Coronavirus and the Constitution – XXXI: The Payment of Wages Order

On March 29th 2020, the Home Secretary – acting in his capacity as the Chairperson of the National Executive Committee under the Disaster Management Act – issued an order requiring, inter alia, that “all the employers, be it in the Industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.” The context of the Order is important: this direction was one of five directions passed in light of the fact that, after the announcement of the nationwide lockdown on March 24th, there had been large-scale movement of migrant labourers back to their home-towns. Mandatory payment of wages was one measure to forestall this movement, along with other measures such as suspension of rent for a month, a temporary ban on evictions, and so on.

This order was challenged before the Supreme Court in Ludhiana Hand Tools Association v Union of India. After granting a temporary stay on coercive action against businesses that were not complying with the order, the Court heard arguments, and judgment is expected later this week.

The primary argument of the employers turns upon the contention that the Disaster Management Act does not grant the central government the power to compel the payment of wages to the workers. The order itself invoked section 10(2)(l) of the DMA, and the employers argue that this provision only enables guidelines to government authorities, not private entities. Petitioners also contend that Section 65 of the Disaster Management Act, which allows the National Executive Committee to “requisition resources” in order to ensure a prompt response, and is followed by Section 66, which compels the payment of compensation in case of requisition, is the only provision under the DMA which authorises the government to impose obligations on private parties is Section 65. This (or so the argument goes), on its terms, does not allow a direction for the mandatory payment of wages; and that in any event, even if it does, the terms of Section 66 have not been complied with.

Now, as a legal argument, this contention is very clearly flawed. There are two reasons for this. The first is that the series of guidelines and orders issued on and after the 24th of March 2020 have not been issued under Section 65 of the DMA, but under Sections 10 – in particular, 10(1) and 35 of that Act. Previously on this blog, we have critiqued these sections for being over-broad and enabling executive carte blanche; however, as long as these sections remain on the statute books, the power of the government to act remains within the framework of the DMA (Section 35, in particular, authorises the government to take measures that are “expedient” for the purposes of the Act).

More importantly, however, the point is this: the impugned direction in the order of 29th March cannot be severed from all the other directions that have been passed by the NEC under the framework of the DMA. These directions – that constitute the warp and the weft of the lockdown itself – impose obligations upon private parties. These include, for example:

  1. The order of closure of shops and establishments, which gave rise to this controversy in the first place.
  2. Orders restricting the movement of individuals between state borders.
  3. Orders imposing “night curfews.”
  4. Orders banning public gatherings.
  5. Orders mandating social distancing.

Examples can be multiplied, but the basic point is that if the Court was to hold that the payment of wages direction is unconstitutional because the DMA denies to the government the power to impose obligations upon private, then it would necessarily follow that the lockdown itself – which is nothing more than a web of interlocking obligations imposed upon private parties – is itself unconstitutional, as a whole.

Or, to put it another way: in order to enforce the lockdown, the government imposed a series of obligations and restrictions upon a whole host of private parties and individuals, that have put them to a significant amount of hardship. It would be oddly asymmetrical if those restrictions were upheld, but directions to mitigate their impact upon some of the most vulnerable and marginalised segments of society, were struck down for want of power.

Now it may be argued that the distinction between the orders set out above, and the direction for the payment of wages, is that in the latter case, there is an already existing regime of labour law (set out in the Industrial Disputes Act and other laws) that governs this question. This argument, however, is flawed as well: the DMA has a general non-obstante clause (Section 72) that makes it prevail over inconsistent statutory provisions in other laws; however, the Industrial Disputes Act has a specific exception to its non-obstante clause for provisions that are more beneficial to workmen than what they may get under the ID Act; the impugned direction, it should be clear, falls squarely within the scope of the objection, thus obviating any need for adjudicating between seemingly conflicting laws.

Consequently, the challenge to the competence of the NEC in issuing the directions for the payment of wages cannot succeed. What of the substance of the direction itself? It may be argued that it violates Article 19(1)(g) (freedom of trade and commerce) by compelling employers to pay wages even when their shops themselves have been closed down. In this context, it is important to note the following: the source of the dispute is State action; in particular, the Order of 24th March 2020, mandating the closure of all shops and establishments for the duration of the lockdown. Now, imagine a situation in which the impugned Direction had not been passed. The result of this would be that workers would – effectively – be deprived of their right to livelihood (under Article 21), as a direct consequence of State action.

It is therefore clear that Article 19(1)(g) is not the only right at issue in the present case, but that Article 21 is involved as well. It is further crucial to note that Article 14 is also implicated: the ability and means to work from home is directly related to socio-economic class, and therefore the Guidelines of closure of 24th March disproportionately impacted workers who are already the most vulnerable and marginalised in society.

Now, in its recent judgment on the Right to Information Act, the Supreme Court noted that in case there was a clash of two fundamental rights, the doctrine of proportionality would apply. Proportionality – in such cases – requires a balancing exercise that ensures that neither of the two rights is effaced. It is clear that no Direction at all would deprive the workers entirely of their right to livelihood during the period of the lockdown, and thus effectively efface Article 21 during that time. On the other hand, it is not evident that a temporary order for the payment of wages would efface the right under Article 19(1)(g) (i.e., force permanent closure of business). To the extent that it does impose a burden upon employers – that also flows from State action – there is no doubt that the State ought to pay compensation. For that, however, there should lie a direct claim against the State for its failure to protect rights under Article 19(1)(g) after its own action has led to their deprivation. However, the remedy for that cannot be to throw the other party to the equation – the more vulnerable and marginalised party – to the wolves, by striking down the payment of wages order itself.

It is therefore my submission that under the existing legal framework, the Direction for payment of wages is legal; at the same time, however, there should be an enforceable fundamental rights claim made against the State for its failure to adequately compensate employers as a result of the lockdown that it imposed following the Order and Guidelines of 24th March 2020.

Guest Post: Attachment of Property, Freezing Orders, and PMLA Investigations: The Need for Reasonable Exclusions

[This is a guest post by Abhinav Sekhri, first published on the Proof of Guilt Blog.]


In almost any prosecution, the property used to commit a crime becomes case property (a murder weapon). In some kinds of prosecutions, this extends to locking down the site of criminal acts (a brothel or a gaming house). There are also other prosecutions, such as those for money laundering, where a major focus is on identifying the property generated from criminal acts (flat bought by public servant from bribe money).

Countries across the world take the view that for effective deterrence of crime, law enforcement must also have powers to take away the proceeds of crime besides prosecuting the criminal act itself. In India, this translates into empowering law enforcement agencies with ability to pass orders for attachment / freezing of assets, to restrain anyone from altering / transferring property that is identified as part of the proceeds of crime. The pre-eminent example of this attachment / freezing order regime in India is the Prevention of Money Laundering Act 2002 [“PMLA”].

Broad Powers 

Currently, Section 5 of the PMLA confers upon investigating officers a power to provisionally (for upto 6 months) attach property which is believed to be “proceeds of crime” [Or property that is “involved in money laundering”, which may or may not be understood to mean a different thing]. To appreciate the breadth of this power, take a look at how Section 2(u) of the PMLA defines the phrase “proceeds of crime”:

“Proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

Explanation. — For the removal of doubts, it is hereby clarified that “proceeds of crime” include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;

 

Keeping aside the fact that the exact scope of this definition is still uncertain even to courts and is almost infinitely broad, there are two key takeaways from the definition: (i) Proceeds of crime can either be the actual property obtained through criminal activity or its value; (ii) The criminal activity itself need only be relatable to a scheduled offence [the list of predicate offences which allow invoking the PMLA].

What we have, then, is a power conferred upon investigating officers to take away almost any asset or property that they can show as having links to the alleged acts of criminality in a case. For example, it means the agency can issue warrants of attachment of a house, as the accused would have invested some money in building / buying the house which will be shown to bear a link to the alleged acts of criminality that are connected to the scheduled offence. And where the property itself is not identifiable, then it would probably trigger an attachment order qua certain amounts lodged in bank accounts.

