Guest Post: Licensing of Internet Broadcasts under the Copyright Act: Key Constitutional Issues

Tags

arbitrariness, intellectual property, proportionality, Ultra Vires

(This is a guest post by Shuchita Goel.)

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The statutory licensing scheme provided under Section 31D of the Copyright Act, 1957 (“the Act”) has recently faced a constitutional challenge in the Supreme Court in M/s Lahari Recording Company v Union of India (W.P. (C) 667/2018), as well as the Calcutta High Court in Eskay Video Pvt. Ltd. v Union of India (W.P. 14979 (W)/2016). A similar challenge was previously rejected by the Madras High Court in South Indian Music Companies v Union of India, on certain limited grounds.

Section 31D was introduced into the Act through Section 18 of the Copyright (Amendment) Act, 2012, that came into force on 21 June 2012. It is supplemented by Rules 29 – 31 of the Copyright Rules, 1958 (“the Rules”). The Scheme essentially grants broadcasting organisations the right to communicate to the public, by way of broadcast or performance, a previously published literary or musical work and sound recording, after giving notice of its intent to do so, and upon payment of royalties, to the owner. This notice is given after the process of determining the rate of royalty is completed by the Intellectual Property Appellate Board (“Appellate Board”):

Section 31D: Statutory licence for broadcasting of literary and musical works and sound recording

(1) Any broadcasting organisation desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section.

(2) The broadcasting organisation shall give prior notice, in such manner as may be prescribed, of its intention to broadcast the work stating the duration and territorial coverage of the broadcast, and shall pay to the owner of rights in each work royalties in the manner and at the rate fixed by the Appellate Board.

(3) The rates of royalty for radio broadcasting shall be different from television broadcasting and the Appellate Board shall fix separate rates for radio broadcasting and television broadcasting.

The Section has been challenged for being ultra vires Articles 14, 19(1)(g), 21, and 300A on the ground that it does not allow for a reciprocal understanding between copyright owners and their licensees. Rather, it allows any broadcasting organisation to unilaterally publish copyright owners’ works without allowing them any say in the matter, thus taking away their incentive to create original works and bear the fruit of their intellect by collecting their ‘IP reward’.

What the challenges seem to have neglected, however, is an associated issue of the constitutionality of an Office Memorandum (“Memorandum”) issued under Section 31D by the Department of Industrial Policy and Promotion (“DIPP”). In this piece, I will be arguing that this Memorandum is issued outside the competence of the DIPP and violates Articles 14 and 19(1)(g) of the Constitution.

The scope of Section 31D seemed to be limited to two modes of broadcasting i.e. radio and television, as they are the only modes of communication mentioned in both the Act and the Rules. However, the DIPP’s Memorandum issued on 5 September 2016 clarifies that “internet broadcasting” and “internet broadcasters” fall within the ambit of Section 31D, as it does not contain a prohibition on either the modes of broadcasting, or classes of broadcasters.

Arrogation of Legislative and Judicial Powers

The constitutional competence of the DIPP in issuing such a memorandum is questionable. While there is no strict separation of powers doctrine followed in India, it has been held previously to be part of the basic structure of the Constitution in Kesavananda Bharati v State of Kerala. Under Articles 73 and 162 of the Constitution, the Union and state executive authorities, too, may exercise limited functions of legislative interpretation or clarification if the statute enacted by the legislature permits them to make such determinations. Shamnad Basheer has discussed the argument of how an executive agency can give limited statutory interpretations which are necessary for rendering its own functions, and only as provided by the statute. However, the DIPP has neither been granted such authority, nor is such an interpretation necessary to its functioning. The issuance of the Memorandum is quite clearly an act of arrogation of unauthorised legislative power by the DIPP.

It is also an accepted tenet of our constitutional scheme that the power of interpreting statutory instruments lies solely with judicial or quasi-judicial authorities. The power to interpret the provisions of the Copyright Act, 1957 had been given to the Copyright Board, which was held to be a judicial body exercising predominantly judicial functions by the Madras High Court in Shamnad Basheer v. Union of India. It was later merged with the Appellate Board, which has also been held to be a judicial body exercising judicial functions in the same case. Interpreting the Act is therefore, a function of the Appellate Board as a quasi-judicial entity, and any act of interpretation made by the DIPP that extends, not clarifies, the scope of Section 31D is impermissible for want of Constitutional authority.

Arbitrary Executive Action

The arbitrariness doctrine is a well-accepted tenet of determining the scope of Article 14, where it provides a guarantee against arbitrary State action, whether exercised under authority of law or in exercise of executive power without making of law. The Supreme Court, in Om Kumar and Ors. v Union of India, has laid down the grounds to be followed to challenge an administrative action as arbitrary, where the order of the administrator needs to be examined to see if it is ‘rational’ or ‘reasonable’. The basis of inquiry is “whether the administrator has done well in his primary role, whether he has acted illegally or has omitted relevant factors from consideration or has taken irrelevant factors into consideration or whether his view is one which no reasonable person could have taken.”

Section 31D opens with the words “any broadcasting organisation desirous of communicating to the public…” The Memorandum reads “internet broadcasting” into Section 31D by virtue of the definition of “communication to the public” in Section 2(ff) of the Act. Section 2ff includes within its ambit any work or performance being made available to the public by any means of “display or diffusion”, and even goes onto clarify that communication through satellite or cable or other means of simultaneous communication to more than one household or place of residence is included within such definition. The DIPP has taken this language to mean that such communication ought to not be restricted to only television or radio broadcasting, and also includes internet broadcasting.

The opening words of the Section reflect the breadth of view taken by the legislature when it comes to the classes of broadcasters and does not refer to any class in particular. The DIPP, however, stands on shaky ground when it assumes that Section 31D allows for including different modes of broadcasting, and not only the different classes of broadcasters.

The legislature has specifically restricted the scope of Section 31D to radio and television broadcasting given the specific text of the provisions in Section 31D(3), and Rules 29(3), 29(4)(b), 29(4)(g), 29(4)(h) 30, 31(1), 31(5), and 31(6) of the Copyright Rules, 1957 where “radio” and “television” broadcasting are the only modes mentioned specifically with no indications that the language may be broadened to include “internet broadcasting” as well.

Further, if we look at Rules 29(4)(j) and 31(7)(a), the scheme seems to have been made applicable only to programmes that are scheduled to appear “on air” with pre-specified time slots. It is a fact that radio and television broadcasting are media where the time at which particular programs occur depict their relative importance to the channel, and the viewership it brings in. Internet broadcasting does not have the same drawbacks that require viewers to adhere to schedule because they may choose to consume any content at any point of time as per their wishes.

From this, it is apparent that the legislature seems to only have envisaged radio and television broadcasting as the modes of broadcasting that were to qualify for statutory licensing in India. The effect of the Memorandum is to extend the scope of Section 31D to a mode of broadcasting over the internet, when the same is neither reflected expressly in the text of Section 31D, nor supported by any judicial decisions favouring such an interpretation.

The DIPP is also mistaken when it assumes that the modes of broadcasting all have the same rules applicable to them. The Act and the Rules create a clear distinction between different modes of broadcasting (and not classes of broadcasters), reflected in their insistence on delivery of separate notices, fixation of separate royalty rates, and maintenance of separate records and books of accounts for television and radio broadcasting. The arguments of the DIPP assume that all internet broadcasters are bound by a single royalty rate, irrespective of whether they choose to broadcast over the internet, or television, or radio. This would defeat the purpose of the law because a single organisation may be both, for example, a television and an internet broadcaster. It would then be able to follow a lower rate by election, regardless of which mode it broadcasts content over. Considering all this, it is evident that the Memorandum violates Article 14 because it is arbitrary, and does not confine itself to the purview of the law laid down by the legislature.

An Unreasonable Restriction on Article 19(1)(g)

Finally, we come to the issue of the rights of content owners under Article 19(1)(g) which includes the right to contract freely while carrying out that business or trade. However, this right may be curtailed under Article 19(6) by reasonable restrictions in public interest. The reasonableness standard has come to be equated with a proportionality analysis by the Supreme Court in Modern Dental College and Research Centre and Ors. v State of Madhya Pradesh, affirmed in Binoy Viswam v. Union of India (popularly referred to as the AADHAR/PAN judgement). The test itself consists of a conjunctive four-part analysis which begins with an enquiry into whether the purpose of imposing that limitation is legitimate. Secondly, it must be established that the measures are rationally connected to fulfilling that purpose. Thirdly, no alternative measures must be available that fulfil the same purpose with a lesser degree of limitation, and finally, the relative importance of achieving the end sought to be fulfilled by the measure ought to be adjudged vis-à-vis the social importance of preventing limitations on Article 19(1)(g).

The Memorandum, being clarificatory of an existing legal position, merely reads the language of 31D in a broad sense, without placing the inclusion of internet broadcasting within the larger objective of the Section itself. To determine if the Memorandum serves a proper purpose, we need to examine the purpose with which Section 31D was enacted as well. The Madras High Court in South Indian Music Companies (supra) discusses this, and justifies it as a limitation on Article 19(1)(g) on the following reasoning:

[Section 31D] provides for a mechanism to deal with the public interest vis-a-vis the private interest. It has been introduced by way of a public policy… It was meant to support the development and growth of private radio broadcasting. The object is also to strike at the monopoly to the detriment of the general public. [Emphasis supplied]

 

The Court thus states that Section 31D was enacted in public interest, with the intent of supporting the growth of private radio and television broadcasting. Radio broadcasting was slowly dying, where copyright owners had no incentive to license their content at low rates, and radio companies did not have the listenership that brought in high advertising revenues to pay adequate royalties to copyright owners. Thus, it was intended to allow radio broadcasters access to a mechanism where they would pay royalty at fair rates set by the IPAB (and not copyright owners) for use of their content.

The logic for television broadcasting is similar. It is pertinent to notice at this point that Section 31D does not include all forms of television broadcasting. It is very limited in scope, permitting only literary, musical and sound recording works to be broadcasted over television. This necessarily excludes visual and cinematic content. The idea was to protect a form of television broadcasting that was dying as well – synchronisation works, where music is played behind a static visual background unrelated to the music itself, and not all forms of television broadcasting. Finally, if we look at the drafting history of Section 31D as well, it was initially introduced in Parliament in 2010 with the intent of protecting only radio broadcasting. However, the final version of the amendment had included limited forms of television broadcasting as well in support of this idea.

Coming back to the Memorandum – is internet broadcasting a medium that requires protection in the public interest such that its inclusion in Section 31D acquires a legitimate purpose? Internet broadcasting is an industry on the ascendant. Out of 1.32 billion people in India, the internet has reached over 500 million in such a short period of time. Internet users are now switching from television to digital streaming services due to ease of access and diversity content they can access on demand at any time they wish. All of this means that copyright owners will retain the incentive to license their work at fairer (or even lower) royalty rates to be put up on internet broadcasting platforms because a wider audience will not only bring in increased royalties, but also wider recognition of their work, something that radio and limited television broadcasting simply cannot achieve. The argument used by the Madras High Court of striking at the copyright monopoly for radio and television broadcasting will not stand when it comes to internet broadcasting.

There, then, seems to be no prima facie public interest involved in protecting internet broadcasting as an industry which is a mode of broadcasting that is both currently flourishing, and is likely to continue doing so, keeping in mind its inherent advantages of ease and convenience of access, lower cost, and choice-based viewership capabilities. The Memorandum ought to fail the first test of proportionality and is an unreasonable restriction on the rights granted in Article 19(1)(g).

Conclusion

It is clear, therefore, that while arguments of the competence of the DIPP in issuing this Memorandum exist, there also exist potential arguments challenging its content as well. The broader effect of this Memorandum until now has been to create massive confusion and multiple challenges to licenses granted for internet broadcasting as no royalty rates have, as yet, been set by the IPAB. While the constitutionality of this Memorandum specifically is not currently under challenge yet, it would be interesting to see it taken up were the Supreme Court to hold Section 31D itself as not being ultra vires the Constitution.

The Aadhaar Judgment and the Constitution – II: On proportionality (Guest Post)

Tags

aadhaar, proportionality

(This is the second post of our three-part series on the Aadhaar Majority’s legal reasoning. This is a guest post by Mariyam Kamil.)

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The five-judge bench decision of the Indian Supreme Court on the constitutional validity of the Aadhaar scheme was handed down on 26 September 2018. The judgment was split 4:1. Justice Sikri, who wrote the majority judgment on behalf of himself, Chief Justice Misra and Justice Khanwilkar upheld the scheme. Justice Bhushan in a separate opinion concurred and Justice Chandrachud dissented.

This post will focus on one theme from the judgment: the standard of judicial review against which privacy infractions are tested. This issue was at the core of the privacy challenge. It also turned out to be the most critical factor in the Court’s analysis that ultimately upheld the Aadhaar scheme. For now, I will focus on the majority judgment.

The post will proceed as follows. In Part A, I will consider the three ‘standards of review’ that have been discussed in the Indian privacy context. Part B will outline the majority’s adoption of the ‘proportionality’ test. Part C will examine the Court’s application of this test to the Aadhaar card scheme.

Part A: The Three Tests

 Prior to the nine-judge bench decision in Puttaswamy, most Indian privacy cases appeared to oscillate between two standards of judicial review: the traditional reasonableness analysis and the stricter standard of ‘compelling state interest’.

