs of power would not resolve the situation. The ideal position must be to create checks on the existing power. When the Sarkaria Commission recommended the exercise of discretion by the Governor in summoning the Assembly, the recommendation was towards checking the unfettered nature of ‘aid and advice’ clause that effectively dilutes the rule of executive accountability to the Assembly. Similarly, in the present matter, a desirable position was imposing checks on the power of the Speaker and not to make that Office nugatory. If the Governor can direct the Government to face a trust vote even in those cases where the Assembly is duly summoned, then the entire purpose of having the process of no-confidence motion stops making sense. The opposition, then, will always rush to the Governor and seek a direction for holding a trust vote. So, instead of having executive accountability to the Legislature, it creates a regime of executive accountability to the Legislature through a nominated Office.

I started this post with an observation made by the Supreme Court in Shrimanth Balasaheb Patil v. Hon’ble Speaker, Karnataka Legislative Assembly and wish to conclude by quoting another observation from the same decision:

The scrupulous discharge of duties by all guardians of the Constitution include the duty not to transgress the limitations of their own constitutionally circumscribed powers by trespassing into what is properly the domain of other constitutional organs.

Coronavirus and the Constitution – XIX: The State Disaster Risk Management Fund and the Principle of Equal Distribution [Guest Post]

[This is a guest post by Devesh Kumar.]


Federal grants to states are necessary as no system of distribution can possibly meet the need for natural development and social services, which are usually the responsibility of states. In order to meet the requirements, the central government provides the finances in the form of grants to state governments. The federal structure of Indian Constitution [“Constitution”] lays down many institutional strategies for fostering intergovernmental cooperation between the centre and states. For an instance, under Article 275, the Central government shall make grants-in-aid to States as per Finance Commission’s recommendations. Such grants are given to those states which are in need of financial assistance.

These federal grants become extremely necessary for a state during emergency situations like the COVID-19 pandemic where the state government itself cannot handle such a situation. Keeping this in mind, the Central government on 3rd April 2020 released Rs 17,287.08 crore to different states to enhance their financial resources to deal with the various challenges in the fight against this pandemic. The grant includes Rs 6,195.08 crore towards ‘revenue deficit grant’ under the recommendations of the 15th Finance Commission to 14 states, and Rs 11,092 crore in advance under the State Disaster Risk Management Fund [“SDRMF”] to states to build quarantine facilities.

However, this distribution of funds is very contentious. Kerala, one of the worst affected states, received a mere Rs 157 crore under SDRMF. On the other hand, Rs 802 crore was allocated to Odisha, a state with far fewer reported cases and migrants, which is 5 times the allocation of Kerala. So, why is there such inequality and is it justified under the Constitutional framework? If not, then what must be done in order to rectify such a mistake? In this blog, I shall try to answer these questions.

Concept of Grants- in- aid under the Constitution of India

The idea of fiscal need has been borrowed from Australia. Section 96 of the Constitution of Australia provides that Special grants are justified when a state, through financial stress from any cause, is unable efficiently discharge its functions as a member of the federation. In India, the Parliament has the power to make such grants under Article 275 and 282 of the Constitution. Article 282 states that ‘the centre may make grants for any public purpose notwithstanding that the purpose is not one with respect to which Parliament may make laws.’ Such grants are used for a number of purposes like promoting state action in all significant areas of the nation; even the centre may give grants as an incentive to the states. Thus, the financial resources of the centre and states are pooled together with a view to achieve certain preferred national goals, such as fighting COVID-19 together.

Under Article 275 of the Constitution, the central government can provide statutory grants to states. Such grants are given to those states which are in need of financial assistance, in the form of unconditional grants. Currently, the central government distributed the funds to all state governments under this provision, since the SDRMF is a statutory fund provided under Article 48 of the Disaster Management Act, 2005 and the 15th Finance Commission has recommended for such grants to the tune of 28, 983 crores for the year 2020-21.

Recognizing the problem of financial imbalances, the Constitution empowers the Finance Commission to resolve such imbalances by making recommendations on tax devolution and grants in aid of revenues. The analysis of intergovernmental transfers shows that that the tax devolution and grants given on the recommendations of the Finance Commission have a strong equalizing element. However, in the case of COVID- 19 funding, the purpose of establishing the Finance Commission seems defeated. As stated earlier, the grants categorized by the Finance Commission do not seem fair and equalizing. Therefore, we need to look into the constitutionality of such grants.