Safeguards

The breadth of provisional attachment powers under the PMLA necessitates the existence of some legal safeguards to prevent undue hardship at the hands of executive officers. Enter, the three-step logic of the PMLA. The argument, essentially, is that the PMLA contains a multi-level system of safeguards to prevent abuse:

  1. First level — Provisional Attachment: Provisional attachment orders are time-barred and can only be issued if there are “reasons to believe” that property is the proceeds of crime / involved in money laundering. These reasons must be in writing. Further, such orders cannot interfere with enjoyment of immovable property;
  2. Second level — Confirmation: Within thirty days of issuing a provisional attachment order, a complaint must be sent to the Adjudicating Authority which then decides whether or not to confirm the provisional order. This is an independent tribunal which operates totally separately from the criminal court. At this stage, everyone interested in the property has the chance to make their case to show why it shouldn’t be attached, and a reasoned order must be passed by the Authority to justify its conclusions. This process is, again, time-bound.
  3. Third level — Appeal: A right of statutory appeal before an Appellate Tribunal for Money Laundering exists for all persons aggrieved by the orders of the Adjudicating Authority.

In almost any writ petition challenging attachment orders, this is a standard response on behalf of the law enforcement agencies to argue that the matter should remain within the PMLA system and not be taken up by the court.

The Need for Reasonable Exclusions

The three-step logic of the PMLA does offer some safeguards, in theory at least. But even so, this setup has critical design flaws.

The broad attachment powers of the PMLA exist in a system where eventual confiscation of the proceeds of crime requires a prior criminal conviction for money laundering offences. Therefore, almost every attachment order will likely subsist for the several years that it takes for any prosecution to complete. It also means that once a person fails to secure any relief through the three-step PMLA process, she will not be entitled to any enjoyment of her own property.

While this might not be a problem for small, replaceable items, such as a watch or a laptop, it becomes an unimaginable problem where the property is a house. Or, far worse, is the situation where the property attached is money lying in bank accounts. Here, the three-step safeguards come to nought as all access to the property is gone the moment a provisional attachment order is passed. What this means, then, is that a person is rendered penniless, and crippled in her ability to sustain the long legal battle required to prove her case first before the tribunals and then later in the criminal trial.

This is not the only drastic scenario that I can imagine. Consider, for instance, a case where money in bank accounts is attached as the actual proceeds of crime have since been sold. But now, these monies are held in the accounts of a company that has nothing to do with any money laundering allegation and offers gainful employment to hundreds of people.

These routine examples from the world of PMLA prosecutions show just how unfair this legal regime is.  It is also squarely unconstitutional. This complete deprivation of property by passing attachment orders for the entire asset is by no means a reasonable or proportionate manner to secure state interests. If anything, it is a classic case of pursuing state interests by trampling upon the most basic rights of affected persons.

A way to make this regime more palatable would be to start recognising reasonable exclusions from the scope of any attachment orders. For instance, allowing persons to remain in possession upon payment of rent; or allowing certain limited withdrawals to continue running a business and paying salaries; or paying lawyers’ fees. These are not revolutionary ideas and are in fact already part of the law in other countries [See, e.g.Section 303Z5 of the U.K. Proceeds of Crime Act, 2002; Luis v. United States, 136 S. Ct. 1083]. By engrafting a process of recognising reasonable exclusions within the PMLA statutory framework — at the stage of provisional attachment orders for movable property and at the confirmation stage for immovable property — the core fairness and proportionality concerns would be answered to some extent. Moreover, it would also help save judicial time, as currently such reliefs are sought either through writ proceedings in High Courts or through interim orders before the Appellate Tribunal.

Conclusions

The PMLA has not been a statute shy of legislative tinkering. Often, this has been a response to some or the other gaps being pointed out in the scheme of the Act. The absence of any reasonable exclusions from the attachment regime is as big a gap as there can be. It leads to a disproportionate deprivation of the basic rights (and needs) of innocent persons, and also wastes valuable judicial time and effort. Ergo, a happy ending? Remember, it is the hope that kills you.

Guest Post: Proportionality in Application – An Analysis of the “Least Restrictive Measure”

[This is a guest post by Ankush Rai.]


Introduction 

Proportionality, at the most basic level, is the common sense idea that any state action should choose such means which are well-suited to the ends it is pursuing. As Fritz Fleiner, a German administrative law scholar, once wrote – “the police should not shoot at sparrows with cannons.” The principle of proportionality as a standard of review has been adopted universally by multiple countries in their jurisprudence. However, this ‘universal’ principle of proportionality has distinctly local flavours due to the varying history, culture and institutions of different countries.

In India, the proportionality test has also acquired its own flavour and evolved conceptually through a bunch of cases in its jurisprudential history. The test in its newest form was adopted in a 2016 case named Modern Dental College vs State of Madhya Pradesh (hereinafter Dental College). This reformulated version of the proportionality test, which resembles the German version in its language, has been applied in subsequent cases, and as a result has firmly made its place in Indian jurisprudence. In the Dental College case, the Supreme Court of India, in the context of Article 19 of the Indian Constitution, endorsed a four-pronged test for proportionality. It held that –

… 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 adoption of this four-pronged approach by a 5-judge bench of the Supreme Court brought the proportionality test in its true sense to the centre-stage of Article 19 analysis. This test was further amplified when the Supreme Court through a landmark decision in Justice K. Puttaswamy vs Union of India endorsed proportionality as a standard of review for any limitation upon the fundamental right to life and liberty under Article 21. It is submitted that through these two decisions the Supreme Court firmly established proportionality as the new standard of review for any state action that limits fundamental rights.

Against this backdrop, this piece aims to analyse the application of the proportionality principle in its latest form in three recent Supreme Court decisions: Justice K Puttaswamy vs Union of India II (hereinafter Aadhaar case), Anuradha Bhasin vs Union of India (hereinafter Anuradha Bhasin) and Internet Mobile Association of India vs Reserve Bank of India (hereinafter IMAI). In all these three cases, an array of fundamental rights and limitations were reviewed by the Supreme Court using the four-pronged proportionality test. This piece will only focus on the application of the third prong of the proportionality principle (the least intrusive measure) vis-à-vis the above-mentioned cases. This is because firstly, the application of the first two prongs have been largely non-controversial in nature. Secondly, an analysis of the fourth prong vis-à-vis these cases deserves an independent analysis of its own and is beyond the scope of this piece.

The central argument of this piece is that the Supreme Court, through an inconsistent application of the third prong of the proportionality test in these three cases, has made it impossible to determine what the position of the law is on this issue. This inconsistency in application has been created because it has answered the following two questions differently in different cases: firstly, on whom does the burden lie to produce the ‘least restrictive measure’; and secondly, through how much evidence can this burden be satisfied? After it has been established that there is an inconsistent application of the third prong, this piece will put forward an approach which can remove this inconsistency and determine a position for the law in this regard. It will finally conclude on the necessity to have a consistent position of law on this issue and the grave consequences that may arise if it is not done so.

Inconsistency in Application 

The third prong of the proportionality test is a fact-based test as it necessarily entails for the Court to examine various alternative measures that can be adopted to achieve the intended goal of the state. After such examination, the Court should choose the least restrictive but equally effective measure to achieve the intended goal of the state. This piece will now present the answers given by the Court in the above-mentioned judgements for the two questions flagged before. This presentation of the answers of the Court will clearly show the inconsistency with which it has applied the third prong of the test. However, before the analysis is done it is important to note what this analysis will not do. This analysis will not engage in normative scrutiny of ‘what is the correct position of law’ but will limit itself to finding out ‘what is the position of law’. A normative scrutiny would require a very different kind of analysis and is beyond the scope of this piece.

Question 1: On whom does the burden lie?

In the Aadhaar case, a 5-judge bench of the Supreme Court of India held the Aadhar Act to be constitutional through a 4:1 majority. The majority observed in paragraph 280 of the judgement:

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.

 

Hence, on the first question, this observation of the majority makes it clear that it is the petitioner upon whom the burden lies. While this statement of the Court regarding petitioners not providing alternatives is factually incorrect as they had given the alternative of smart cards, this grave factual error is of no concern in this context. All that matter is that the burden was put on the petitioners.

In the case of Anuradha Bhasin, the Supreme Court through a 3-judge bench decision reiterated that fundamental rights could only be restricted in a proportionate manner. Although it did not restore access to the internet in Kashmir, it asked for a review committee to review the suspension orders after seven days.

This judgement, after having a detailed discussion on the proportionality test, summarizes it in paragraph 70. While referring to the third prong of the test it states that “the ‘authorities’ must assess the ‘existence’ of any alternative mechanism in furtherance of the aforesaid goal.” This observation logically entails that if the State has to assess the existence of alternatives it has to necessarily find them out first. Without finding out alternatives it cannot assess their effectiveness. As a result, what the Court essentially means by the extract quoted above is that the burden to produce alternatives is upon the state. This is a reversal from the previous position taken by the Supreme Court in the Aadhaar case in which it placed the burden upon the petitioners. Hence, two contradictory answers to the same question create an inconsistency in the application of the third prong. This inconsistency is only enhanced by the next case of IMAI.