After Puttaswamy, three things became clear as far as standard of review for privacy infractions was concerned. First, the minimum threshold that the State had to satisfy in order to legitimately curtail the right to privacy was the standard of ‘just, fair and reasonable’. Second, penumbral notions of privacy must satisfy the standard of review applicable to the respective constitutional provisions under which the infraction is claimed. Third, there was some support for the view that ‘proportionality’ would be the standard of review applicable to privacy cases going forward.

It is crucial to understand how these three standards differ from each other. What is the conceptual distinction between ‘reasonableness review’, ‘compelling state interest’ and ‘proportionality’? Do they overlap with each other? Are they only distinct in degree or do they also differ in content?

Most authors agree that ‘compelling state interest’ and ‘proportionality’ are more stringent standards of review than traditional ‘reasonableness’ (see, for instance, Dr Tarunabh Khaitan’s work). The Indian Supreme Court has also affirmed this view in the past (see for example, Ashok Kumar Thakur).

Moreover, an exposition of these standards also reveals a variation in scrutiny. The starting point for all the three tests is that the infringing act must have the authority of law. If the impugned State action does not have the authority of ‘law’, the Court will look no further.

If this hurdle is overcome, we then get to the next enquiries. The ‘just, fair and reasonable’ test requires the Court to answer two questions: 1) Is the State pursuing a legitimate state aim or objective? I will call this the ‘objective review’. If the answer to this question is in the affirmative, the Court will ask a second question. 2) Is the State using reasonable means to achieve this State objective? Put differently, is there a rational nexus between the means used and the objective sought to be achieved. I will call this ‘means review’.

The ‘compelling state interest’ test is one part of the two-pronged strict scrutiny standard. As part of strict scrutiny, the Court answers the following two questions: 1) Is the State pursuing a ‘compelling’ State aim? 2) Is the State pursuing the least intrusive means of achieving its compelling objective?

Strict scrutiny is a more rigorous standard of review. However, the difference between reasonableness review and strict scrutiny is mainly one of intensity. The degree of intensity of the ‘objective review’ and ‘means review’ changes, but the enquiries remain largely similar. So, in strict scrutiny, within the ‘objective review’ we ask: is the State pursuing a compelling State interest rather than a legitimate one. Under ‘means review’, we question whether this is the least intrusive manner of achieving the State’s compelling objective rather than a reasonable means of achieving that aim. This limb of strict scrutiny is referred to as ‘narrow-tailoring’.

‘Proportionality’, on the other hand, is qualitatively different from the other two. It varies not only in intensity but also in content. Proportionality consists of four enquiries. First, is the State pursuing a legitimate purpose? Second, is there a rational nexus between that purpose and the infringing act? Third, can another, less intrusive, measure be used to achieve the State’s purpose? Finally, is the infringement of the right too great in comparison to the public purpose?

The first two limbs of proportionality align closely with the ‘objective review’ and ‘means review’ under the traditional reasonableness analysis. The third limb resembles the narrow-tailoring limb of strict scrutiny. However, it is the fourth limb of proportionality that is unique. The fourth limb requires the Court to make a value judgment. It requires the Court to balance the importance of the State interest on the one hand, with the importance of the right or the extent of its intrusion, on the other. For instance, the Court may ask, is the public benefit in pursuing the State interest greater than the extent of infringement of the right? Therefore, a State interest could be legitimate (first limb), rationally connected to its objective (second limb) and narrowly tailored (third limb), yet it could still fail the balancing component under the fourth limb of proportionality.

Many criticise the proportionality standard for this very reason (see, for example, Francisco Urbina’s book). To them, proportionality allows the Court to review legislative choices. However, it is this fourth balancing limb of proportionality which is characteristic of the test. It is what makes the test, on occasion, even more stringent than strict scrutiny.

Part B: The Majority’s Understanding of ‘Proportionality’

 The majority speech in the Aadhaar judgment adopts ‘proportionality’ as the standard of judicial review for testing privacy infractions. Interestingly, the majority adopts a slightly modified version of this test.

The majority begins their consideration of proportionality with a doctrinal and academic analysis leading them to note that ‘some differences about the approach on the application of proportionality doctrine’ exist. For instance, the Judges point out the differences between tests adopted by the German Constitutional Court and the Canadian Supreme Court. They explain the German test as follows:

According to this test, a measure restricting a right must, first, serve a legitimate goal (legitimate goal stage); it must, secondly, be a suitable means of furthering this goal (suitability or rational connection stage); thirdly, there must not be any less restrictive but equally effective alternative (necessity stage); and fourthly, the measure must not have a disproportionate impact on the right-holder (balancing stage). [120]

This appears to be the conventional approach. The majority speech contrasts the German test with the Canadian Oakes test:

In contrast, Canadian Supreme Court… has held that the objective must be ‘of sufficient importance to warrant overriding a constitutionally protected right or freedom’; there must be a rational connection between measure and objective; the means must ‘impair “as little as possible” the right or freedom in question’; and finally, ‘there must be a proportionality between the effects of the measures which are responsible for limiting the Charter right or freedom, and the objective which has been identified as of “sufficient importance”’. [122]

 As the Court points out, there are two main differences between the German approach and the Canadian one. First, the Canadian test requires the State aim to be of ‘sufficient importance’ rather than just legitimate. Second, the German test insists that there must exist no other ‘less restrictive but equally effective alternative’. In contrast, the Canadian formulation only requires that the State impair the right ‘as little as possible’.

The majority speech then turns to the task of deciding the best formulation between these variations of the test for India. It points to two main criticisms levelled against the German test. First, all the moral work in the German test is done at the balancing stage, rendering the first three limbs of the test predominantly useless. Second, “the balancing act at the final stage is often carried out in an impressionistic fashion which seems to be largely unguided by principle and thus opens the door for subjective, arbitrary and unpredictable judgments encroaching on what ought to be the proper domain of the democratic legislature.” [123]

These criticisms are not new to proportionality review. Interestingly, the Court turns to Professor David Bilchitz’s work to answer one of these criticisms. According to Professor Bilchitz, the first concern i.e. that the balancing stage of proportionality doing all the work rendering other limbs useless, can be addressed by focusing on the necessity stage (third limb) instead of the balancing stage (fourth limb). He does this by supplementing the necessity stage in the following way:

First, a range of possible alternatives to the measure employed by the Government must be identified. Secondly, the effectiveness of these measures must be determined individually; the test here is not whether each respective measure realises the governmental objective to the same extent, but rather whether it realises it in a ‘real and substantial manner’. Thirdly, the impact of the respective measures on the right at stake must be determined. Finally, an overall judgment must be made as to whether in light of the findings of the previous steps, there exists an alternative which is preferable; and this judgment will go beyond the strict means ends assessment favoured by… the German version of the proportionality test; it will also require a form of balancing to be carried out at the necessity stage. [123] (emphasis added)

Two points merit attention at this stage. Foremost, is the majority’s uncritical adoption of Professor Bilchitz’s proposition. It has been argued elsewhere on this blog that this choice is questionable. In addition, some aspects of the Bilchitz thesis are themselves open to objection. For example, according to Professor Bilchitz (and the majority) the third limb of proportionality now requires a comparison of different measures all of which achieve the State objective ‘fairly and substantially’. Having identified a range of measures that can ‘fairly and substantially’ achieve the State aim, why is it that, among those objectives, the State is not required to adopt the least intrusive option? Notably, the majority does not require the State to do so. Instead, they say that there is a balancing exercise to be undertaken at this stage of the analysis. However, the majority does not clarify what the content of this balancing is. What are the values that are balanced at this stage?

As for the second criticism levied against the German test—that the fourth balancing stage is carried out in an impressionistic fashion, unguided by principle—the majority holds that it can be overcome by using established ‘bright-line rules’:

Insofar as second problem in German test is concerned, it can be taken care of by avoiding ‘ad-hoc balancing’ and instead proceeding on some ‘bright-line rules’ i.e. by doing the act of balancing on the basis of some established rule or by creating a sound rule. [124] (emphasis added)

This, again, is a controversial claim. What are these bright-line rules? The majority offers no guidance on this. The fourth limb requires the Court to weigh against each other the importance of the public purpose pursued by the State against the intrusion it causes into individual rights. It is difficult to understand how bright line rules can offer an answer to this value-laden process. Indeed, one of the main criticisms of this limb of proportionality has been that it requires weighing up against each other of incommensurable values.

 In sum, the Court adopts the German proportionality test but tempers down intensity of the third limb of narrow-tailoring with Professor Bilchitz’s analysis and qualifies the fourth balancing limb with its own caveats. This the Court refers to as its nuanced proportionality test which is the amalgam between the German and Canadian tests, and this is the test that the Court formulates and adopts for its privacy and Aadhaar analysis.

The next section will attempt to understand the Court’s application of its own test to the facts before it.

Part C: The Majority’s Application of Proportionality

 The majority has propounded a version of proportionality which requires the Court to consider the following enquiries:

1. Is the State pursuing a legitimate aim?
   1. The State aim must be legitimate, not necessarily compelling.

2. Are the means used to achieving this aim reasonable or suitable?

3. Is there a less intrusive way to achieve the State objective? This enquiry includes:
   1. Identifying alternatives to the measure adopted by the State.
   2. Asking how effective each of these alternative measures are. Do they achieve the State objective in a ‘real and substantial manner’?
   3. What is the impact of each of these measures on the infringed right?
   4. The Court will undertake a ‘balancing exercise’ at this stage.

4. Balancing the State objective on the one hand with the importance of the right and the extent of intrusion on the right on the other.
   1. This balancing is best done by following bright-line rules which are either established or need to be created.

Let us now examine the Court’s application of its own test, particularly with reference to the highly contested third and fourth limbs of proportionality.

On the first limb of proportionality i.e. whether the State is pursuing a legitimate objective, the Court observes that it is.

Section 7 of the Aadhaar Act is aimed at offering subsidies, benefits or services to the marginalised section of the society for whom such welfare schemes have been formulated… [263]

[T]he aim of the Act is to ensure that these benefits actually reach the populace for whom they are meant. This is naturally a legitimate State aim. [266]

The majority speech then proceeds to analyse the Aadhaar scheme based on the second limb of proportionality. The question here is: is there a rational nexus between the means used to achieve the State objective? Here, again, the Court reasons that there is a rational connection between the means i.e. the Aadhaar enrolment scheme and its authentication, and the State objective i.e. providing welfare benefits:

At this point of time, we are discussing the issue as to whether the limitation on the rights of the individuals is rationally connected to the fulfillment of the purpose contained in the Aadhaar Act… Section 7, which provides for necessity of authentication for receipt of certain subsidies, benefits and services has a definite purpose and this authentication is to achieve the objectives for which Aadhaar Act is enacted, namely, to ensure that such subsidies, benefits and services reach only the intended beneficiaries. [278]

These two limbs of proportionality are largely uncontroversial. It is the Court’s application of the third and fourth limbs that creates difficulty.

On the third limb of proportionality—the necessity limb—although the majority endorses Professor Bilchitz’s thesis, as discussed above, it completely fails to engage with it in its own analysis. All that the majority had to say on the third limb is this:

Insofar as third component is concerned, most of it stands answered while in the discussion that has ensued in respect of component No. 1 and 2. The manner in which malpractices have been committed in the past leaves us to hold that apart from the system of unique identity in Aadhaar and authentication of the real beneficiaries, there is no alternative measure with lesser degree of limitation which can achieve the same purpose. In fact, on repeated query by this Court, even the petitioners could not suggest any such method. [280]

This reasoning is, with respect, unfortunate. There is no consideration at all of alternatives to the Aadhaar card scheme. The Court shirks this enquiry on the basis that the petitioners have suggested no such alternates. It has been pointed out elsewhere on this blog that this is factually incorrect. There is no discussion of the effectiveness of these alternate measures either. Further, there is also no assessment of the impact of Aadhaar and other alternate measures on the right to privacy. Importantly, and as a logical corollary, no balancing exercise is in fact carried out at this stage.

The Court had to clarify, through its own four-part enquiry, how it concluded that Aadhaar was the only scheme with no available alternatives to achieve the State purpose. This analysis was certainly not done in the first and second components of the test discussed above. Significantly, it was important for the Court to engage with this analysis because the strongest challenge to the Aadhaar scheme would have come from the third and fourth limbs of proportionality as these are more rigorous in nature than the first two prongs.

The Court’s examination of the fourth limb of proportionality is also intriguing. Interestingly, at this stage the majority introduces a two-part enquiry into its balancing exercise:

• Whether, ‘legitimate state interest’ ensures ‘reasonable tailoring’?… Here the Act is to be tested on the ground that whether it is found on a balancing test that the social or public interest and the reasonableness of the restrictions outweigh the particular aspect of privacy…
• There needs to be balancing of two competing fundamental rights, right to privacy on the one hand and right to food, shelter and employment on the other hand. [285]

The first enquiry, although it is not articulated clearly, is the conventional proportionality analysis. It requires the Court to balance against each other the importance of the state objective and the extent of intrusion into the right. The second enquiry, in contrast, balances two fundamental rights against each another. I will consider the majority’s approach to each of these enquiries in turn.