The Finance Commission recommendations and test of its Constitutionality

Eminent jurists such as H.M. Seervai identified fiscal independence as one of the features of the federal character of the Constitution. The principle of federalism is well-founded in the recommendations, as under Article 280(3) it decides the share of revenue, grants, etc. The Finance Commission recommendations include both the vertical and the horizontal devolution of union revenue. In the present case of vertical devolution, the criteria adopted by the commission have caused the decrement in the transfer to a few states like Kerala. This has caused serious implications on the autonomy of states in terms of their financial powers.

The Constitution of India envisages the sharing of tax between the centre and state, where the centre has to share some portions of its tax with the states. The objective of federal transfer is fiscal equalization and the Commission (as an expert body) has to make recommendations in a fair and equitable manner. The right to equitable distribution incorporates the concept of equality, which is fundamental to republicanism and the rule of law. The recommendations, being a constitutional mandate on the Finance Commission under Article 280(3), evidently attract the principle of equitable distribution based on equality. Hence, the Commission is obligated to take into account the above principles of federalism and equality.

Where did the Finance Commission go wrong?

The total SDRMF allocation for the year 2020-21 is Rs 28,983 crore. The latest release for the response to COVID-19 is Rs 11,092 crore; this sum is split into the ratio suggested by the 15th Finance Commission. The allocation formula for the fund was changed, and the 15th Finance Commission proposed a new system before the COVID-19 crisis. The criteria inter alia include previous expenditure, population and area of the State. Unfortunately, the Finance Commission did not consider any specific criterion pertaining to COVID-1,9 like number of confirmed cases. As a result, its findings are odd in this context as Kerala receives Rs 53 lakh per patient while Odisha receives some Rs 160 crore per patient. Therefore, the after-effects of 15th Finance Commission recommendations show that the formula used by the Commission was arbitrary and results in the violation of equitable distribution of the revenue.

The Finance Commission’s goals include inter alia equity principle, efficiency, predictability and stability, where its transfers are meant to rectify the horizontal imbalances among the states. The preamble of the Constitution guarantees the equality of status and of opportunity. Therefore, D.D. Basu in his commentary on the Constitution of India (ed. 8, p. 9301) states that the Finance Commission, while discharging its duties, has to look into the needs of the states and come up with the principles to take account of various factors such as:

  • The budgetary need.
  • The promotion of activities of national importance.
  • The special needs of a particular state, etc.
  • The need of equalizing the social services and administration standards to a national level.

These transfers aimed at bringing equalization serve as a valuable aid to the stability of a federation and the citizenship rationale. The foregoing assertion is based on a premise that no matter wherever a citizen lives, she should have access to certain important economic and social rights.

Further, the doctrine of equality enshrined in the Constitution is fundamental to the rule of law and therefore is the basic feature of the Constitution. Such equality has been breached in present case since relevant considerations pertaining to pandemic are not being taken into account has led to the arbitrary decision. The funds were distributed rather taking into account the irrelevant considerations such as geographical area, population etc. Therefore, recommendations based on irrelevant parameters violate the right to equality of residents of Kerala. Now, in order to rectify the same, the Finance Commission must change the parameters and include relevant parameters like number of confirmed cases as suggested by the opposition. However, this process would be time-consuming and such delay will not serve the purpose. Therefore, the centre must adopt the other way of providing grants to the discriminated states by drawing its power from Article 282 of the Constitution.

The Way forward

In the current situation where various states are facing financial stress, it is the responsibility of the central government to provide them discretionary grants allowed under Article 282 of the Constitution. As discussed above, such grants are discretionary in nature and it depends upon the will of the central government to grant the same. However, the centre cannot do away from its responsibility by merely citing its discretion. There are many instances (here, here and here) where the Supreme Court and High Courts in India have struck down the unfettered discretion of the authority. In a democratic country like India, unfettered discretion should not exist with any organ of the state.  Going by same reasoning, the central government should not be allowed to use its unfettered discretion without looking at relevant considerations. Therefore, in present situation of financial distress, discretionary grants must be provided to the States that are in need of such finances.