In the IMAI case, a three-judge bench of the Supreme Court lifted the ban on cryptocurrency that had been imposed by the Reserve Bank of India. It did so solely on the ground that ‘alternative measures’ were not considered by the RBI. As a result of not considering alternatives, it had restricted the fundamental right under Article 19(1)(g) of the shareholders of virtual currency trading firms in a disproportionate manner.

In this judgement, in paragraph 6.162 the Court states that “we are obliged to see if there were less intrusive measures available and whether RBI has at least considered these alternatives.” So, the answer to the first question in this case is again given to be – “the State.”

Hence, we have a situation where in the first case, a 5-judge bench of the Supreme Court holds that the burden to come up with alternatives is on the petitioners. In the second case, by defying the rule of precedent, a 3-judge bench holds that the burden is on the state. This would logically entail that the judgement given in the second case by the 3-judge bench is bad in law because it outrightly defies a larger bench’s decision and as a result, the same approach would not be followed in the future. However, in fact, this does not turn out to be true. This is because in the third case the Court again places the burden on the state to come up with alternatives. So, what is the position of the law on this question? Is it the petitioner as per the 5-judge bench decision? Or has the position changed as per two consecutive 3-judge bench’s decision? Which position will the Court adopt in a future case ? The decision of an older 5-judge bench or the decision of two recent three judge benches. There is simply no way to find that answer as things stand now.

Question 2: How much evidence satisfies this burden?

In the Aadhaar case, the answer that the Court gives to the second question is ambiguous. This is because, as has been argued elsewhere on this blog, the manner in which this judgement conceptualizes the third prong is very different from how it applies it.

The manner in which the Court conceptualizes the test is by wholly adopting the model given by Professor David Bilchitz. The model which Bilchitz proposes requires, first, identifying alternatives to the measures adopted by the state; secondly, asking how effective these alternatives are and whether they achieve the state objective in a ‘real and substantial manner’; thirdly, what is the impact of each of these alternative measures on the infringed right; and fourthly, the Court should undertake a balancing exercise. This is how the Court conceptualizes the third prong of the test.

The manner in which the test is applied in the Aadhaar Case, however, is different: the Court does an analysis of the third prong in just one paragraph, where it states that most of the components of the third prong have been dealt with in the first two prongs. Moreover, it holds that the manner in which malpractices have been committed in the past with respect to various public distribution schemes, leaves it with no choice but to hold that there is no alternative scheme with a lesser degree of limitation which can achieve the purpose. Aadhar through its unique identity-based authentication system is the only way to do so.

Hence, we can see a clear disconnect between the conceptualization of the third prong and the manner in which it was applied. It is impossible that the first two prongs of the proportionality test which deal with questions around whether the aim is legitimate and whether there is rational nexus between the legitimate purpose and the way it is being applied, can answer the questions asked while examining the third prong. Moreover, in the application of third prong there is no engagement by the Court on the effectiveness of the alternative measures or the impact of Aadhar and the other alternative measures on the right to privacy.

Therefore, this case answers the second question in an ambiguous manner. It is impossible to determine what standard will the Court follow in a future case. This ambiguous answer is further amplified by how the Court answers the same question in the second and third case.

In the Anuradha Bhasin case, the answer to the second question is found through analysing the so-called ‘relief’ provided by the Court in terms of internet access. The relief as mentioned in paragraph 152 (f) of the judgement states that the existing suspension orders for internet services must be reviewed within seven working days. In this case, since the burden was upon the State to provide for alternatives, it would be correct to assume that the decision of the Court would be based on an examination of the alternatives provided by the state itself. So, what alternatives did the State provide? The answer is none. It simply advocated for a total ban. This is mentioned in the judgement when it records the submissions made by Solicitor General Tushar Mehta appearing for the State. He submits that it is impossible for the state to distinguish between ordinary citizens and troublemakers, and so a total ban has to be imposed. He further submits, with respect to internet services, that it is not possible for the state to ban only certain websites/parts of the internet while allowing access to other parts. Hence, the answer that emerges to the question – through how much evidence is the burden satisfied? – seems to be “whatever the state submits to the Court.” This is because the Court does not lift the internet ban, which is exactly what the State had asked for. The Court simply defers to the evidence given by the state without any engagement or critical analysis of the state’s submissions.

Therefore, while in the Aadhaar case the Court gave an ambiguous answer, in this case it set the standard of deferring to what the state had submitted without any critical engagement or analysis. This standard, however, turns on its head in the IMAI case.

In the IMAI case, the Court establishes a new standard that had not been seen before. The judgement in paragraph 6.172 and 6.173 states that the RBI has to prove with ‘empirical data’ that such harm was caused to the entities it regulates due to cryptocurrency that it had no option but to ban it. This is unlike the previous two cases wherein the alternatives given by the petitioners were completely ignored. In the Aadhaar case, the alternative given was smart cards, and in the Anuradha Bhasin case the alternative given was selective banning of the internet and not a complete shutdown. Both of these were ignored. However, in IMAI, the Court extensively engages with the alternatives given by the petitioners. This can be observed in paragraph 6.162 to 6.164 of the judgement. Additionally, the Court ensures that the RBI responds to these alternatives given by the petitioner, as can be read in paragraph 6.165 of the judgement. Eventually, on the account of the RBI not being able to give demonstrable evidence, the Court strikes down the ban on cryptocurrency. So, the standard set through this case is – the state through ‘empirical data’ must establish why the action it took was the only possible measure and no alternative measure could have been adopted.

Hence, a simple perusal of the answers given by the Court to the same question puts us in a very complicated position. While in the first case, a 5-judge bench sets an ambiguous standard, in the second case, a 3-judge bench sets the standard of deference to the whatever the state submits. Yet in the third case, another 3-judge bench sets an entirely new standard of asking the State to demonstrate with ‘empirical data’ that alternative measures are not equally effective. All this again begs the question – Which standard will the Court follow in a future case? This is because all three judgements set three different standards.

A Consistent Approach to the Law

Now that it has been established that the law with respect to the third prong is undetermined because of the inconsistent application of the third prong of the test, a new approach will be suggested by the author to create consistency in application. What is the new approach? The answer to this question is embedded in citation 13 of the case where it all started – Modern Dental College vs State of Madhya Pradesh. The Supreme Court in this case had adopted the four-prong proportionality test from the book of Aharon Barak (former Chief Justice of the Supreme Court of Israel) titled Proportionality: Constitutional Rights and Their Limitation. There is an extensive discussion in Chapter 16 of this book on the issue of burden of proof in the context of proportionality. Regarding the question on whom does the burden lie, Barak makes a very nuanced argument. He states the burden should lie both on the petitioner as well as the State. However, the nature of the burden on both of them will be different. On the petitioner, the burden is to bring forth alternative measures that are less intrusive but equally effective in nature. This is because the state should not bear the burden of dealing with an infinite set of possibilities through which legislation can be carried out. On the state, the burden is to examine those alternative measures suggested by the petitioners, and then show through evidence that the alternative measures put forward by the petitioners do not achieve the intended goal in an equally effective manner. This is because only the state has the financial and logistical capability to test those alternative measures. This is how the first question – on whom the burden should lie – is answered by Barak.

Regarding the second question: how much evidence is needed to satisfy the burden – he states that this ought to be determined by the Court. He then lays down how the Court should determine this. He states that in situations where the State, due to whatever reason, simply does not provide a full factual framework as to the justification for the limitation on a fundamental right then the Court should use its powers to the demand the production of more evidence by the state. The Court should urge the state to factually demonstrate with evidence that the alternative measures provided by the petitioners which it is rejecting do not achieve the intended goal in an equally effective manner. This is level of evidence that needs to be satisfied. If, even after this, the State does not come up with factual evidence to justify the limitation it has put up on a fundamental right, then the Court should hold the limitation unconstitutional. Hence, at the end of the day if the Court is not satisfied with the justification for the limitation on a constitutional right, then it should declare the limitation unconstitutional. It should be noted here that a similar approach was adopted by the Supreme Court in the IMAI case.