On the first enquiry, the Court instead of balancing the importance of the State purpose against the extent of intrusion into privacy, engages in a detailed evaluation of the ‘reasonable expectation of privacy’ test. Borrowing heavily from the English Court of Appeal’s decision in R Wood v Commissioner, the Court says,

Therefore, when a claim of privacy seeks inclusion in Article 21 of the Constitution of India, the Court needs to apply the reasonable expectation of privacy test. It should, inter alia, see:

• What is the context in which a privacy claim is set up?
• Does the claim relate to private or family life, or a confidential relationship?
• Is the claim a serious one or is it trivial?
• Is the disclosure likely to result in any serious or significant injury and the nature and extent of disclosure?
• Is disclosure relates to personal and sensitive information of an identified person?
• Does disclosure relate to information already disclosed publicly? If so, its implication? [292]

It is imperative to understand what the ‘reasonable expectation of privacy’ really is. It is a test propounded in a 1967 decision of the United States Supreme Court: Katz v United States. This test was generally applied to American Fourth Amendment unreasonable search and seizure claims. The test has a subjective component and an objective component. The subjective component asks whether the person whose right is violated actually expected privacy in such a situation? If the answer is in the affirmative, the Court then asks whether, objectively, the society would find the expectation of privacy unreasonable? The Court’s use of the ‘reasonable expectation of privacy’ test is open to two main objections.

First, as pointed out elsewhere on this blog, the reasonable expectation of privacy test has been discredited in the land of its origin. Further, its application to Indian privacy cases is also disputed. Nariman J, for one, expressly rejected it in Puttaswamy.

Second, the purpose of the reasonable expectation of privacy test is to determine whether the infringement occurred in a sphere where the petitioner has a valid claim to privacy. Consequently, it relates to a stage anterior to proportionality review. If the petitioner had no reasonable expectation of privacy, then there is no breach of the right to privacy to begin with. There is simply no need to engage in the exercise of balancing competing interests.

Curiously, the Court had adopted this understanding of the ‘reasonable expectation of privacy’ test in an earlier part of its reasoning. It said:

Before we proceed to analyse the respective submissions, it has also to be kept in mind that all matters pertaining to an individual do not qualify as being an inherent part of right to privacy. Only those matters over which there would be a reasonable expectation of privacy are protected by Article 21. [260]

Thus, if the petitioner has no reasonable expectation of privacy, she is outside the protective scope of Article 21. It is puzzling, therefore, that while undertaking a balancing exercise under the fourth limb of proportionality, the Court decided to use the ‘reasonable expectation of privacy’ test. With respect, this is conceptually indefensible.

On the second aspect of the balancing enquiry, the Court attempted to balance the right to privacy on the one hand, and the rights to food, livelihood and social welfare benefits on the other, to conclude that the invasion on the right to privacy is minimal. The majority reasoned in the following terms:

Let us advert to the second facet of balancing, namely, balancing of two fundamental rights. As already pointed out above, the Aadhaar Act truly seeks to secure to the poor and deprived persons an opportunity to live their life and exercise their liberty. By ensuring targeted delivery through digital identification, it not only provides them a nationally recognized identity but also attempts to ensure the delivery of benefits, service and subsidies… [298]

In the aforesaid backdrop, this Court is called upon to find out whether Aadhaar Act strikes a fair balance between the two rights… To reiterate some of the important features, it is to be borne in mind that the State is using Aadhaar as an enabler for providing deserving section of the society their right to food, right to livelihood, right to receive pension and other social assistance benefits like scholarships etc. thereby bringing their right to life to fruition. This necessity of Aadhaar has arisen in order to ensure that such benefits are given to only genuine beneficiaries. The Act aims at efficient, transparent and targeted delivery of subsidies, benefits and services. In the process, it wants to achieve the objective of checking the corrupt practices at various levels of distribution system which deprive genuine persons from receiving these benefits… As against the above larger public interest, the invasion into the privacy rights of these beneficiaries is minimal. [307, 308]

Conclusion

To conclude, there are three main takeaways from the judgment on the standard of review applicable to privacy claims.

First, the standard of judicial review is now, unambiguously, proportionality. Second, the majority creates its own version of proportionality for the purposes of Indian privacy jurisprudence. Strikingly, this includes a balancing exercise under the third, necessity limb. Yet, it remains unclear what the content of this commensuration exercise is. Finally, the Court’s application of the proportionality standard to the Aadhaar card scheme is defective in at least two main respects: it fails to engage meaningfully with the less intrusive alternatives and it, wrongly in my view, conflates the fourth limb of proportionality review with the ‘reasonable expectation of privacy’ test.

The Aadhaar Judgment and the Constitution – I: Doctrinal Inconsistencies and a Constitutionalism of Convenience

Tags

aadhaar, Bodily Integrity, bodily privacy, evidence, privacy, proportionality

(In the previous post, we began a four-part series examining the factual claims that are at the heart of the Majority judgment in Aadhaar. Parallel to that, we shall also be running a series on the legal arguments relied on by the Majority. This is the first post in that series, on the substantive aspects. In subsequent posts, we shall examine the issue of the money bill, and the standards of review employed by the Court.)

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The Aadhaar Judgment – as we have noticed – relies heavily upon certain factual assumptions to arrive at its conclusions. Surprisingly for a constitutional judgment, law and doctrine takes a relative backseat. To the extent that it does, however, rely on legal doctrines, these too must be subjected to careful scrutiny.

Proportionality, Burdens, and the Strange Disappearance of Facts 

The overarching legal standard – as discussed previously – is that of proportionality. The Majority – correctly – holds that the Aadhaar programme, and the provisions of the Aadhaar Act, must be tested on the touchstone of proportionality. However, as I pointed out in the first post, the Majority’s articulation of the proportionality standard is far from satisfactory. After noticing how different jurisdictions apply the proportionality standard in slightly different ways, the Majority – without any justification whatsoever – adopts the South African constitutional scholar’s David Bilchitz’s formulation of the test. I have the utmost respect for the scholarship of Professor Bilchitz, but this will not do. As Seervai pointed out a few decades ago, while critiquing the uncritical reliance of the 1980s Court on John Rawls’ theory of justice, it is imperative for the Court to explain why David Bilchitz’s articulation of proportionality is the relevant to the Indian Constitution; what about the Constitution’s text, structure, and our judicial precedent is so Bilchitz-ian? There is no explanation forthcoming.

Be that as it may. The importance of Bilchitz’s formulation, the Court tells us, is that with respect to the “necessity” prong of the proportionality standard, it strikes a middle ground between two extremes: by insisting on a rigorous scrutiny of the possible alternatives to the impugned measure, it requires the State to justify that its chosen measure actually infringes rights to the minimal extent. At the same time, it doesn’t allow the Court to substitute its policy preferences for that of the Parliament, by striking down a measure on the basis that some alternative might be more desirable or beneficial.

Now, what are the exact parameters of the Bilchitz approach to proportionality? The Majority extracts them at paragraph 124:

First, a range of possible alternatives to the measure employed by the Government must be identified. Secondly, the effectiveness of these measures must be determined individually; the test here is not whether each respective measure realises the governmental objective to the same extent, but rather whether it realises it in a ‘real and substantial manner’. Thirdly, the impact of the respective measures on the right at stake must be determined. Finally, an overall judgment must be made as to whether in light of the findings of the previous steps, there exists an alternative which is preferable. (paragraph 124)

The underlined parts of the Majority’s test (which, incidentally, is a rough paraphrasal of Bilchitz actually says, and which I shall come to shortly) demonstrate that the proportionality standard is a heavily fact-oriented enquiry. Now, in the context of the Aadhaar challenge (specific to Section 7 and the Aadhaar Act), what were the facts that were necessary to the proportionality enquiry? The first set of crucial facts would, naturally, pertain to how “effective” Aadhaar-Based Biometric Authentication [“ABBA”] was at plugging welfare leakages (the stated goal of the Aadhaar Act). The second set of facts would pertain to the alternatives to ABBA, and how effective they were towards achieving the same goal. The Court would then examine the extent to which these alternative measures were more protective of individual rights, and then come to a conclusion about whether the necessity standard (qua Bilchitz) had actually been satisfied: that is, all things considered, had the Government selected the least restrictive alternative to achieve its goal.

What did the Majority say with respect to the first set of facts? The answer is at paragraph 72:

But the argument based on alleged inaccurate claims of savings by the Authority/Union of India in respect of certain programmes, like saving of USD 11 billion per annum due to the Aadhaar project, as well as savings in the implementation of the MGNREGA scheme, LPG subsidy, PDS savings need not detain us for long. Such rebuttals raised by the petitioners may have relevance insofar as working of the Act is concerned. That by itself cannot be a ground to invalidate the statute. (paragraph 72)

This astonishing paragraph shows that either the Majority completely failed to understand the test that Bilchitz actually proposes or, having understood it, simply refused to apply it correctly. The “inaccurate claims of savings” – on which reams of evidence were presented to the Court – were not about the “working of the act”; rather, they were about the “effectiveness” of the measure (ABBA), and therefore, qua Bilchitz, an absolutely critical component of the necessity standard. To remove any doubt, here is what Bilchitz actually says in the article that the Majority paraphrased:

A judgement must be made whether the government measure is the best of all feasible alternatives, considering both the degree to which it realises the government objective and the degree of impact upon fundamental rights (‘the comparative component’). [Bilchitz, “Necessity and Proportionality” in Reasoning Rights 61 (Hart 2014)].

The arguments of the Petitioners was precisely that Aadhaar failed the necessity standard because it did not realise the government objective to the extent that the invasion of rights was justified, once you considered the background context and the availability of alternatives; and the evidence for this was that the Government’s primary justification – welfare savings – was simply not borne out, either by the facts, or by the logic of what constitutes leakage (identity fraud, quantity fraud, and eligibility fraud, with ABBA – at best – being able to tackle only the first). In a judgment absolutely riddled with factual assumptions, however, in this area – where facts were crucial – the Majority refused to look at them.

Now, how did the Majority deal with the second important component of the necessity standard – that of alternatives? We come to paragraph 280:

The manner in which malpractices have been committed in the past leaves us to hold that apart from the system of unique identity in Aadhaar and authentication of the real beneficiaries, there is no alternative measure with lesser degree of limitation which can achieve the same purpose. In fact, on repeated query by this Court, even the petitioners could not suggest any such method. (paragraph 280)

As I have said in my first post, with the greatest of respect, this is not only false, but demonstrably false. First, it is on the record. Consider paragraph 97 of the written submissions of Mr. K.V. Viswanathan:

It is the State’s burden to show that Aadhaar is both necessary and proportionate, i.e. there exist no other alternatives that could have achieved their stated goals, using a less intrusive method [See Peck v UK, (2003) ECHR 44, ¶¶76-87 and Modern Dental College & Research Centre v State of MP, (2016) 7 SCC 353, ¶¶60-65]. As a matter of fact, there exist less-invasive alternatives such as Smart Cards and social audits that have been included in sec. 12 of the NFSA and can help reduce diversion/leakages. In fact, these Smart Cards (using hologram, RFID chip, or OTP) have helped eliminate barriers of distance or location to avail entitlements, such as in Chhattisgarh.38 Other alternatives such as food coupons, digitisation of records, doorstep delivery, SMS alerts, social audits, and toll-free helplines have also helped. 39 For instance, the Tamil Nadu PDS system is run using smart cards and electronic POS Machines and is in the process of replacing its 1.89 crore ration cards with smart cards, at a cost of over Rs 300 crores. 40 The very fact that the State has not examined such alternatives itself is enough to show that they have not discharged their burden under Art. 21. The fact that alternatives exist, and that the stated purposes can be achieved without invading privacy, further fortifies the submissions of the Petitioners herein.”* [internal footnotes omitted]

But secondly – and even more importantly – it is acknowledged by Justice Bhushan in his concurrence! Here is what Bhushan J. says:

At this juncture, we may also notice one submission raised by the petitioners that Aadhaar Act could have devised a less intrusive measure/means. It was suggested that for identity purpose, the Government could have devised issuance of a smart card, which may have contained a biometric information and retain it in the card itself, which would not have begged the question of sharing or transfer of the data. We have to examine the Aadhaar Act as it exists. It is not the Court’s arena to enter into the issue as to debate on any alternative mechanism, which according to the petitioners would have been better. (paragraph 191)

The absurdity is evident. The Majority adopts a standard of proportionality that requires it to consider alternatives, but states that no alternatives have been proposed. Justice Bhushan acknowledges that alternatives have been proposed, but says that constitutional standard does not allow him to consider them. This, surely, is enough to demonstrate that this judgment sinks under the weight of its own contradictions.

As a final point, it is important to note that even if the Petitioners had not suggested any alternatives, the Majority makes no mention of where the burden of proof lies. This is contrary to Justice Chandrachud’s dissent, where it is made clear that because it is the State that is infringing rights, the State bears the burden of showing that there exist no alternatives that could satisfy the State goal.

On proportionality, therefore – which is the heart of the judgment as far as the law goes – this is what the Majority does. It adopts a standard without explaining why. It then either misunderstands or misapplies that very standard that it has chosen to adopt. It erases the two most crucial components of that standard, and then finds that Aadhaar is proportionate all along. No wonder, then, that the necessity prong – which is the most involved and detailed aspect of the proportionality standard – is effectively reduced to one paragraph of “analysis.” Indeed, given how the Majority essentially smuggles its conclusions into its premises, it is difficult to imagine how it could ever have held that Aadhaar was not proportionate.