Admittedly, the approach suggested by Barak is a complex approach to understand, and hence warrants an example. Let us take the example by applying the above approach in the Aadhaar case. As the burden is on both parties but of different nature, the petitioners ought to provide alternatives, like they did with smart cards. Now the burden would fall upon the State to examine the alternative of smart cards and then through evidence establish whether smart cards could or could not achieve the intended goal in an equally effective manner as Aadhaar could. Say the state claims that smart cards do not achieve the intended goal in an equally effective manner. In such a scenario, the Court has to step in find out whether the state has provided the full factual framework in conducting its examination of smart cards. Suppose the Court is not satisfied with the factual framework and feels that the State has either negligently or wilfully not provided the same. Then it should demand that the State factually demonstrate how it came to the conclusion that smart cards are not as effective as Aadhaar in achieving the intended goal. If the State still does not provide any such evidence, then the Court should hold the limitation unconstitutional.

Conclusion

In conclusion, the author would like to state the grave consequences of having an inconsistency in application of the third prong of the proportionality test. One of the eight ‘principles of legality’ as per Lon Fuller is that Law should be free from contradictions and have consistency. If this is not the case, then it cannot be called a law. An inconsistent law is no law at all. This basic understanding of law gains a lot more importance when applied in the context of proportionality. Proportionality is now an established standard of review with firm roots in Indian jurisprudence, something that is used to check whether any limitation on fundamental rights is valid or not simply cannot have an inconsistent application – otherwise, a citizen will never know whether his fundamental rights will be protected by the Supreme Court when the wrath of State is unleashed upon him. This also violates the normative role of a constitutional Court in a democracy, which is to act as a check on excessive state power. Therefore, it is submitted that the third prong of the proportionality test should be made consistent and in order to do that the above approach should be established.


[The author would like to thank Tanvi Apte and Bhavisha Sharma for their inputs on the article.]

Coronavirus and the Constitution – XXI: The Mandatory Imposition of the Aarogya Setu App

The extension of the “nationwide lockdown” by another two weeks has brought with it a slew of further directions under the National Disaster Management Act. Many of these directions exacerbate the problems pointed out in previous posts. For example, unlike previous directions, this one actually does impose a physical curfew (between 7PM and 7AM), and directs local authorities to pass necessary orders implementing it. This particular direction lies at the intersection of rule by executive decree and the undermining of federalism, as discussed previously. In this post, however, I want to briefly consider Guideline 15 of Annexure 1, which mandates the use of the government’s contact tracing app – Aarogya Setu – for all private and public employees, and obligates employers to ensure 100% coverage.

To those who have followed the many twists and turns of the Aadhaar story, this metamorphosis from “voluntary” to “voluntary-mandatory” to “effectively mandatory” will have a familiar ring – the pandemic probably just accelerated the pace of transformation from a few years to a few weeks. The mandatory imposition of Aarogya Setu through executive decree, however, suffers from serious legal problems, discussed below.

The Absence of Anchoring Legislation

As pointed out repeatedly on this blog, the legal framework for the government’s pandemic management strategy has been the National Disaster Management Act, which has an umbrella clause permitting the issuance of guidelines and directions aimed at addressing disasters. Previously on this blog, we have discussed the separation of powers and other democratic problems that come with using vague enabling legislation to anchor a wide-reaching executive response. When it comes to the infringing of rights, however, the problem is even more acute: Part III of the Constitution requires that even before we get to the discussion of whether a rights violation is justified or not, there must exist a law that authorises it. Any such law has to be specific and explicit with respect to the rights that it seeks to infringe, the bases of infringement, the procedural safeguards that it establishes, and so on.

The NDMA cannot be such a law, because it says absolutely nothing about the circumstances, manner, and limitations under which the government is authorised to limit or infringe civil rights (in this case, the right to privacy). The enabling clauses do not help, because – as pointed out above – they are generic enough so as to permit just about any executive decree that (the executive believes) is required to tackle the disaster. If the NDMA was indeed accepted as the basis, then this would effectively subvert the legality requirement entirely and across the board: there could, hypothetically, be one single umbrella legislation that stipulates that “the government may do anything that it believes is reasonable to achieve the public interest” , and do away with any further need for lawmaking in toto. This, however, is the very definition of rule by executive, instead of the rule by and of law.

It should be noted that the proposition I am advancing here is a very basic one. Last week, for example, the High Court of Kerala refused to allow the government to cut salaries without specific legislation authorising it (the Court correctly observed that the existing provisions of the Epidemics Act and the Kerala Covid-19 Ordinance were far too generic to authorise such a step). We shall discuss the judgment of the Kerala High Court in a subsequent post, but for now, suffice it to say that this is not just a basic proposition under Indian law, but a basic proposition everywhere. The Israeli High Court – not exactly known for being a hotbed of bleeding-heart liberal jurisprudence – held a few days ago that the Shin Bet could not engage in surveillance without authorising legislation. A few months ago, the High Court of Kenya held that GPS Coordinates and DNA samples could not be collected under cover of a general law, but – at the very least – would require “anchoring legislation” to do so.

The requirement of specific legislation is not a mere procedural quibble, but a crucial constitutional point. One, of course, is the separation of powers issue, which we have discussed before: if the State is going to mandate an intrusive, data-collecting app upon its citizens, then the least that ought to be done is that it be authorised by the citizens’ elected representatives, in Parliament. Equally importantly, however, a hypothetical “Aarogya Setu law” will necessarily have to demonstrate constitutional compliance with respect to data protection principles. A good example of this – again – is the history of Aadhaar: once it became clear to the government that it actually had to pass an Aadhaar Act, the accompanying infrastructure – including limitations upon the use of Aadhaar – also had to be considered. Writing out these provision in law also enabled an informed challenge in Court, where at least a part of the Act was struck down for being unconstitutional (I need not go over that again here). Blithely mandating Aarogya Setu in one sentence through an executive decree tears the constitutional architecture to shreds.

The Proportionality Test(s)

Given the government’s penchant for Ordinances (the Kerala government has, for example, issued an ordinance to get around the High Court’s salaries judgment), the requirement of legislation is unlikely to present an effective check upon executive abuse. That, however, makes it important to highlight that there exist serious substantive constitutional concerns with the mandatory use of the Aarogya Setu app.

As is well known, the proportionality standard for adjudicating whether a violation of the right to privacy is justified or not has four prongs: legality (requirement of a law, with a legitimate purpose), suitability (the government’s action must be suitable for addressing the problem, i.e., there must be a rational relationship between means and ends), necessity (i.e., it must be the least restrictive alternative), and proportionality stricto sensu (there must be a balance between the extent to which rights are infringed and the State’s legitimate purpose).

There is, by now, extensive literature on the question of the very effectiveness of contact-tracing apps to fight a pandemic such as Covid-19. As this Brookings Paper shows, (a) contact tracing is effective where there exists large-scale testing capacity and less spread (the first condition certainly does not exist in India today); (b) there is a high risk of false positives and false negatives, something that gets worse as the population size increases (recent examples in India bear testimony to this); (c) the absence of complete smartphone penetration can defeat the purpose (particularly true for India) (the authors also point out other risks, such as social stigmatisation). It is, therefore, an open question whether the second limb of the proportionality test – suitability/rationality – is satisfied.

The problem grows more severe when we come to the necessity prong (discussed previously on this blog as well). The data collection practices of the Aarogya Setu app – and how they fall short of constitutional standards – have already been discussed extensively (see here, here, here, and here). Now, it is not the purpose of this post to engage in a detailed technical discussion about whether the Aarogya Setu app complies with the third limb of the proportionality standard or not (much of that work may be accessed in the links above). However, there is a broader legal point that needs to be noted. This is the issue of burden: it is well-established under Indian constitutional jurisprudence – most recently in the Aadhaar judgment – that once a prima facie violation of privacy has been demonstrated, the burden of justification (under the proportionality standard) shifts to the State. In other words, it is for the State to show that the suitability and necessity prong of the proportionality standard are satisfied. A necessary corollary of this is that as far as the suitability prong goes, the State cannot mandate the use of a privacy infringing app before it is first demonstrably established that a means-ends relationship actually exists. Thus, if – as the Brookings analysis shows – there is a non-trivial likelihood that the app in question cannot achieve the very (legitimate) purpose that it is designed for, it cannot be made mandatory.

Secondly, as far as the necessity prong goes, it creates a constitutional obligation upon the State to be transparent about the basis for choosing this app, designed in this way. Were less intrusive alternatives considered (see the IFF working paper linked above)? If so, were they found non-suitable for the goal? If not, why were they rejected? And even if not, why is there not a mandatory sunset clause here? Once again, this is not a radical legal proposition: in the Aadhaar judgment, the mandatory linking of bank accounts with Aadhaar was struck down precisely on the basis that there existed less restrictive alternatives, and that the government had comprehensively failed to provide any reasons why they had not been considered. It is fair to say that if the government cannot even show why it has chosen a more intrusive data collecting app over a less intrusive alternative (that exists), then it is in no sense a constitutionally justified decision.