Reasonable Expectation of Privacy

A large part of the Majority’s reasoning is based on the presumption that the privacy interests in the Aadhaar challenge are of a weak, or attenuated nature. To establish this, the Majority applies the “reasonable expectation of privacy” standard, borrowing it from Puttaswamy. The Majority notes that this standard has its genesis in US law, and cites the judgment in Katz for the proposition that there are two components of the test:

“The first was whether the individual, by his conduct has exhibited an actual (subjective expectation of privacy), and the second, whether the subjective expectation is one that the society is prepared to recognize as reasonable. This was also followed in Smith v. Marlyand.” (paragraph 290)

Unfortunately, however, the Majority gets its wires badly crossed. The American “reasonable expectation of privacy” standard – which sets great store by what “society” perceives to be reasonable – was not the standard that was adopted in Puttaswamy (indeed, Nariman J., in his concurring opinion, categorically rejected it). Here is what was adopted in Puttaswamy:

Privacy at a subjective level is a reflection of those areas where an individual desire to be left alone. On an objective plane, privacy is defined by those constitutional values which shape the content of the protected zone where the individual ought to be left alone. (Puttaswamy plurality, paragraph 169)

Puttaswamy, therefore, abandoned the American view of “objective expectation of privacy” as determined by what society considers to be private, and pegged its colours to the mast of the Constitution. The Majority in Aadhaar appears not to have grasped this point, because it assumes that the American standard is the standard incorporated into Indian law. And it appears to apply this standard as well: it holds that demographic information is already demanded by multiple other Acts, and that “core biometric information” is “minimal” and is also asked for by the State while issuing driving licenses and so on. In other words, the Majority’s analysis can be summed up as follows: the information that Aadhaar asks for is also asked by the State in other contexts, and therefore, the privacy interest is minimal. However, this is exactly the discredited American approach to privacy (which has been in the process of being quietly abandoned in the country of its birth).

Unsurprisingly, it is Justice Chandrachud in his dissent who applies the correct standard (unsurprising because it was he who authored the Puttaswamy plurality), and notes that because the information collected pertains to the body, it is intimate enough to attract a high privacy interest. The distinction is important, because it is the Majority’s devaluation of the privacy interest in demographic and biometric information that allows it to hold that the “balancing” prong of the proportionality standard (balance between the State goal and the degree of invasion of rights) is justified. Indeed, the Majority appears to believe that because of the low privacy interests in demographic and biometric information, there is no invasion at the stage of collection at all!

… the issue is not of taking the aforesaid information for the purpose of enrolling in Aadhaar and for authentication. It is the storage and retention of this data, whenever authentication takes place, about which the concerns are raised by the petitioners. The fears expressed by the petitioners are that with the storage and retention of such data, profile of the persons can be created which is susceptible to misuse. (paragraph 296)

At a previous point in its judgment as well, the Majority claims that the Petitioners have no problem with collection of information, only with its storage and retention (leading to the threat of surveillance). Once again – and I do not say this lightly – this is demonstrably false, and false from the record. Multiple counsel – lead by Mr. Shyam Divan – argued that forcible collection of biometric and demographic information violates bodily and informational privacy. Section II of the Written Submissions of Mr. K.V. Viswanathan (linked above) is titled “COLLECTION OF IDENTITY INFORMATION UNDER THE AADHAAR ACT [SEC. 3, 4(3), 7 & ALLIED SECTIONS AND REGULATIONS] VIOLATES ART. 14 AND ART. 21.” Here is a sample paragraph:

The inviolability of the human body rests upon two deeper premises: (a) the idea that every individual ought to be treated as an end in herself (and not as a means to an end), and (b) that there is an intrinsic value in an individual determining how and in what manner to use her body. Thus, the inviolability of the body does not become salient only in extreme situations like torture, forced sterilisations, and forced labour, but also in situations that appear innocuous, or at least, do not seem to present a tangible or expressible harm. The core issue then, is not whether an identifiable physical harm to the body can be pointed out, but whether the individual’s decision about how to use her body is taken over by another entity (in this case the State), who decides for her instead. (paragraph 18)

This too, forms part of the arguments of Chandrachud J.’s dissenting opinion, where he notes that collecting information from people without any reasonable suspicion, but on the presumption that they might one day commit identity fraud, is per se disproportionate.

It is, of course, the Majority’s prerogative whether or not finds these arguments persuasive. But it is not the Majority’s prerogative to invert reality and claim that something that was argued in open Court was never actually argued.

The Return of the Minuscule Minority, and Issues of Evidence

A significant set of arguments before the Court focused on exclusion. It was argued that ABBA, by its very nature, was exclusionary: the fallible nature of biometric authentication, its impact upon vulnerable sections of society (such as manual labourers  with worn-out fingers and the disabled), its impact in the context of ground realities in rural India with regular internet outages, and its propensity to set up a new class of middlemen (the PoS machine operators) all ended up excluding the very beneficiaries that it was meant to include. This, it was argued, was a violation of Article 21, and in its disproportionate impact, a violation of Article 14. To substantiate this claim, detailed affidavits, as well as scholarly articles, were placed before the Majority.

The Majority’s response is at paragraph 317:

In fairness to the petitioners, it is worth mentioning that they have referred to the research carried out by some individuals and even NGOs which have been relied upon to demonstrate that there are number of instances leading to the exclusion i.e. the benefits are allegedly denied on the ground of failure of authentication. The respondents have refuted such studies. These become disputed question of facts. It will be difficult to invalidate provisions of Parliamentary legislations on the basis of such material, more particularly, when their credence has not been tested. (paragraph 317)

And:

When it is serving much larger purpose by reaching hundreds of millions of deserving persons, it cannot be crucified on the unproven plea of exclusion of some. (para 319)

There are a few things I want to point out here. First – yet again – the Court has engaged in a selective account of the Petitioners’ arguments. It was not simply “research” done by NGOs and individuals, but the fact that it was placed before the Court on affidavit. Secondly – and more importantly – let us examine the Court’s approach. The Court says that these have become “disputed questions of fact” whose “credence has not been tested.” But for a large part of its judgment, this same Majority takes as gospel, points raised by the Chairperson of UIDAI in a power-point presentation made before the Court which was not even placed on affidavit! The Majority’s entire case on the functioning of the CIDR and the safeguards with respect to authentication and storage is drawn from this power-point presentation.

The legal double-standard here is breathtaking: the Court gives more evidentiary credence to a power-point presentation that has no legal sanctity as evidence, while ignoring evidence placed before it on affidavit, on the basis that it has become a “disputed question of fact”! And, as a side note, it’s worthwhile to note that if this will henceforth be the evidentiary standard applied by the Court, pretty much all of PIL will be thrown into a garbage bin (except for those PILs where the petitioners have the foresight of preparing PPTs).

Thirdly, it is difficult to find words to comment on the Court’s “unproven plea of the exclusion of some.” To me, it brings back memories of another, notorious line: “the so-called rights of the minuscule minority.” That ghost was evidently “exorcised” in Puttaswamy. Someone, it seems, forgot to inform the Majority.

Fourthly – and relatedly – the Majority goes on to record the Attorney-General’s statement that nobody will be excluded in case of an authentication failure, and notices that there is a circular to that effect. This, once again, mixes up legal standards. To understand why, consider the following observation in Shreya Singhal v Union of India:

The possibility of abuse of a statute otherwise valid does not impart to it any element of invalidity. The converse must also follow that a statute which is otherwise invalid as being unreasonable cannot be saved by its being administered in a reasonable manner. (paragraph 95)

This is a well-established proposition. Now note that the challenge to Section 7 was a challenge to its constitutionality, on the basis that it would have a disproportionate impact upon the most vulnerable, and that by design, it would serve to exclude people from accessing their basic entitlements (partly because of its nature, and partly due to prevailing conditions in India, such as internet penetration, possibility of machine failure etc.). Instead of meeting the objection at the level of the statute, the Majority instead relies upon the AG’s statement, and a circular! Once again, this is an inversion of the correct constitutional standard: a promise that the law will be implemented fairly is taken as a defence of its constitutionality.

Once again, it is the dissenting opinion of Chandrachud J., that gets this right. Chandrachud J. correctly notes that as long as the risk of exclusion is embedded into the design of the Act, it cannot be made mandatory; that is, before ABBA can be imposed as mandatory, it must first be guaranteed that, in the normal course of its operation, it will not exclude people and bar them from their Article 14 and 21 rights.

This is, of course, in stark contrast to the Majority, which appears to believe that the dictum “you cannot make an omelette without breaking eggs” also applies to fundamental rights. That, indeed, appears to be the upshot of the Majority’s view that as the Act is operated, “loopholes” will be plugged; the fact that those “loopholes” are actually about the denial of fundamental rights appears to make no difference; it is, ultimately, the same kind of callous disdain for fundamental rights that was so evident in the Koushal judgment.

Conclusion

There are other legal errors in the Majority judgment, which we may attempt to point out in a future post. For now, I want to say that on three absolutely critical points – proportionality, privacy, and exclusion – the Majority judgment is grossly erroneous. On proportionality, the Majority plucks out a standard without justifying it, applies it wrongly to boot, and wishes away inconvenient facts. On privacy, the Majority misunderstands Puttaswamy, and applies the incorrect standard. And on exclusion, the Majority applies double standards in its appreciation of evidence, mixes up a constitutional challenge with fair implementation, and winds up sounding like a rewind of Koushal v Naz. For all these reasons, and on these points, the Majority judgment needs to be reconsidered.

But what really stands out is how the Majority repeatedly claims – falsely – that certain arguments were never raised or never made, and attributes positions to the Petitioners that they never held. And to top that is its Janus-faced approach: it employs factual assumptions at some places, while wishing away facts at other places; it uses one approach to evidence at one place, and then changes that approach midway through the judgment; it borrows constitutional standards, but then fudges their application.

This is a constitutionalism of convenience, not of principle.

Guest Post: Bail Provisions of Section 45 PMLA Struck Down – Some Hits and Misses

Tags

arbitrariness, article 14, bail, criminal procedure, proportionality

(This is a guest post by Abhinav Sekhri, which first appeared on the Proof of Guilt blog)

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Two days ago, a Two Judges’ Bench of the Indian Supreme Court decided a batch of writ petitions led by Writ Petition (Crl) No. 67 of 2017 titled Nikesh Tarachand Shah v. Union of India & Anr. [Nikesh Shah] in which it struck down the parts of Section 45 of the Prevention of Money Laundering Act 2002 [PMLA] which concerned the grant of bail. The Court held that these parts violated Articles 14 and 21 of the Constitution – guaranteeing a right to equality, and protection against deprivation of the right to life and personal liberty by a procedure not established by law. The effect of this judgment is that bail petitions earlier subject to a stringent standard under Section 45 PMLA will now be tested on the less taxing standards of Sections 439 and 437 of the Criminal Procedure Code 1973 [Cr.P.C.]. This post has four parts – (i) explaining how money laundering and the PMLA work (which I’d urge you to skim through even if you’re a lawyer, because at times the judgment reflects some lack of knowledge on the Court’s part), (ii) charting out how the Court did what it did, (iii) showing where the Court goes wrong, and finally (iv) what this judgment might mean for the many other statutes with similar clauses that have not been examined by the Court yet.

What is the PMLA, What are the Schedules, and What does Section 45 do?

The PMLA is India’s answer to its global commitment to tackle money laundering, which (at the cost of oversimplification) means representing assets obtained through illegal acts as untainted. In line with global standards, the PMLA covers all kinds of conduct connected with this process of representing black as white (doing, aiding, abetting, attempting etc), as long as one knowingly did so [Sections 3 and 4]. The PMLA not only makes this is an offence but also triggers connected civil actions of attaching and confiscating the tainted assets themselves [Sections 5-8].

Notice how the entire idea of money laundering is linked to some underlying illegal act which results in generating some proceeds – cash or kind. While some countries don’t require that illegal act to be a crime, India does, and the PMLA calls it a ‘Scheduled Offence’ [Section 2(y)] i.e. offences that are part of the Schedules to the PMLA. There are three Schedules – A, B, and C – and Schedule A contains the bulk of offences and Schedule C is basically the same thing applied in a transnational context. Schedule B contains only one offence – Section 132 of the Customs Act 1962 which criminalises making false declarations before customs officers. Importantly, when the underlying offence is one from Schedule B, the PMLA will only apply if the allegations involve a value of at least one crore rupees. There is no such minimum monetary limit for cases with Schedule A offences. It wasn’t always like this, and the history behind these Schedules became quite important in Nikesh Shah which requires me to discuss it here.

When the PMLA came into force in 2005, Schedule A only had two paragraphs carrying offences punishable under the Indian Penal Code 1860 [IPC] for waging war against India and nine offences from the Narcotics, Drugs and Psychotropic Substances Act 1985 [NDPS Act]. Schedule B contained the bulk of offences, along with a lower minimum threshold of thirty lakhs for the value of allegations. Then around 2010 India wanted to join the Financial Action Task Force [FATF] as a member. The FATF is a global body created by the G-8 for money laundering and membership is a big deal [India is the only South Asian member state till today]. When the FATF conducted its evaluation of Indian money laundering laws, it heavily criticised the monetary limit for the cases in Schedule B [paragraph 167 of the linked report]. The logic was that the limit would allow money laundering to escape under the radar as people would just deal in smaller tranches over a slightly elongated period of time. So the FATF recommended the limit be abolished [paragraph 175]. The government sought to do this by simply moving all Schedule B offences to Schedule A, which was done through the 2013 Amendment, leaving Schedule B empty for the time being.

In all this moving around offences, nobody thought fit to look at what impact it would have on the rest of the PMLA – specifically, on Section 45 which spoke about bail. Since the money laundering offence was tied to the Scheduled Offence, Section 45(1) looked at that underlying offence and this decided how difficult it would be to get bail. If it was a Schedule A offence with a sentence of more than three years, the law placed two additional conditions for getting bail: (i) the public prosecutor had to be given a chance to oppose bail, and if the prosecutor chose to oppose bail, then (ii) the court had to satisfy itself that the defendant was “not guilty of such offence” and was not likely to commit any offence on bail, and the burden fell on the defendant to satisfy the court. For all other Schedule A offences, and all Schedule B offences, the regular bail clauses from the Cr.P.C. continued to apply. You can see how the 2013 amendments to the Schedules completely changed the look of Section 45 – the exceptional process became the norm. This new normal was under challenge before the Supreme Court in Nikesh Shah.