Conclusion

The government directive mandating Aarogya Setu for all public and private employees suffers from serious legal flaws. In the absence of a specific anchoring legislation, it fails the first limb of the proportionality test. And on more substantive grounds, the government bears the burden of showing that the design of the app satisfies both the suitability and the necessity prongs of the test – a burden that, thus far, remains undischarged (indeed, going by blithe ministerial statements about how the app might continue to be in use for two years, there seems to be very little appetite in the government to even attempt to discharge that burden). There would, therefore, appear to be excellent legal grounds for a challenge to the NDMA Direction; of course, the prospect of any such challenge succeeding at a time when the Court appears to have withdrawn itself from its task of rights adjudication, is another matter.

Guest Post: The UP Hoardings Case and Misplaced Comparativism

[This is a guest post by Shubhangi Agarwal and Harsh Singh.]


In March, the Uttar Pradesh administration had ordered the putting up of banners in Lucknow with names, photographs and addresses of more than fifty CAA – NRC protesters, asking for compensation from them for allegedly causing damage to private and public property. Observing a clear case of a breach of privacy, the Allahabad High Court took suo moto cognizance and registered a PIL against the government administration. The court rightly ruled that the actions of the state are “an unwarranted interference in privacy of people” (discussed here). However, this decision was appealed before the Supreme Court, and the apex court, after placing reliance on a UK Supreme Court judgment, ordered that the case be referred to a larger bench for consideration. This article seeks to juxtapose the crisp and timely intervention of the Allahabad High Court with the Supreme Court’s referral order and analyzes the apex court’s misplaced reliance on UK case law.

The Allahabad High Court’s swift justice

The Allahabad High Court criticised the UP administration for displaying such banners on the roads. It applied the proportionality test laid down in the Puttaswamy judgment and observed that the authorities failed it on all the three counts. Firstly, there was no law which permitted such actions. Secondly, the aim to deter mischief and recover money from protesters for alleged damage to public property was not a legitimate aim, as they were not fugitives, and there was no need to publicize their personal details. Lastly, there existed no rational nexus between the means employed and the objective sought to be achieved. Lakhs of accused persons in UP were also facing criminal trials but their personal details were never subjected to such publicity. The court even went on to remark that “the placement of personal data of selected persons reflects colorable exercise of powers by the Executive.”

The Supreme Court’s waywardness

The Supreme Court, on the other hand, shied away from its responsibilities when dealing with the same questions. It relied on a UK Supreme Court case – In the matter of an application by JR38 for Judicial Review (Northern Ireland), and referred the appeal to a larger bench. It is pertinent here to explain the facts of the foreign case to distinguish it from our case. In the UKSC case, the appellant, aged fourteen years, was engaged in rioting and his CCTV footage (taken during the course of rioting) was published in two newspapers by the police authorities. The publication was done to ‘identify’ him and to deter future disturbances. The question was whether there was a breach of privacy under Art. 8 of ECHR.

The UK Supreme Court judgment on this can be divided into two parts – the majority opinion and the minority opinion. The majority (Lord Toulson, Lord Clarke and Lord Hodge) opined that there could have been no reasonable expectation of privacy in the facts of the case, because of the nature of the criminal activity the appellant was involved in. Therefore, the appellant could not have expected non-publication of his photograph by the police for his identification. However, their conclusion that the appellant did not have any reasonable expectation of privacy was greatly dependent upon the ‘identification’ purpose of the police.

Lord Clarke, with whom Lord Hodge concurred, held that (paragraph 112):

I agree with Lord Toulson that on the facts here the criminal nature of what the appellant was doing was not an aspect of his private life that he was entitled to keep private. He could not have had an objectively reasonable expectation that such photographs, taken for the limited purpose of identifying who he was, would not be published. I would not however hold that the mere fact that a person is photographed in the course of a criminal activity deprives him or her from the right to prevent the police from publishing the photographs. Thus, if the photographs had been published for some reason other than identification, the position would have been different and might well have engaged his rights to respect for his private life within article 8.1. I would not therefore put the point quite as broadly as Lord Hope does in para 21 of Kinloch quoted above.

The minority opinion (by Lord Kerr and Lord Wilson) held that that the appellant retained a reasonable expectation of privacy primarily because he was a child at the time the photograph was taken, and factors like age, consent, and risk of stigma also play a role when determining the question of privacy. However, after applying the proportionality test, the judges came to the conclusion that the interference with the appellant’s right to privacy under Art. 8 of ECHR was justified for the same reasons as that of the majority opinion.

Lord Kerr J. with whom Lord Wilson concurred, stated (paragraphs 41 and 76):

Prima facie, therefore, the taking and use of a photograph of an individual will lie within the ambit of article 8. The essential question is whether it is removed from that ambit because of the activity in which the person is engaged at the time the photograph was taken and because the person could not have a reasonable expectation that his or her right to respect for a private life arose in those particular circumstances. The fact that the activity in which the person is engaged is suspected to be criminal will not, by reason of that fact alone, be sufficient to remove it from the possible application of article 8.

The painstaking approach taken by the police service to the objective of identifying young offenders such as the appellant has been explained by Chief Inspector Yates and Superintendent Robinson. Internal police inquiries were made; community leaders and social services were asked whether they could identify those involved; and it is ironical that the appellant and his father were shown the photograph that was later published. Had they identified the appellant, no publication would have occurred.

 

As is clearly evident from the above paragraphs, the photograph was published with the clear purpose to identify the wrongdoer; in the present case, however,, banners with personal details were put up to seek compensation from protesters for damage to public property, and to ‘name and shame’ them. There is a stark contradiction in both the objectives. These protesters were not fugitives and were not trying to bypass their interrogation and trial.

Conclusion

Only a few days before this referral order, the Supreme Court in Shah Faesal v Union of India, had remarked on judicial references. It had noted that “when substantial judicial time and resources are spent on references, the same should not be made in a casual or cavalier manner.” Regrettably, it failed to follow its own laid down principle. Moreover, the recovery notices which were issued to the protestors were challenged by them and the matter was already pending before the court. In such circumstances, the reference order was evidently unjustified. The result of this was that the swift justice delivered by the Allahabad High Court was derailed in the Supreme Court, in no small part because of erroneous reliance upon UKSC case law, as well as a failure to correctly apply the Puttaswamy judgment.

Coronavirus and the Constitution – XV: The Odisha High Court on the Ban on Vehicles [Guest Post]

[This is a guest post by Amlan Mishra.]


In an order delivered two days ago, the Odisha High Court has partially lifted the de-facto ban on movement of vehicles without prior permission of the police. The court held that access to essential commodities stood hindered for people because of this ban, unless the state could put a mechanism in place to make these commodities available near the consumers. It is interesting to note that there has been no official notification, communication or publicized s. 144 order regarding such a ban. The authorities had decided that this was an effective way to implement the social distancing protocol. Accordingly vehicles were being ‘confiscated’ by the police if they were found to be moving without proper passes. The police seemed to argue that walking to the nearby marketplace was the best option for the people. I will show that in lifting the complete ban, the court understood the true meaning of proportionality, and recognized the disproportionate impact it would have on certain groups of people.

Proportionality of movement restrictions

Previously, it has been argued on this blog that a complete curfew like ban on ‘individual movement’ has not been contemplated under the NDMA Act or the Epidemic Diseases Act. The EDA, however, gives broad powers to the state government to control movement of individuals. Gautam Bhatia has rightly pointed out that the ban on individual movement is proportionate only if it allows for exceptions like movement for purchase of essential commodities. Relying on a much more pointed UK regulation, Bhatia has argued that proportionality mandates the following restrictions: “if you are (a) an individual, or a group of two people, (b) are stepping outdoors for a listed activity, or (c) have another reasonable ground for making essential travel, then that is permitted.” Inherent here is the idea that the pandemic spreads by human contact, not by the mere act of stepping out, thus a complete ban on movement cannot pass the test of proportionality.