SC on Section 45 – Violates Articles 14 and 21
Petitioners argued that the constitutional protections of Articles 14 and 21 were violated by Section 45 PMLA, and the Court agreed to both contentions. Rather than address arguments first and then move to the Court’s appreciation, I discuss both together for brevity.

Article 14
The Petitioners argued that linking the stringent bail clauses to offences in Schedule A that carried at least a three year maximum sentence was creating several irrational and arbitrary classifications which the Court encapsulated through examples [Paragraphs 24-27, and 35]. The Court found no basis to differentiate the harsh treatment meted out under Section 45 from the following hypothetical cases which according to the Court did not attract Section 45:

• When there is only the PMLA charge as the trial for the Scheduled offence was complete;
• When the PMLA allegation is based on a Schedule B offence;
• When the PMLA allegation is based on a Schedule A offence carrying a maximum sentence below three years;
• When a person is tried for a Part A offence with at least a three year term (versus a joint trial where the same person is tried together with the person with PMLA charges);
• When the person is released on Anticipatory Bail under Section 438 Cr.P.C. for allegations of the Scheduled Offence, before the PMLA charge was brought in.

The Court was of the view that the seriousness of money laundering cases depended on the amount of money involved [Paragraphs 29-30]. Since Schedule A had no monetary limits, the Court concluded that the likelihood of being granted bail was being significantly affected under Section 45 by factors that had nothing to do with allegations of money laundering [Paragraphs 26-27]. When the Attorney General attempted to defend the scheme by painting the classification as a punishment-based one, the Court easily rebuffed his argument. First, the Court suggested there was no such scheme, but noted that even then, the idea should have something to do with the object of the PMLA. The Court showed how Schedule A had many offences that didn’t seem related to money laundering [taking particular objection in Paragraph 34 to offences under the National Biodiversity Act being there], leaving out others that might have more rational connections to money laundering such as counterfeiting currency [Paragraphs 29-30]. The Court also adversely commented on how Schedule A had lumped different NDPS offences together, at the cost of ignoring how the parent Act treated those offences differently [Paragraph 32-33].

The Court noted also that Section 45 of the PMLA was different from other laws that carried similar requirements such as Section 20(8) of the Terrorism and Disruptive Activities (Prevention) Act 1987 [TADA]. The ‘such offence’ in TADA required a court to be satisfied that the defendant was not guilty of the TADA offence in question before granting bail. But in the PMLA, ‘such’ offence referred to the Scheduled Offence instead of the PMLA offence. So, the restrictions imposed by Section 45 PMLA were held to have no connection to the objects of the PMLA itself and thus the rational classification, if any, violated Article 14 [Paragraph 28].

Article 21

The Petitioners argued that requiring defendants to satisfy the court that they were not guilty of ‘such’ offence violated Article 21 by reversing the presumption of innocence and required the defendant to disclose her defence at the outset of the case. In the judgment the Court doesn’t really address Article 21 independently – instead the Court suggest that because the provision violates Article 14 it cannot be ‘procedure established by law’ and therefore violated Article 21. Towards the end of the decision the Court begins discussing the argument though. It labels Section 45 a “drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence.” [Paragraph 38]. In the same paragraph it goes on to observe that “before application of a section which makes drastic inroads into the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India, we must be doubly sure that such provision furthers a compelling state interest for tackling serious crime. Absent any such compelling state interest, the indiscriminate application of section 45 will certainly violate Article 21 of the Constitution. Provisions akin to section 45 have only been upheld on the ground that there is a compelling state interest in tackling crimes of an extremely heinous nature.”

Hits and Misses
There are two questions that were at stake here: (i) did any part of Section 45 offend the Constitution, and if so, (ii) did the Court have no other option but to repeal the provision. Reading the decision, it seems like the Court felt there was so much wrong in the PMLA scheme it decided to throw the kitchen sink at one point rather than explain the issues. The Court answered both affirmatively but never explained to us whether any argument dispositive, or does every case need this sort of broad argumentation to succeed.

Classification and Article 14 first. After reading the legislative history behind the 2013 amendments and the FATF argument, do you think that the Court is right in concluding that higher the monetary allegations, more serious the PMLA case? I’m not so sure. Nor do I think there is much to be gained by placing emphasis (like the Court does) on how Schedule B today has a higher limit than the initial thirty lakhs to suggest that this is in fact the case. It is far more plausible that the one crore limit was placed keeping in mind the underlying offence (false declarations to customs officials in an enquiry) and the concerns of the export industry, which is already subject to Schedule A through Section 135 of the Customs Act 1962 (evading customs duty). Rather than attempt at answering what might be the basis for such a classification for the PMLA (and indirectly giving hints to the government on what might pass muster), the Court would have done well by restricting itself to answering whether the present classification between (i) PMLA allegations based on a type of Schedule A offences versus (ii) all other PMLA cases was intelligible and connected to the objects of the PMLA. As there was enough to show that the original intent (if any) behind Section 45 had not kept apace with the subsequent amendments to the Schedules in 2013, the Court could strike down this classification. But did that require striking down the whole clause?

This brings us to the other part of what did that classification achieve. If it sought to serve as a filter for PMLA cases when it came to administering a strict bail clause, we are left with no filter. Does that mean no PMLA case is serious enough to warrant an application of the clause, or will the clause apply to every PMLA case? Deciding this would need the Court to decide whether clauses such as Section 45 that required a court to find defendants ‘not guilty’ at the bail stage were constitutional. Rather than directly address this, the Court turned to how the text of Section 45 was flawed, as it referred back to the Scheduled Offence on deciding bail petitions. Since the scheduled classification had been struck down, there was nothing to refer to, and so the clause had to go. While there is little to fault this approach, I remain unconvinced that the Court had no option but to strike down the clause because of the text. The Court has performed far greater feats of legislative reconstruction than being asked to read ‘such offence’ in Section 45 PMLA as referring to the PMLA allegations rather than only the Scheduled Offence. After all, it stands to reason that a bail provision in the PMLA would want a PMLA special court to consider the PMLA allegations. In fact, many High Court decisions show this is how they were doing it. Heck, this is how the Court itself was doing it in Rohit Tandon at the start of November [Paragraphs 21-23 of the link]. I think this course was adopted as it helped secure two objectives. Not only did this take care of the PMLA clause which this bench of the Court clearly did not like much, it also helped to protect other statutes with similar clauses which the Court held met a ‘compelling state interest’ test.

This brings me to one last bit about Article 21 and the Eighth Amendment of the U.S. Constitution. The Court cites a previous decision in Rajesh Kumar v. State (NCT) of Delhi [(2011) 13 SCC 706] for the proposition that Article 21 of the Indian Constitution has incorporated the Eighth Amendment and its protection against excessive bail [Paragraphs 13, 19 of Nikesh Shah]. The Court also cites two American decisions [Paragraph 37] on bail for good measure. This is, unfortunately, wrong. Rajesh Kumar cited previous precedent in Sunil Batra to suggest that even though India did not have the Eighth Amendment or the ‘Due Process’ clause, the consequences were the same to prevent cruel and unusual punishment. Not only did both those decisions not mention the excessive bail clause, the references to the cruel and unusual punishment clause itself are highly contentious as an earlier bench of the Supreme Court had held it couldn’t be pressed in India, and that decision continues to be cited.

Conclusion

The slapdash manner in which the PMLA Schedules were amended in 2013 to appease the FATF had already caused some High Courts to address this issue of Section 45. The closest it came to striking down the clause was the Punjab & Haryana High Court’s decision in Gorav Kathuria v. Union of India & Anr. where it held the bail provisions would not apply retrospectively to offences previously in Schedule B [Paragraphs 43-45 of Nikesh Shah]. When the Court declined to hear an appeal against the High Court order in Kathuria I thought that it had indirectly affirmed the validity of Section 45. The judgment in Nikesh Shah comes as a surprise, and marks the first occasion when the Court has looked at any part of the PMLA through a constitutional lens. There are other parts that are equally problematic – the asset forfeiture scheme and the compulsion on witnesses to make truthful declarations, for instance – that litigants may take to the Court being encouraged by this judgment.

As for the future impact of Nikesh Shah on other statutes that carry the same ‘drastic provision’, the stage is set for some litigation on that front as well. The Supreme Court has only approved of the TADA and the MCOCA provisions in the past, leaving the many others open to scrutiny on this new test of whether the provision furthers a ‘compelling state interest’. The Court never answered that for the PMLA context while deciding the petitions in Nikesh Shah. Do you think it might conclude that the PMLA does not meet the test? What about the other statutes? I’ve re-pasted my list of statutes containing the clauses below after accounting for the ones that are not relevant anymore. Comments, as always, are welcome.

1. Section 437(1), Cr.P.C. (in cases of death and life imprisonment).
2. Section 12AA (inserted in 1981), of the Essential Commodities Act, 1955.
3. States of Punjab and Tripura inserted this provision as Section 439-A to the Cr.P.C. so applicable within their territory, in 1983 and 1993 respectively. This restricted bail to persons accused of certain offences, inter alia Section 121, 124-A IPC.
4. Section 37 (amended in 1989) of the Narcotic Drugs and Psychotropic Substances Act 1985 [NDPS].
5. Section 7A (inserted in 1994) of the Anti-Hijacking Act, 1982.
6. Section 6A (inserted in 1994) of the Suppression of Unlawful Acts against Safety of Civil Aviation Act 1982.
7. Section 8 of the Suppression of Unlawful Acts against Safety of Maritime Navigation and Fixed Platforms on Continental Shelf Act 2002.
8. Section 51A (inserted in 2002) of the Wildlife Protection Act, 1972.
9. Section 43D (inserted in 2008) of the Unlawful Activities Prevention Act, 1967 [UAPA] (nearly identical).
10. Section 36AC (inserted in 2008) of the Drugs and Cosmetics Act, 1940.

 

Review: Proportionality, Punishment and Judicial Review: A Response to Jeydev C.S.

Tags

Cruel and Unusual Punishment, proportionality, Punishment

(This is a guest post by Puneet Dinesh.)

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In this Guest Post, Jeydev C.S examines a topical issue given the recent political developments of awarding life sentences and death penalty for cow slaughter. The post revolves around an important legal question: Whether the courts can review the proportionality of punishments linked to a crime?

While Jevdev analyses some crucial questions surrounding the issue, it is an interesting exercise to examine the manner in which the variants of proportionality gets incorporated in different parts of the Constitution.

I. Importing principles from Art. 19 to Art. 21

The post while examining whether the standard of proportionality can be found within Article 19, refers to the Supreme Court’s decision in State of Madras v V.G Row to argue that ‘proportionality’ can be read under the ‘reasonable restrictions’ under Article 19(2). The argument then takes the help of Maneka Gandhi to import the standard of proportionality, found in the ‘restrictions’ under Article 19(2) to Article 21. While Maneka Gandhi allows for a harmonious and combined reading of Article 19 and 21, it is crucial to understand what exactly this means. The question really is, when can a principle under the ‘reasonableness’ test be invoked for a Article 21 challenge? Bhagwati J, in Maneka provides some guidance in this regard:

“The law, must, therefore, now be taken to be well settled that Article 21 does not exclude Article 19 and that even if there is a law prescribing a procedure for depriving a person of ‘personal liberty’ and there is consequently no infringement of the fundamental right conferred by Article 21, such law, in so far as it abridges or takes away any fundamental right under Article 19 would have to meet the challenge of that article”.

For Bhagwati J, the challenges under Art. 19 can only be tested, if a freedom under Art. 19 is affected. However, this leaves us in a difficult position- any penal law prescribing punishment ipso facto violates various freedoms under Art. 19. Bachan Singh, when faced with the same question two years later after Maneka, observes that a penal law prescribing punishment cannot affect Art. 19 rights. Interestingly, Bhagwati J, writing his dissent in Bachan Singh two years later after the majority’s opinion, criticizing the majority for applying the wrong test to arrive at the conclusion that Art. 19 rights are not affected, also refuses to answer if a penal law stands to violate Art. 19 rights.

Is there another way to understand the harmonious reading of Art.14, 19, 21 per Maneka? The alternative reading that makes sense is to consider the principles of due process developed under Art. 14 and 19 in an Art. 21 inquiry. It is through this reading, that proportionality as a principle can be examined in an Art. 21 inquiry. It is a different matter altogether (as will be addressed later) the impact of the contents and the variants that proportionality takes within Art. 19 on Art. 21. The limited point being, proportionality as a principle can be considered through the harmonious reading of freedoms under Art. 19 and 21. In fact, a similar reading can be expected in the Canadian and South African Constitutions which subjects all rights to the proportionality standard.

II. Vikram Singh’s discussion on the Eighth Amendment in the United States and ‘substantive due process’

Jeydev’s post later relies on the observations by Vikram Singh on the appropriate standard to examine the proportionality of punishment. Vikram Singh relies on a series of United States and Canada precedents to further the position that proportionality is part of judicial review when the punishment is ‘outrageously disproportionate’. However, in the United States, the Eighth amendment specifically requires the court to examine if the punishment is proportionate to the crime and Section 12 under the Canadian Charter of Rights and Freedoms also provides a right not to be subjected to cruel or unusual punishment. Therefore, the principles evolved for determining proportionality (as discussed in Ronald Allen Harmelin v. Michigan 501 US 957 (United States) and R v Smith (1987) 1 SCR 1045 (Canada)) were due to the legislative mandate provided under the Eighth amendment and Section 12 respectively. It is important to note that a parallel provision is absent in the Indian constitution and the absence has not gone unnoticed before the Supreme Court.

The court in Jagmohan Singh (1972) observed that “…so far as we are concerned in this country we do not have in our Constitution any provision like the Eighth Amendment nor are we at liberty to apply the test of reasonableness with the freedom with which the Judges of the Supreme Court of America are accustomed to apply “the due process” clause”. Vikram Singh loses sight of this important distinction and proceeds to import the standard found in United States and Canada. Although Jagmohan Singh was prior to the Maneka Gandhi dicta, statues that define punishments forms part of the substantive due process review. (See Sunil Batra).While Bachan Singh and Mithu might help in arguing for a substantive review of a penal legislation, the bench strength in both the cases was lower than Maneka Gandhi.

The proportionality standard that ends up getting imported in the Indian context through Vikram Singh is nothing different from the Wednesbury standard of reasonableness. On this note, it is important to distinguish two different reviews of proportionality in cases of punishment. First, when the judiciary is reviewing the proportionality of a prescribed punishment in a penal law (Vikram Singh or the recent Bihar High Court’s prohibition judgment) Second, when the judiciary is reviewing the proportionality of a sentence given by a lower court (Santosh Bariyar line of cases). The analysis here is restricted to the former type of review.

III. Whether ‘proportionality’ is a constitutional standard?

The elevation of an administrative law standard as grounds for constitutional review has faced severe criticism from academic circles and the Supreme Court. The Supreme Court in Royappa v State of Tamil Nadu, while adjudicating on an administrative law matter, considered that mere ‘arbitrariness’ is sufficient to constitute an Article 14 violation. As Tarunabh Khaitan, points out, the case laws following this precedent has formulated the ‘unreasonableness’ test in the name of ‘arbitrariness standard’. It is in this context, an analysis on the proportionality test as a constitutional review standard becomes relevant.

Proportionality as an administrative law standard has been a recent addition to the list of standards open to judicial review for administrative actions. Om Kumar (2001) is perhaps the first case to add proportionality to the existing standards of administrative law review. As the court in McDowell noted, in 1996, ‘..The applicability of doctrine of proportionality even in administrative law sphere ..(was)..a debatable issue’ and further proceeded to note that, ‘It would be rather odd if an enactment were to be struck down by applying the said principle when its applicability even in administrative law sphere is not fully and finally settled’. However, the incarnation that ‘proportionality’ has taken at least in the cases challenging the extent of punishment and administrative actions is nothing different from what the ‘arbitrariness’ standard has given us i.e ‘unreasonableness’ test or rather what the Supreme Court calls it the ‘Wednesbury principle of proportionality’.

Wednesbury standard and the proportionality test may constitute different or same standards of review depending on the relevant jurisdiction. In English law, the latter forms a higher threshold than the former, wherein, the proportionality standard involves a four-stage test examining if (a) the objective is necessary to limit a fundamental right, (b) the impugned measure is rationally connected to it and (c) there is minimal impairment of the right to accomplish the objective (d) balancing the rights against the restriction. In India, depending on the context, the proportionality standard has taken both the four-stage test (‘reasonable restrictions’ under Article 19(2)-(6) and the Wednesbury reasonableness (judicial review of administrative actions) approach. This scheme i.e different nature of proportionality tests for a constitutional case and an administrative law case, is worth noting for future evaluation of Vikram Singh.

Wednesbury standard, while consisting of several hierarchical standards internally, requires judicial interference only for decisions that are seriously unreasonable. Inspired by this standard, the Eighth amendment cases picks up on the ‘grossly disproportionate’ test, while the Indian counterpart, sticks to the ‘shockingly disproportionate’ test. Abhinav Chandrachud, analyses a plethora of administrative law decisions where the court uses the phrase ‘proportionality’ standard but ends up employing the Wednesbury standard of review blurring the distinction that Om Kumar had created (See Hazarila).

The four-prong test in the Indian jurisprudence has had a muddled journey so far. Mainly invoked in the context of ‘reasonable restrictions’ under Article 19 (2)- (6), the test has been severely misemployed. As Ashwita Ambast notes here, from ignoring to take certain prongs of the test into account (Brij Bhushan), disturbing the hierarchy of analyses and now, ignoring to apply the test after deliberating on it (Modern Dental College), the four-prong test is yet to be flawlessly applied. The constitutional status of this test was approved as early as in the year 1952 in VG Row. The judgment stresses on the requirement of ‘narrowest limits’ (minimal impairment) and ‘exceptional circumstances’ (necessity) – crucial aspects of the proportionality analyses. The reiteration of this test was elaborately made recently in the NEET judgment by AK Sikhri J. After making a detailed survey of the test referring to comparative sources, the court proceeds to observe the ruling in TMA Pai and PA Inamdar and satisfies itself of the ‘reasonableness’ test without making any analyses on the proportionality test. Therefore, there is very little value in the court’s effort to explore the contours of the four-prong test. The most important and the controversial part of this test is when the court examines if the impugned act is a ‘minimal impairment’ to accomplish the objective. This often requires the court to evaluate comparative sources and put forth its own ideas on what constitutes a ‘minimal impairment’. As seen earlier, Indian courts have shied away from applying this part of the test.

All these discussions, brings me to my core argument: the link between Article 19 ‘restrictions’ and Article 21 to employ the tool of ‘proportionality’

As mentioned previously, the restrictions under Article 19 have always demanded for a stricter proportionality analyses. While the traditional four-prong test might have not been employed, it is rarely the case that they have been substituted to the Wednesbury standard of reasonableness. (See Chintaman Rao). In a constitutional adjudication case, challenging the extent of punishment mandated by the legislation, the court in Vikram Singh and the recent judgment on prohibition of alcohol have employed the Wednesbury standard of proportionality. Therefore, even if one were to source ‘proportionality’ of punishments under Article 19, one cannot lose track of these difficult questions. However, since Vikram Singh’s analyses of proportionality did not originate from Article 19, it might be unfair to attack the judgment on that ground.

Where can we then place ‘proportionality’ as invoked by Vikram Singh in the Indian constitution? Article 14 is perhaps the only, but difficult, place for proportionality to clench. The scope of this essay does not extend to include Article 14 analyses but the ‘arbitrariness’ test developed post-Royappa has been unclear. Whatever one thinks of the dubious link between arbitrariness and inequality under Article 14, there are multiple instances wherein, the arbitrariness has taken the form of the ‘reasonableness’ test. In which case, it becomes easier to add one more administrative law standard i.e proportionality within the folds of Article 14 as the test essentially is one inquiring the ‘reasonableness’ of the impugned clause in the legislation. This link may be crucial to re-engage with the content of the ‘arbitrariness’ standard, a conversation which is much awaited. However, one can’t lose track of the impediments that 2G Reference; Subramanian Swamy and more recently, Rajbhala poses in this endeavor.

While the proportionality analyses for punishment clause stands on a weak footing in Indian constitutional law, it will certainly be interesting to see, the manner in which proportionality (especially, the variant of proportionality) will get invoked and incorporated in the Indian Constitution.

 

 

 

Guest Post: Judicial Review and Proportionality of Punishment

Tags

article 21, Cruel and Unusual Punishment, proportionality

(In the context of life sentences and even the death penalty being mooted for cow slaughter in some states, Jeydev C.S. examines whether the Indian Constitution requires proportionality in punishment)

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How far can the State go? It is a general proposition that duly enacted penal statutes can prescribe punishments for undesirable conduct. Recent political developments suggest that this legislative freedom may be taken further than ever before. From a constitutional standpoint though, it is far from clear if the state actually has untrammelled discretion in sentencing. For instance, can it execute someone for relatively minor offences like petty theft, or sentence a man to rigorous imprisonment for life if caught driving drunk? Screaming headlines and political ramifications aside, the underlying issue here is whether our Constitution can be concerned with proportionality of punishment while dealing with the legality of penal statutes. In this post, I posit that this specific legal question has been answered in the affirmative, considering the findings of leading case law of the Supreme Court of India while interpreting the text of the Constitution.

Article 21 provides that “No person shall be deprived of his life or person liberty except according to procedure established by law”. A perfunctory reading of this clause suggests that, as far as the state has, one, established a certain procedure through law; and two, such procedure is followed by the state while depriving a person of her life or personal liberty, then such an action of deprival by the state would be permissible. However, this has not meant that unchecked excesses by state agencies under the garb of procedural propriety have been condoned by the courts. In the case of Maneka Gandhi v. Union of India, the Supreme Court held that the “procedure established by law” must be just, fair, and reasonable so as to not be in violation of article 21. To put it another way, the Court read three non-textual pre-conditions into the nature of the administrative process, in the absence of which depriving actions of the state will be rendered unconstitutional. While arriving at this outcome, Chief Justice Beg particularly rejects the notion that articles 21 and 19 are independent compartments of rights; rather, they are available together (along with article 14, particularly with regard to reasonableness) when reviewing executive action. While Maneka Gandhi does much more in the realm of article 21 jurisprudence, this facilitative reading permits us to import certain relevant standards that have been laid out with respective to articles 19 and 14.

Article 19 of the Constitution primarily addresses the protection of certain rights (such as speech, assembly, association, movement, profession et cetera). These freedoms, as articulated in clause (1) are circumscribed by the limitations of clauses (2) through (6) – the common criterion of restriction under these clauses is that such restriction must be ‘reasonable’. While there have been many instances of the courts opining on the nature of what this actually entails, for our purposes, we may turn to the case of State of Madras v. V. G. Row. This case dealt with an action of the State of Madras (as it then was) whereby it declared a political organisation to be an unlawful association. In its opinion, the Court reaffirmed the reasoning of previous cases such as Dr. N. B. Khare v. State of Delhi, that article 19 restrictions must be substantially and procedurally reasonable, and that such reasonableness may be indicated by factors such as “the extent of the evil sought to be remedied”, “prevailing conditions”, and “disproportion of imposition”. Granted, Row only envisages this to be applicable to impediments imposed upon article 19 rights. However, Maneka Gandhi clearly expects a harmonious and combined reading of these standards which can help inform the contours of what may be reasonable for the purposes of article 21. Therefore, I contend that proportionality is a relevant consideration when reviewing law that deprives life or personal liberty.

In a similar tenor, I must now address article 14, which prohibits the state from denying to any person equality before the law or the equal protection of laws within India. Most famously, a constitutional bench of the Supreme Court held in E. P. Royappa v. State of Tamil Nadu that article 14 entails a prohibition on arbitrariness in state action. Drawing upon this precedent and Maneka Gandhi, the case of Mithu v. State of Punjab sought to apply the principle to a penal provision in a criminal statute. Section 303 of the Indian Penal Code, 1860, which provided for a mandatory minimum sentence of death for those who commit murder while serving a term of life imprisonment, was assailed against the combined significance of articles 14, 19, and 21. The Court struck section 303 down as unconstitutional, for such a sentence, which on no valid basis of classification discriminates between convicts and non-convicts, would be arbitrary – further, the automatic imposition of a sentence of death, which is expected to used sparingly per the judgment in Bachan Singh v. State of Punjab, would be disproportionately oppressive; for these reasons, the impugned section was held to be in violation of article 21. Chandrachud J illustrates the importance of a proportionality test for the purposes of sentencing – he notes that a savage sentence, such as amputation for theft, would run afoul of article 21; he actively adverts to the reliance upon article 19 standards of reasonableness to assess challenges under article 21. This further reinforces the importance of proportionality, which as we have noted, has been incorporated through Row.

It is true that a substantial bulk of Mithu dealt with the disproportionality parameter, in as much as a criminal statute took away sentencing discretion from courts during trial. However, perhaps the most forceful articulation of the need for proportionate punishment is seen in Vikram Singh v. Union of India. In this case, the appellants sought to challenge the constitutional validity of section 364A of the Indian Penal Code, 1860 on the grounds that it prescribed a sentence of death, thereby in violation of article 21, as clarified in Mithu. At the earliest, the Court sought to dissuade the notion of the appellants that section 364A amounted to a mandatory death sentence. As the provision itself reads, death is only one option before the trail court – it may also choose to impose a sentence of imprisonment for life. Therefore, this case is clearly distinguishable from Mithu as the mere option of death as a possible punishment for a crime does not violate article 21. Despite dismissing the instant appeal on this ground, Chief Justice Thakur addresses the general issue of proportionality. He opines that merely because courts are deferential to legislatures on matters of punishment, generally, does not mean that penalties that are “shockingly disproportionate” to the gravity of the underlying offence are immune from constitutional intervention.

The Court then proceeds to categorically import the principle of proportionality in punishment from foreign (particularly, North American) jurisprudence. In Weems v. United States, the Supreme Court of that country affirmed the proposition in favour of ‘graduated’ and ‘proportionate’ punishment, by finding grounding in the Eighth Amendment to the United States Constitution, which prohibits cruel and unusual punishments. Similarly, cases like Enmund v. Florida, Coker v. Georgia, and Solem v. Helm have all held penal statutes to be in violation of the Eighth Amendment on account of being disproportionate to the gravity of the underlying offence. Chief Justice Thakur specifically cites the cases of Harmelin v. Michigan and Ewing v. California to be indicative of a prospective American standard, as culled from past jurisprudence – as far as there is a “reasonable basis for believing” the prescribed punishment “advances the goals” of criminal justice and was arrived at through a “rational legislative judgment”, such statutes may be deemed to be proportionate.