Accordingly, the Odisha High Court has held that a complete ban on the use of vehicles for buying essential commodities will not pass the threshold of proportionality. The ban is therefore subject to ‘satisfactory explanation by riders’. It performs the balancing exercise thus:

“Until any particular guideline and proper arrangement are brought in the matter of above, there should not be complete ban of movement of two wheelers and relaxation may be made subject to satisfactory explanation by such riders. This may not be construed to be a complete lifting of Ban. As it is for the complete lockdown situation, people of the State are also in serious misery and complete ban of movement of two wheelers in absence of system making availability of essential commodities at the walk-able distance will add further to the miseries of the people.”

Interestingly, the state government had been constantly telling people that proper arrangements have been made to provide them essential goods at close quarters. Arrangements for a few delivery vans etc were being made, according to the police. But the court did not seem satisfied by these assurances. Inherent here was the idea that lived realities of the people did not endorse the assumption that proper arrangements had been made by the government. This approach of the court needs to be juxtaposed with the ‘trust’ that constitutional courts increasingly repose in the executive when it comes to emergencies, even when the question involves fundamental rights. This order provides a welcome departure from the trend of courts camouflaging these questions as matters of policy, or appealing to the best judgement of the executive.

Disproportionate impact on some groups

The order also notes that while asking people to ‘walk’ may seem innocuous it has disproportionate impact on some groups over the other:

Keeping in view the precarious condition prevailing in the State having no particular mechanism in the matter of availability of vegetables, medicines and other such usable items within walkable distance for all, collection of same involves different category of people including Senior Citizens, women and persons unable to ride cycle may be forcing many people to move to particular areas for such collection.

 

This is also a welcome acknowledgement by the court that walking long distances to get essentials may have disproportionate impact on some groups over the other. As has been argued elsewhere in this blog: for the purposes of constitutional adjudication the ‘effect’ of the restrictions on rights matter, not the intention of the government. The effect test is also an established precept of anti-discrimination law, whereby disproportionate impact of a measure on a particular group because of any immutable feature/choice (gender etc) falls foul of the constitution. This action must be appreciated in the background of the Supreme Court’s distasteful remarks questioning the need to ensure payment of wages available to workers (a group disproportionately affected by the lockdown).

Seizure of vehicles and levy of fine

Interestingly, the court also lays down that seized vehicles should be immediately released, upon taking an undertaking from the driver, and such vehicles should be allowed to pass at least ‘thrice’ thereafter, without any levy of fine or punishment. This assumes special importance in light of State Amendments that have recently increased fines and the duration of imprisonment under the EDA. The court appears cognizant of the fact the ultimate determination of whether a particular movement is for ‘essential goods’ or not would fall on the policemen on the ground. A three time leeway to previous offenders was accordingly given to shrink the room for arbitrariness.

Notably, once the government assured the court that vending stalls have been set up in all residential areas of the twin-cities of Bhubaneshwar and Cuttack, this order was modified to allow this leeway only to ‘disabled persons’ and ‘senior citizens’. The modification of the order shows that the court’s role through crucial is limited to plugging access to fundamental rights and limiting arbitrariness.

Overall, the order ticks many boxed of what constitutional courts are expected to do in these times: question ‘adequacy’ of measures taken by the executive; balance rights with the emergency of the situation; lastly acknowledge and mitigate disproportionate impact of measures on vulnerable groups.

Guest Post: The Supreme Court’s Cryptocurrency Judgment

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


[This is a guest post by Suhrith Parthasarathy.]


On 31 October 2008, Satoshi Nakamoto, a presumed pseudonymous person(s), presented a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The intention was to create a decentralized digital currency that would operate without a central bank through an open-sourced network using cryptography to verify and validate transactions. There would, under this model, be no need for any intermediaries, and each transaction would be recorded on a public ledger called a blockchain. At least since 1983, when an American cryptographer David Chaum introduced an anonymous cryptographic digital money called “ecash”, efforts had been made by many persons to create an alternative to fiat money, that is currencies which derive their value through government regulation. But the invention of Bitcoin was the first time a real breakthrough was made.

Since then, various other cryptocurrencies have cropped up, each using blockchain technology to record the transactions. The social media giant Facebook announced in June 2019 that it intended to launch its open form of cryptocurrency, Libra. In India, after the launch of Bitcoin a number of cryptocurrency exchanges began to operate. But they were working in what was really a regulatory vacuum. There was not only no clear definition of what a cryptocurrency was but there was also no law that prohibited or regulated their use. This situation prevailed until April 2018, when the Reserve Bank of India issued a circular, not banning the use of crypto currencies themselves, but the provision of banking services to any person who dealt with such currencies. This effectively meant, though, that any exchange which facilitated the use of cryptocurrencies stood thwarted. But now, in what might come as a temporary relief, if nothing else, to those who deal in these currencies, the Supreme Court has, in Internet and Mobile Association of India v. RBI, quashed the RBI’s circular.

In a 180-page long judgment, authored by Justice V. Ramasubramanian, the court found that while the RBI has the power to regulate Virtual Currencies [VCs], the prohibition imposed through the April 2018 circular is disproportionate, and, therefore, ultra vires the Constitution. In the court’s belief, in the absence of any legislative proscription, the business of dealing in these currencies ought to be treated as a legitimate trade that is protected by the fundamental right to carry on any occupation, trade or business under Article 19(1)(g) of the Constitution. According to the court, the RBI’s circular, in imposing a wholesale moratorium on the provision of banking services to these dealers, unreasonably impinged on what is otherwise a valid vocation, by going beyond the limitations permitted under Article 19(6).

As the Court recognized in its judgment, the circular, issued on 6 April 2018, was a culmination of a series of measures undertaken by the RBI concerning the regulation of VCs. In 2013, the RBI first began to take stock of the proliferation of these currencies, and in June that year it released a Financial Stability Report in which it defined VCs as “a type of unregulated digital money, issued and controlled by its developers and used and accepted by the members of a specific virtual community” In December of the same year, the RBI issued a caution to the users, holders and traders of VCs, which, it said, would include Bitcoins, about the potential financial, legal, and security related risks that they were exposing themselves to, and also pointed out that the RBI was in the process of examining the very legality of the use of these currencies. More press releases followed, before an Inter-Disciplinary Committee, set up by the Government, released a report in July 2017. In this, the committee, once again, advised against dealership in VCs. What is more, the committee also made a recommendation to the government seeking legislative changes that would make the “possession, trade and use of crypto-currencies expressly illegal and punishable.”

But, as is clear, there was, in fact, no law that banned the use of VCs, and that made trading in them illegal. Even as on the date of the judgment, while draft bills had been shared and circulated, with a view to bringing about legislation banning the use of cryptocurrencies, there was no statutory command expressly debarring their use. But the RBI through its circular had, for all practical purposes, put an end to the use of VCs in India by severing the ties between the cryptocurrency market and formal Indian economy.

Two different petitioners went to court against this move. One, the Internet and Mobile Association of India, a non-profit group that aims to represent the interests of the online and digital services industry, and two, a group of corporations that were in the business of running of crypto exchange platforms. Broadly, both the petitioners attacked the circular on the following grounds: first, that VCs are not legal tender but tradeable commodities and therefore that they fell outside the RBI’s regulatory ambit; and second, even assuming VCs were amenable to regulation by the RBI, the circular nonetheless disproportionately impinged on the petitioners’ rights. While the former ground proved unsuccessful, the court accepted the latter. These findings, as we will see, are likely to have serious long-term ramifications.

In the petitioners’ contention, VCs were neither money nor any other form of legal tender. They were, on the contrary, goods/commodities that fell entirely outside the purview of the legislation under which the impugned circular had been issued, that is the RBI Act, 1934, the Banking Regulation Act, 1949 and the Payment and Settlement Systems Act, 2007. Therefore, according to them, the RBI lacked the authority to regulate these currencies.

The court, in responding to this contention, analysed the role and the power of the RBI under these statutes, and sought to determine whether VCs did, in fact, fall within the scope of that power or not. In engaging in this analysis, it noted a rather thorny difficulty: that VCs eluded precise definition. While there were some who described the currencies as an exchange of value, and while some others called it a stock, there were many that pronounced it as a good/commodity. There was a belief that this lack of precise definition could easily see VCs slip out of all regulatory control. Therefore, one ought to examine, the court believed, what the basic, foundational objective of these currencies was.

From a reading of Nathaniel Popper’s book, “Digital Gold: The Untold Story of Bitcoin” the court noted that even Satoshi Nakamoto saw cryptocurrencies as a “digital analog to old-fashioned gold, a new kind of universal money that could be owned by everyone and spent anywhere.” Hence, the currency’s very design was aimed at creating a “cleverly constructed decentralized network without central authority.” Moreover, Nakamoto itself, the court observed, had defined bitcoin as a “new electronic cash system that’s fully peer-to-peer, with no trusted third party.” The judgment found that this basic objective had promoted states across jurisdictions to treat VCs—even though they had not acquired the status of a “legal tender”—as “digital representations of value.” But even still, did this mean VCs are money? And ought that to matter, in deciding whether the RBI could regulate it?

Traditionally—in a theory which harks back to the time of Aristotle—money has been seen as anything that can serve as (a) a store of value, which means people can use it as an asset that can be saved, retrieved and exchanged at a later time; (b) as a unit of account, that is a measure to provide a common base for prices; and (c) as a medium of exchange, not as a commodity, but as something that persons can use to intermediate the swapping of goods and services. In the case of the Indian rupee, for example, it fulfils all three of these conditions. But the rupee represents that form of currency, which is typically referred to as “fiat” money, that is money whose value has been determined by the state. The fixing of this value, as the writer John Lanchester puts is, is “act of faith”. Under this conception, a Rs. 10 note is worth what it is because of what the state claims its value to be.

If one were to use this definition, VCs too would likely fall within the meaning of money. They may not yet work well enough as a store of value or as a means of exchange, and given that they operate through a blockchain—which has no central server and uses digital, cryptographic technologies to authenticate a transaction—it is possible that they might never come to act as a real substitute for money. But that they have elements of each of the fundamental features of money means, as the court has held here, that they ought to be treated as such. The petitioners, however, contended that a fourth element has been added to the existing definition of money, and that for something to constitute money today it ought to also serve as a means towards the final discharge of a debt or as standard for deferred payment. In their belief, VCs did not fulfil this fourth function, either in the sense of being regarded as money by society or as being understood as money under the law.

The Court rejected this argument. It held that as long as there are certain institutions who accept VCs as valid payment for the purchase of goods and services, it was sufficient to bring the currencies within the regulatory power of the RBI. “Anything that may pose a threat to or have an impact on the financial system of the country,” the judgment held, “can be regulated or prohibited by RBI, despite the said activity not forming part of the credit system or payment system.” This power to regulate, the Court added, also included the power to prohibit. And, in any event, what was prohibited here wasn’t the very act of trading in VCs, but merely the provision of banking services to those who trade in VCs.

Having answered the first question thus, the court proceeded to examine whether the practical prohibition of VCs that resulted from the circular unreasonably impinged on the fundamental rights of those who used and traded in VCs, and of those who facilitated such use and trade. On this, there were four primary arguments that were made. First, it was argued that the Section 35A of the Banking Regulation Act required RBI to “satisfy” itself, among other things, that “public interest” or “the interest of banking policy” required it to issue directions. In this case, the petitioners said, no such “satisfaction” had been arrived at. In other words, the RBI, according to them, had failed to apply its mind. The court rejected this argument outright. At least from June 2013 onwards, the RBI, it held, had been studying the use of VCs and pondering over what action ought to be taken.

Second, the petitioners argued that the exercise of power in this case was colourable. In making this argument, they relied, on a reply to an RTI query, in which the RBI had claimed that it had no power to freeze the accounts of defaulting companies or of shell companies. But as the court held here, what the circular did was not to freeze bank accounts, but to simply order entities regulated by the RBI from exiting any relationship that they might have with a person or entity that deals with VCs.

Third, the petitioners argued that the RBI had sought to illegitimately improve its case by supplying reasons for the circular through counter affidavits and submissions. Here, the court held that while the test employed in MS Gill v The Chief Election Commissioner (1978) prohibits an authority from improving its case—in that the impugned order should speak for itself—the court is always free to examine subsequent materials in larger public interest. In this case, the court had expressly directed RBI to issue a detailed reply to representations made by the writ petitioners, and, therefore, the argument based on MS Gill could not be sustained.

Fourth, the petitioners argued that the circular did not meet the test of proportionality. By virtually choking into submission any VC exchange, the circular, according to them, infringed the right to practice any profession, or to carry on any occupation, trade or business, contained in Article 19(1)(g). While this right can be restricted through reasonable measures imposed in the “interest of the general public” under Article 19(6), such measures must conform to the doctrine of proportionality.

This test, as it exists in India, was first expounded by a constitution bench in Modern Dental College and Research Centre v. State of Madhya Pradesh (2016). There, the court held, that this doctrine is inherent in Article 19 and partakes four separate lines of analyses: (1) that the measure has to be designated for a proper purpose; (2) that the measure undertaken is rationally connected to the fulfilment of that purpose; (3) that there are no alterative and less intrusive measures available that may similarly achieve that same purpose with a lesser degree of limitation; and (4) that there needs to be a proper relation between the importance of achieving the aim and the social importance of preventing the limitation on the constitutional right.

Having noted that the proportionality test represents the relevant standard—and the judgment needs to be commended for this, given how rare it is that our apex constitutional court respects its own precedents—the court then plunged not into an analysis of the four prongs and whether they were met by the circular but rather into a consideration of the UK Supreme Court’s verdict in Bank Mellat v. HM Treasury (No. 2) (2013). Bank Mellat concerned the Financial Restrictions (Iran) Order 2009 issued by the Treasury under the Counter Terrorism Act of 2008. Through the order, persons operating in the UK’s financial sector were directed to discontinue any transaction or business relationship with the Bank, with immediate effect. As Justice Ramasubramanian held, this order, which was under challenge in the UK Supreme Court, was somewhat identical to the RBI’s circular. There, as he noted, the majority on the bench struck the Treasury’s order down on the grounds that the issues which the order sought to address, that is the financing of nuclear proliferation activities, were inherent to banking in general and were not special to Bank Mellat, and that in picking and choosing a single Iranian bank the order was arbitrary, disproportionate and irrational. What is more, the majority also found, through Lord Sumption’s opinion, that the order did not arise out of a matter of necessity when less drastic measures were considered to provide protection in relation to other Iranian banks.

In Internet and Mobile Association, the Supreme Court held that it could not go as far as the UK Supreme Court had in Bank Mellat, because the UK has a statute where standards for judicial review are clearly set out. This finding though is perplexing because the Supreme Court has previously held in Modern Dental that the doctrine of proportionality, and the four-prong test it entails, is inherent in Article 19 itself. In any event, having said so, the Court, in Internet and Mobil Association, nonetheless proceeded to examine the circular on the doctrine. It did this not by testing the circular on each prong as laid down in Modern Dental, but only on the question of whether the RBI considered alternative and less intrusive measures than that which the circular adopted. To this, however, the court added an additional test, seemingly derived from a 1969 judgment in Md. Faruk v. State of MP. There, a constitution bench of the Court had held that when a right under Article 19(1)(g) is encroached upon by a complete prohibition of any activity, the State must show the court that the nature of such an activity is either inherently pernicious or has a capacity or tendency to be harmful to the general public.

Before proceeding with an analysis on these lines, though, the Court made two critical interventions. First, it held that given that a person who is denied access to banking services faces onerous consequences, including the effective shutting down of his or her trade, the burden in this case is on the RBI to show that its circular does not unreasonably infract on the petitioners’ rights. Second, it rejected the RBI’s argument that there is, in fact, no fundamental right to trade, sell and invest in VCs and therefore that the petitioners could not invoke Article 19(1)(g). This is because there was no legislation, as on date, that prohibited the use of VCs. Given that, to thwart any exchange that facilitates such functioning by altogether denying them access to banking services would certainly constitute an encroachment on fundamental right. The only question was whether such a restriction is a reasonable one or not.

On that, the court proceeded to examine whether there were less intrusive measures available and whether RBI had considered the adoption of such measures. Potential solution that could have been considered, the judgment held, includes those suggested by the EU’s Parliament: a report by the Union, that examined whether cryptocurrencies ought to be banned outright, for example, recommended that no such ban was necessary so long as good safeguards were in place “protecting the formal financial sector and more in general society as a whole, such as rules combating money laundering, terrorist financing, tax evasion and maybe a more comprehensive set of rules aiming at protecting legitimate users (such as ordinary consumers and investors.”

The RBI, the court held, clearly did not consider such alternatives before issuing the circular, but it had, after the writ petitions were filed, done so by providing specific rebuttals to the petitioners’ contentions. In the court’s belief, once the RBI has applied its mind to the issue and considered alternatives measures it could not sit on judgment over whether such measures are merely illusory. It noted: “While exercising the power of judicial review we may not scan the response of RBI in greater detail to find out if the response to the additional safeguards suggested by the petitioners was just imaginary.” This is disappointing. The test, as laid down in Modern Dental, as we saw earlier, is to examine whether “there are alterative and less intrusive measures available that may similarly achieve that same purpose with a lesser degree of limitation.” The test isn’t, as the court held here, whether the state authority considered alternative measures, but whether such measures as a matter of fact do exist.