While affirmative reiterations of these principles exist throughout Vikram Singh, the most utility for our purposes in evaluating the Indian constitutional scheme may be derived from the enumeration of guiding considerations at paragraph 49 – first, the general principle is that punishment must be proportionate; second, that there exists a presumption that the legislature (unlike the courts) is best positioned to propose punishment; and third, that the courts must defer to its wisdom in this regard unless the prescription is outrageously disproportionate to the offence or so inhuman or brutal that it would be unacceptable by any standard of decency. This standard if further raised in cases where the prescription is one of death – the Court defers to the high standard of judicial care that is applied to the death penalty, in line with evolving jurisprudence on the issue, while also asserting that the likelihood of this punishment being deemed disproportionate is particularly high. I must reiterate however, that my quest here is to not comment on whether the death penalty is disproportionate in certain cases. Rather, it is whether any punishing statute (including, but not limited to the death penalty) is open for constitutional review on the grounds of proportionality.

It is altogether another matter that the Court in Vikram Singh chose to dismiss the appeal on the grounds that the impugned provision did not offend the aforementioned standard. Nonetheless, these principles undoubtedly constitute the ratio decidendi of this case. Being the leading Supreme Court judgment on this point, it shall be binding on courts throughout India. Hence, any criminal statute that prescribes punishment can be held against this test of proportionality; and if it is found to run afoul of this, that punishment may be declared by our constitutional courts to be ineffective on account of it being in violation of article 21. Whether the recent spate of amendments and legislative proposals merit such consideration is a question for another day.

The Bihar High Court’s Prohibition Judgment: Key Constitutional Issues – IV: (More on) Punishment

Tags

proportionality, Punishment

(In this guest post, Manish carries forward the conversation on the punishment clauses that was initiated by Abhinav yesterday.)

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In a strongly worded and well-reasoned judgment, the Patna High Court on Friday struck down the Bihar government’s attempt to impose total prohibition in the state through amendments to the Bihar Excise Act, 1915 (“the Act”). Other aspects of the judgment have been dealt with elsewhere on this blog, and in this post I will discuss the Court’s reasoning with regard to the penal provisions of the Act, particularly in relation to due process. I argue that in deciding this issue, the Court used its strongest words, but not its strongest reasoning.

Prologue

As part of the amendments, punishments under the Act were drastically enhanced, ranging from a minimum of 10 years in jail and extending up to life imprisonment, and fines ranging from 1-10 lakh rupees. In the writ petitions before the Court, the enhanced punishment was challenged on three main grounds: first, that the imposition of high minimum punishments under sections 47, 53 and 54 was disproportionate to the offence and took away judicial discretion even where mitigating circumstances might warrant a lesser sentence; secondly, that the confiscatory power provided to the State to seal premises and destroy or forfeit property under sections 68A and 68G was excessive; and thirdly, that the mechanism of collective fine introduced in section 68-I was vague and lacked procedural safeguards. The only response of the State on record was that the legislature possessed “plenary power to legislate and provide for punishment” and that the Court could not interfere with legislative wisdom.

At the outset, it is submitted that the existence of “plenary power to legislate” is hardly an adequate response in a case where it is the exercise of the said power that is being challenged, particularly given that under Article 13 of the Constitution, this power is expressly subject to the provisions of Part III. Nevertheless, the Court proceeded to consider the amendments in some detail, and found all the challenged provisions to be in violation of Articles 14 and 21.

Reverse Onus and procedural due process

Importantly, the court prefaces its analysis with an examination of section 48 of the Act (itself not under challenge), which reverses the burden of proof for all offences under the Act. It explains how the lack of due process in cases where stringent punishment is envisaged can make the burden on the accused more onerous:

“…punishments by itself cannot be seen but have to be seen along with the procedure, for, the procedure may create certain liability, which, coupled with the punishment, would made things worse.” (Para 89.03)

The Court observed that while a reverse onus clause, such as section 48, would not by itself be unconstitutional, the presumption it created against the accused would render the substantive penal provisions subject to a higher standard of scrutiny. In doing so, it made a critical link between substantive and procedural due process i.e. using the absence of procedural safeguards to decide the validity of substantive provisions of the law: a variation on the integrated Article 14-19-21 approach that courts have followed since Maneka Gandhi.

Collective fines and subjective satisfaction

The Court then considered the provision relating to collective fines, under section 68-I, which reads as follows:

“If the Collector is of the opinion that a particular village or town or any locality within a village or town or any particular group/community living in that village or town have been repeatedly violating any of the provisions of this Act or are habitually prone to commit an offence under this Act or are obstructing the administration of this Act, then the Collector may impose a suitable collective fine on such group of people living in such area of the town or village and may recover such fine as if they were Public Demands under the Bihar & Orissa Public Demands Recovery Act, 1914.”

The Court observed that the entire process under section 68-I was dependent on the subjective satisfaction of the Collector. There were no guidelines for the identification of a locality or group within a village or town, no provision for any of the affected persons to be heard prior to imposition of the fine, and no means of appeal against the decision. In these circumstances, it struck down the provision as being in violation of Article 14 and 21 of the Constitution, terming it “draconian, completely vague, uncertain and unlimited”.

It should be noted that the provision of collective fines under the Bihar Excise Act is not a unique phenomenon. Most notably, section 16 of the SC & ST (Prevention of Atrocities) Act, 1989, read with section 10A of the Protection of Civil Rights Act, 1955, empowers the State Government to impose collective fines in cases of atrocities against members of the Scheduled Castes and Scheduled Tribes. However, these provisions contain substantially more procedural safeguards: the satisfaction of the State Government is to be determined on the basis of an inquiry; the apportionment of fine among the inhabitants of the area is based on the means of individuals to pay; and an appellate process is provided for by means of filing a petition before the State Government, which is to be disposed of only after providing the appellant with a hearing. It is submitted that the Bihar government would do well to emulate these safeguards, should it deem it necessary to continue with the mechanism of collective fines.

Life, liberty and property

The Court finally dealt with the reasonableness of the provisions relating to imprisonment, fine, confiscation and destruction of property. The ground for review was drawn from the requirement under Maneka Gandhi that procedure established by law for deprivation of a person’s life or liberty under Article 21 was required to be just, fair and reasonable. Using this due process requirement, the Court constructs the beginning of a case against excessively stringent or draconian penal provisions without procedural safeguards.

Unfortunately, it does not do so convincingly: while the reasoning is logical, the use of precedent is the shakiest in this part of the judgment. Two of the four cases it cites (Mithu and Dalbir Singh) were situations where the Supreme Court struck down a mandatory death sentence as being in violation of Articles 14 and 21, partly because judicial discretion in determining punishment and taking into account mitigating circumstances was taken away. In fact, one of the other cases cited (Vikram Singh) categorically upheld the validity of section 364A of the Indian Penal Code, holding that where even one alternative was provided, the punishment could not be challenged as being unreasonable or taking away judicial discretion. Relying only on these grounds, the punishments imposed under the impugned sections could be argued to allow for sufficient judicial discretion, and the decision to that extent stands on shaky ground. It is submitted that the court’s initial observations with respect to the reverse onus clause, and the lack of procedural safeguards, form a stronger ground for making a case for violation of due process requirements under Article 21.

Proportionality and substantive due process

This brings us to the final link in the argument – that of proportionality – which the Court does make to some extent. This thread of reasoning is as follows: in light of a reverse onus clause, a higher burden is already placed on the accused by the procedural provisions of the Act. Therefore, the substantive provisions must not be so onerous so as to take away all elements of due process from the accused. For a comparative standard of fairness, the Court looks at the NDPS Act, which also deals with punishments for possession and consumption of prohibited substances. In that Act, the Court observes, the punishment is graded, varying with the quantity of the prohibited substance in question. (Incidentally, the NDPS Act also contains reverse onus clauses, and the Supreme Court while upholding the validity of these clauses had invoked a standard of ‘heightened scrutiny’ while dealing with prosecutions thereunder.)

The Court also makes reference to the 47^th Report of the Law Commission of India (1972), dealing with the trial and punishment of socio-economic offences. The suggestions of the report in relation to sentencing, particularly the disapproval of “mathematically identical sentences”, remain relevant even today and the Court takes note of them in relation to the offences under the impugned sections 47, 53 and 54, all of which provide for almost identical sentences of long imprisonment and heavy fines for manufacture, transport, possession and consumption of alcohol. The Court observes that in all three sections, the punishment imposed is disproportionate to the offence, and there is no scope for the Court to award a lesser punishment even when there are mitigating circumstances present.

Finally, in regard to sections 68A and 68G, which makes premises and properties used for committing offences liable to confiscation and sealing, the Court holds that the effect of these provisions is to virtually convert the state into a police state. It observes that the reverse onus clause read with these sections would lead to situations of an innocent owner of the premises being punished for acts committed by tenants, even when she had no knowledge of the same. It holds that the provisions are “clearly draconian and in excess of the balance need to be maintained [for achieving the social objectives of the legislation].” In conclusion, it strikes down all the impugned sections as being unreasonable, draconian and ultra vires Articles 14 and 21 of the Constitution.

The Court’s emphasis on individual due process is rather heartening, especially given the tendency of courts to side with the State in cases where reverse onus clauses and stringent punishments are provided for by law. Elsewhere, Mrinal Satish and Aparna Chandra have argued that in cases of anti-terror legislation, the Supreme Court has adopted a minimalist approach while adjudicating their constitutional validity:

“The Court articulates its role in terms of balancing competing interests of national security and civil liberties; it provides broad deference to the legislature, not only to its policy, and its understanding of what is required and permissible to implement the policy, but also by engaging in a fair amount of legal gymnastics to uphold constitutionality of provisions. It evaluates legislative provisions not for their impact on Fundamental Rights of citizens, but to examine whether the provisions further the purpose of the Act on the one hand, and whether there are enough procedural safeguards to prevent misuse on the other. Where in spite of this curtailed review, a provision does not pass muster, the Court takes over the role of the legislative drafter and provides a procedural framework to prevent misuse, or recommends measures for the Parliament’s consideration. Very rarely, if at all, does it invalidate a provision.”

In this context, the High Court’s decision to strike down the provisions in their entirety for being in violation of substantive due process norms under Article 21 is a promising step forward. One only wishes that its jurisprudential reasoning had been stronger.

Epilogue

The last word is yet to be said on prohibition in Bihar. In August 2016, the legislature passed a revised Prohibition and Excise Act, and reports have suggested that the State Government is considering notifying the new Act. An analysis of its provisions suggests that several of its penalties are similar to the ones that have been struck down, and it remains to be seen whether the Government makes appropriate changes to ensure adequate procedural safeguards.

The Bihar High Court’s Prohibition Judgment: Key Constitutional Issues – III: Proportionality in Punishment

Tags

bihar, prohibition, proportionality

(This is a guest post by Abhinav Sekhri, cross-posted with permission from his Proof of Guilt blog.)

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Overview

The separate opinion of Justice Singh covers seven issues and he saves the best for last with his analysis of punishment clauses coming right at the end at Paragraph 89. Effectively, the law criminalised anything one did with alcohol (i.e. acts/omissions associated with its production, possession and consumption) contrary to the Act and rules. Punishments for these offences are neatly summarised into three categories in the judgment: (i) incarceration and fine (Sections 47, 53), (ii) confiscation of property (Sections 68-A, 68-G), and (iii) collective fines (Section 68-I) [There are other provisions on punishments in the Act as well that developed on these basic offences]. These were supplemented by the now-standard provision on reversing the burden of proof and presuming the accused is guilty (Section 48). The High Court unanimously held that these penal clauses were unconstitutional.

The Opinion

Out of these three categories, take categories (i) and (ii) separately from category (iii) which is collective fines. The collective fine provision is set aside for obvious violations of Article 21 of the Constitution as it imposed punishments contrary to a procedure established by law as no right of hearing or right of appeal was provided by the clause. Similar provisions for collective fines are present elsewhere that have these procedural safeguards [See, Section 16 of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act 1989].

Which brings me to the more interesting part of the decision concerning categories (i) and (ii). The primary plank on which these penal clauses are set aside is an argument on proportionality, i.e. the sentence imposed for an offence must be proportionate to the harm purportedly caused by the offence. This is a rather crude summation of what is a highly technical concept in sentencing theory [See, Andrew Ashworth Sentencing and Criminal Justice (5^th edn., 2010); Andrew Von Hirsch Censure and Sanctions(1993)]. The High Court located the concept of proportionality in criminal statutes in Article 21 of the Constitution by relying upon the Supreme Court decisions in Mithu Singh v. State of Punjab [(1983) 2 SCC 277] and Vikram Singh v. Union of India[(2015) 9 SCC (502)]. The three judges in Vikram Singh framed the proportionality test as follows: “Courts, however, have the jurisdiction to interfere when the punishment prescribed is so outrageously disproportionate to the offence or so inhuman or brutal that the same cannot be accepted by any standard of decency.”

In this case, the harm as per the State of Bihar was the various evils associated with excessive alcohol consumption that are afflicting its people. The response was to introduce penal provisions that had these notable features:

• A presumption of guilt which the accused must rebut without specifying whether the State had any burden to prove objective facts displaying commission of the offence;
• Broad constructive liability attracting persons whose property was allegedly involved in the commission of offences. These persons would be subjected to the similar presumption of guilt which they must rebut;
• Mandatory minimum punishments – warranting that a sentence of at least ten years’ imprisonment be awarded for possessing alcohol and at least five years for consuming it in a public place;
• Sealing of properties allegedly involved in commission of offences and their confiscation upon conviction;

The Court posed to itself a question – was this response proportionate to the harm – and answered it in the negative as it found the penal clauses were notoriously overbroad and unspecific. There was no gradation of punishment to differentiate minor and major violations. Nor did the punishment clauses show any sensitivity to how different acts posed different harms. The NDPS Act was cited as an example of how such clauses can be provided within constitutional limits (to think that the NDPS Act would appear as a measure for principled criminal legislation!). Notably, Justice Singh did not restrict his opinion to the badly drafted punishment provisions for his proportionality analysis. It also looked at the various procedural conveniences incorporated by the 2016 Amendments, i.e. the reversed burdens of proof and coercive procedures of confiscation and sealing of property. Although persons could plead ignorance as a defence, broad constructive liability meant far too many people would be unfairly accused and subjected to these coercive procedures while having to prove their innocence. These dangers were not set aside by the stringent punishments imposed on vexatious actions by overzealous state agents.

Some Comments

The absence of any sentencing policy or guidelines has been a common lament for several criminal law scholars in India over the years. This decision puts the problems starkly into perspective. Imposing a minimum ten-year imprisonment for possessing alcohol and confiscating premises where nobody knew alcohol was present there seems to satisfy the outrageously disproportionate standard of the decision in Vikram Singh. However, the Supreme Court in both Mithu Singh as well Vikram Singh was at pains to stress the different position that the death penalty occupied from a sentence of imprisonment. In Mithu Singh, one may recall, Section 303 IPC was set aside because it only allowed for the death sentence without any alternative. The Supreme Court in Vikram Singh put it bluntly: “there are very few and rare cases of sentences of imprisonment being held disproportionate.” The Patna High Court decision is therefore remarkable, for it places the penal clauses in the Bihar Excise (Amendment) Act 2016 in this category of very few and rare cases. To my knowledge, this is the first decision to use the proportionality doctrine to set aside penal clauses despite no death sentence being involved.

There are deeper problems though. The decision in Vikram Singh provided a neat ‘sum up’ of principles on proportionality at Paragraph 52. It was a summing up of principles drawn from Canadian and American jurisprudence – both have specific constitutional prohibitions on certain kinds of punishment. India does not. In fact, the Supreme Court on an earlier occasion in Jagmohan Singh v. State of U.P. [AIR 1973 SC 947] specifically noted that American jurisprudence on prohibiting cruel and unusual punishment [flowing from the Eighth Amendment to the United States Constitution] could not be imported in India because the Indian Constitution did not have similar clauses. Of course, Maneka Gandhi came after Jagmohan Singh and expanded the boundaries of Article 21 allowing us to possibly incorporate the Eighth Amendment jurisprudence. The problems of having such an indeterminate constitutional jurisprudence have been seen with the tussles over the right to privacy and its scope. Therefore, it should be clear that proportionality analysis of punishment clauses does not have a sure footing in Indian constitutional law and the expansion by the Patna High Court may well be considered beyond its current scope.

Conclusion

 

For now, though, one can only be happy with how proportionality is invoked to set aside statutes inflicting persons with disproportionate terms of imprisonment. This experience is similar to what happened in Maharashtra with the beef ban, where again a proportionality argument was raised to set aside the reverse burden clauses. It shows us that High Courts are stressing on a more principled brand of criminalisation, something that has not been the hallmark of how criminal law developed in India over time. A refusal to budge especially when prohibition was such an integral scheme of the ruling government reflects a commitment to principles that must be lauded. The decision is kind, for it tells the legislature what can be done to fix the law. If the State of Bihar chooses to challenge the decision rather than amend the statute, the Supreme Court will be able to consider these important questions. One hopes it upholds how the Patna High Court applied proportionality to restrain the legislature from abusing its near-plenary powers in sending people away for a decade for having a pint.

Modern Dental College vs State of MP: The Supreme Court’s foray into proportionality and public goods

Tags

educational institutions, freedom of occupation, Freedom of Trade, proportionality, reasonableness

Earlier this week, a Constitution Bench of the Supreme Court handed down a unanimous judgment (with a majority and concurring opinion) in the case of Modern Dental College vs State of Madhya Pradesh. The Petitioner’s had challenged the constitutional validity of the ‘Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007′ [“the Act”], as well as the Admissions Rules, 2008 and the Madhya Pradesh Private Medical and Dental Post Graduate Courses Entrance Examination Rules, 2009, which were framed by the State Government in exercise of the power conferred upon it under the Act. Broadly speaking, the Act and Rules were framed to regulate private professional educational institutions. Among other things, they prescribed a compulsory common entrance examination administered by the government (Section 6), provisions for fee fixation by a government committee based on certain detailed criteria (Section 9), and for the reservation of seats. Before the Madhya Pradesh High Court, the petitioners’ primary contention was that the Act and Rules amounted to excessive interference in the autonomy of private educational institutions, and consequently, violated Article 19(1)(g) of the Constitution. The MP High Court rejected the petitioners’ arguments entirely, and upheld the validity of the Act and Rules. The High Court’s judgment was based upon the precedent in T.M.A. Pai, P.A. Inamdar, and subsequent cases, which had decided the extent to which the State could intervene into the functioning of private, unaided colleges.

Before the Supreme Court, the primary contention of the Petitioners was that “by the impugned legislation the State seeks to wipe out the choice available with the appellants institutions to devise their own admission procedure and the provisions of Section 6 read with Section 3(d) necessitate that the admission be carried out only on the basis of a CET to be conducted by the State Government or any agency appointed by it…  in addition, Section 9 of the Act provides for the Committee defined under Section 3(c) of the Act to ‘determine’ and ‘fix’ the fees to be charged by the appellants and thereby completely trample the rights of the appellants to determine and charge the fee…”, and that the provision of reservation violated the judgment of the Supreme Court in Ashoka Kumar Thakur’s Case. (paragraph 19) In other words, through the impugned Act and Rules, the State was effectively attempting to “take over the control of the affairs of the institutions” (paragraph 22), and that this could not be justified as a reasonable restriction under Article 19(6).

The petitioners’ arguments were rejected by the Supreme Court, which upheld the judgment of the High Court and the constitutional validity of the Act and Rules. The Court started by observing that “though education is now treated as an ‘occupation’ and, thus, has become a fundamental right guaranteed under Article 19(1)(g) of the Constitution, at the same time shackles are put insofar as this particular occupation is concerned which is termed as ‘noble’. Therefore, profiteering and commercialisation are not permitted and no capitation fee can be charged.” (paragraph 30) Leaving aside for the moment the general merits of this view, effectively, the argument here seems to be that insofar as an educational institution is engaged in profiteering, it cannot invoke the protection of Article 19(1)(g) to start with. If this is the case, then there is no need to carry out an Article 19(6) analysis. This is precisely what the Court proceeds to do, however. Perhaps, then, a better way of understanding the issue (although the Court doesn’t put it this way) is that the prevention of profiteering is a weighty reason in support of the reasonableness of the restrictions placed upon the Article 19(1)(g) right.

Much of the analysis that follows is essentially a dense, textual reading of the T.M.A. Pai and Inamdar judgments, both of which bind the Court. There is, therefore, little profit in analysing the reasoning of this part of the judgment. Put briefly, the Court follows T.M.A. Pai in holding that the freedom of occupation of educational institutions under Article 19(1)(g) includes the freedom to admit, to set up a reasonable fee structure, to appoint staff, and to take action in cases of dereliction of duty (paragraph 33). T.M.A. Pai had then held that in the case of professional institutions, the admissions criteria must be “fair, transparent and non-exploitative” (paragraph 36), with the overriding consideration being merit. For this purpose, T.M.A. Pai had permitted the government to frame regulations (paragraph 37). Furthermore, P.A. Inamdar had held that the constitution of Committees for monitoring admissions and fee structure, in order to prevent exploitation, was constitutional (paragraph 42). Post-audit measures were insufficient for this task (paragraph 43).

Relying upon this precedent, the Court then considered the question of whether the impugned Act and Rules constituted reasonable restrictions under Article 19(6). In a rare instance of clarity and decisiveness when it came to Article 19, the Supreme Court expressly held that determining “reasonableness” required a proportionality enquiry. There is nothing especially novel or original here. As far as State of Madras vs V.G. Row, the Supreme Court had effectively read proportionality into the reasonableness requirement under Article 19(6):

“The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.”

In the intervening years, however, the Court has rarely fleshed out the contours of this test. The nadir of its Article 19(2) – (6) jurisprudence was undoubtedly Society for Un-Aided Private Schools vs Union of India,  where the Supreme Court upheld the RtE’s compulsory requirement that private schools admit students from under-privileged backgrounds to the extent of 25% of their strength, without even an attempt to analyse the restriction in the context of reasonableness under Article 19(6). At the very least, therefore, in its present judgment, the Supreme Court did well by bringing proportionality back upon the centre-stage of an Article 19(1)(g)-19(6) analysis:

“… a limitation of a constitutional right will be constitutionally permissible if: (i) it is designated for a proper purpose; (ii) the measures undertaken to effectuate such a limitation are rationally connected to the fulfillment of that purpose; (iii) the measures undertaken are necessary in that there are no alternative measures that may similarly achieve that same purpose with a lesser degree of limitation; and finally (iv) there needs to be a proper relation (‘proportionality stricto sensu’ or ‘balancing’) between the importance of achieving the proper purpose and the social importance of preventing the limitation on the constitutional right.” (paragraph 53)

The Court then went into a detailed survey of proportionality jurisprudence in other countries (paragraph 53 – 59), before endorsing the test in the context of Indian Article 19 jurisprudence.

Unfortunately, however, after laying out the test with admirable clarity, the Court failed to apply it to the present case. In paragraph 61, it noted:

“We are of the view that the larger public interest warrants such a measure. Having regard to the malpractices which are noticed in the CET conducted by such private institutions themselves, for which plethora of material is produced, it is, undoubtedly, in the larger interest and welfare of the students community to promote merit, add excellence and curb malpractices. The extent of restriction has to be viewed keeping in view all these factors and, therefore, we feel that the impugned provisions which may amount to ‘restrictions’ on the right of the appellants to carry on their ‘occupation’, are clearly ‘reasonable’ and satisfied the test of proportionality.”

This, however, is merely an assertion. Proportionality would require the Court to actively consider alternative options, and ask whether they were adequate to meet the goal of ensuring “fair, transparent, and non exploitative” procedures. For instance, the Court ought to have given cogent reasons as to why a post-admission audit (which infringes Article 19(1)(g) to a significantly lesser extent) was not adequate. The mere fact of prevailing exploitation and other malpractices was not enough to justify the particular State action in the present case, which – admittedly – constituted far-reaching interference with the autonomy of private educational institutions. The same problem plagues the Court’s analysis of fee-fixation: the Court rejected post-audit measures without explaining why – something that was not open to it if it was faithfully applying a proportionality test. (paragraph 73) Admittedly, the Court did make an attempt to do so in Paragraph 88, where it referred to numerous irregularities in privately-conducted entrance tests, and pointed to the greater accountability of State-administered ones (an assertion which, itself, would be open to doubt). This, however, is certainly not enough to reach such a strong conclusion about the reasonableness of the restriction.

This should not be taken to mean that the Supreme Court was necessarily incorrect. However, its application of the proportionality standard was certainly insufficient, since the whole purpose of that standard is a careful sifting of evidence, so as to ensure that restrictions are proportionate, and that if the same goal could be achieved by a different route, that did not infringe upon rights to the same extent, then it is the responsibility of the State to choose that route.

In addition to the discussion of proportionality, there is another significant aspect of this judgment that is worth noting. In paragraph 83, the Court observed:

“Thus, when there can be Regulators which can fix the charges for telecom companies in respect of various services that such companies provide to the consumers; when Regulators can fix the premium and other charges which the insurance companies are supposed to receive from the persons who are insured, when Regulators can fix the rates at which the producer of electricity is to supply the electricity to the distributors, we fail to understand as to why there cannot be a regulatory mechanism when it comes to education which is not treated as purely economic activity but welfare activity aimed at achieving more egalitarian and prosperous society by empowering the people of this country by educating them. In the field of the education, therefore, this constitutional goal remains pivotal which makes it distinct and special in contradistinction with other economic activities as the purpose of education is to bring about social transformation and thereby a better society as it aims at creating better human resource which would contribute to the socie-economic and political upliftment of the nation.”

This is crucial, because the justification for regulation under Article 19(6) has gone from the “charitable nature” of education, to education as a public utility. The latter is a far more defensible basis for regulation. The charitable activity argument, which has plagued the Court for quite a few decades, is little more than an imposition of the Court’s personal morality upon unwilling education providers, and entirely at war with reality. Education’s public function, however, is independent of the subjective intention with which providers engage in the business, and is also a constitutional basis for regulation. We can surely hope that the Courts will, after this, gradually abandon the no-profiteering-because-charitable-activity view of education, and move to a conceptual framework that places issues of public good and access at the heart of the enquiry.

Consequently, while parts of the reasoning of the Court’s judgment are open to serious question, there are two important things that the judgment does. First, it places proportionality at the centre of the “reasonableness” enquiry, and lays the groundwork for the future development of jurisprudence along these lines. And secondly, it initiates a shift in the discourse from the charitable character of education, to its role as a public utility. It remains to be seen whether either of these developments will have an impact in the coming years.