Yet, the court still held, based on an application of the judgment in Md. Faruk, that none of the entities under the direct regulatory control of the RBI—the nationalised banks, the scheduled commercial banks, cooperative banks or NBFCs—had suffered any actual harm or loss either directly or indirectly on account of their dealings with the exchanges that have facilitated trading in VCs. Moreover, the RBI, the judgment found, submitted no empirical data on the degree of harm occasioned by dealing with these traders. And in the absence of such data, as the Court had held previously, in State of Maharashtra v. Indian Hotel and Restaurants Association (2013), the State could not be held to have discharged its burden. Therefore, the court held, that the circular offended the doctrine of proportionately and was in violation of Article 19(1)(g).

There are a number of positives to take from the judgment. Not least the reaffirmation of the doctrine of proportionality as the bright-line rule to determine claims made under Article 19, and the actual application of principle to facts. Remember, in Anuradha Bhasin v. Union of India, the court invoked the doctrine but still didn’t apply it to the facts before it. Here the court doesn’t shy away from doing so, and for that it must be lauded. What is more, given that the circular under challenge here was in the nature of a statutory direction any eventual legislation that seeks to regulate cryptocurrencies—or perhaps even ban their use and trade—will have to still conform to the doctrine of proportionality. But when the court tests such a law, it must go further than this. It must also ask the State to show it that it not merely considered all potential measures to regulate the currency but that the eventual measure adopted was, in fact, the least invasive one.

The Kashmir Internet Ban: “Restoration”, White-Listing, and Proportionality

On January 10th – as we discussed on this blog – the Supreme Court handed down its judgment on the internet shut-down in Kashmir (it bears repeating that this is the longest continuing internet shut-down in any democratic country). The Supreme Court’s judgment had two parts: a statement of the law and an application of the law to the facts of the case. On the first issue, the Supreme Court held that accessing information through the internet was a fundamental right, and the principle of proportionality applied to adjudicating the constitutional validity of internet shut-downs (which, inter alia, requires the government to adopt the ‘least restrictive’ method when it comes to restricting rights). On the second issue, the Court directed the “Review Committee” (a government body), constituted under the Telecom Suspension Rules of 2017, to review the situation on a weekly basis.

In response to the judgment of the Court, the Jammu & Kashmir government has passed three orders purporting to partially relax the internet shut-down. In this post, I will argue that a reading of the government’s orders reveals that (a) they are in breach of the legal principles laid down in the Supreme Court’s judgment, and deserve to be challenged; and (b) these orders reveal that the State’s own case before the Supreme Court was based on flawed premises – something that has important consequences for challenges to internet shut-downs, going forward.

At the outset, it is important to note that this is a critique of the government’s orders on their own terms; the larger points – that a five-month long internet shut-down is inherently disproportionate, must be lifted at the earliest, and that the Supreme Court’s judgment unfortunately did not grant relief to the Kashmiris – remains.

The Orders

On 14th January – four days after the Supreme Court’s judgment – the J&K government passed an order stating that cross-border terrorist elements were using the internet to communicate and spread propaganda, which could cause large-scale violence. The government directed, inter alia, for provisions of broadband services to institutions providing essential services, 2G mobile connectivity in certain districts, and the installation of internet firewalls and a set of “white-listed websites” that could be accessed by internet users. Access to social media was specifically prohibited. Subsequently, on 18th January,  second order was passed – this time in exercise of review powers under the Telecom Suspension Rules. This order stated that there was had been no adverse impact after the partial restoration, but reiterated that the internet could be used for incitement, “rumour mongering”, and by anti-national elements. It directed restoration of Voice and SMS facilities on pre-paid SIMS, and extended 2G internet to a few more districts. In addition, it provided a specific list of 153 “white-listed” websites, from Blue Dart to Zomato to Amazon Prime – which could be accessed.

In accordance with the Supreme Court’s judgment, this had to be reviewed on a weekly basis. This, consequently, led to the third order, passed yesterday, which reiterated the twin points of “no adverse impact” and “apprehension of misuse.” This order basically expanded the set of white-listed websites to 301 (adding news websites such as Scroll and The Wire), continued the prohibition on social media, and clarified that “white-listing” was a continuous process.

White-Listing and Proportionality 

The three orders make it clear that the government – in conjunction with Internet Service Providers – has the technological capacity to allow selective access to the Internet (contrary to what the Government’s lawyers argued in court; see this analysis by the Internet Freedom Foundation). Independent of the overall constitutional arguments (indicated above), a very simple conclusion follows from this: that internet shut-downs are inherently disproportionate, because a less restrictive alternative exists at all times. If the government’s entire justification for internet shut-downs is that the internet is being used for “rumour mongering” and “incitement to violence”, it is clear that blocking access to all of the internet – a large swathe of which cannot possibly be used in that fashion – fails the ‘least restrictive alternative’ prong of the proportionality standard. In future, therefore, internet shut-downs should be immediately struck down by Courts without any ado: the government itself has given us evidence that they are disproportionate.

This is not, however, a defence of white-listing: in fact, the consequences of the government’s orders go further, as they demonstrate that there exist alternatives that are less restrictive even than white-listing. The government can – it is clear – block access to specific websites (the repeated references to social media show that this is so). This would be a method of ‘black-listing’ – where access to the internet is allowed except for specified websites.

The conceptual difference between white-listing and black-listing can be summed up in very simple terms. In white-listing, the default is no access to the internet, except what the government allows. In black-listing, the default is access to the internet, except what the government prohibits. The first is a case of ‘everything is prohibited, unless specifically allowed.’ The second is a case of ‘everything is allowed, unless specifically prohibited.’

This is where the Supreme Court’s other finding – that accessing information through the internet is a fundamental right – becomes crucial. Because if a constitutional democracy means anything, it means that the default situation is – and must be – the existence of a fundamental right, and it is the limitations that must be the exceptions. White-listing reverses that fundamental proposition – in the words of K.G. Kannabiran, it makes the restrictions “fundamental”, instead of the right. Black-listing, on the other hand, not only preserves the fundamental character of the right, but also – by providing a clear category of what is forbidden (instead of an amorphous “everything”), allows citizens to challenge that before a court (another fundamental aspect of the rule of law).

This also makes intuitive sense. For example, if an individual wants to read science fiction on Strange Horizons, why should there be a need to special permission from the government, in the absence of which, the website cannot be accessed? On the other hand, if the government has credible information that Strange Horizons is inciting people to violence, then it can block access to the website – and, if necessary, will be required to justify it in Court. White-listing, on the other hand, is impossible to effectively challenge, because it brings us right back into the domain of generic statements about the “internet” being used to incite violence and spread propaganda – the kinds of arguments that the government made in the Internet Shut-Down case.

White-listing, therefore, is no effective “restoration”, as it continues to leave the fundamental right to communicate over the internet entirely at the Government’s discretion: exactly the Emergency-style argument that the Government’s lawyers tried to push before the Supreme Court, and were roundly rebuffed.

Conclusion 

As indicated at the beginning of the post, this is not an argument that justifies white-listing (or even blacklisting). The continuing ban on social media on vague and specious grounds of “rumour mongering” remains disproportionate (as pointed out many times, there is actually no evidence showing internet shut-downs combat “rumour-mongering”, and indeed, evidence points the other way). The constitutional case against internet restrictions remains, and will continue to be made – before courts, and elsewhere.

What this post shows, however, is that the J&K’s actions after the Supreme Court’s judgment are effectively subverting the Court’s findings, and also demonstrate severe internal inconsistencies between what the government claims and what it actually does. The Supreme Court made it clear that access to information through the internet was a fundamental right, and restrictions would have to meet the test of proportionality. White-listing reverses that principle, and effectively makes restricting internet access a fundamental right of the government, with the burden upon the people to establish why they should be allowed to access selected parts of the internet. This reversal of the citizen-State relationship is unconstitutional, and will hopefully be recognised as such.


(Disclaimer: The author was one of the lawyers representing the Petitioners in the internet shut-down challenge.)

 

Guest Post: The Kashmir Internet Ban – What’s at Stake

[This is a guest post by Suhrith Parthasarathy.]


A three-judge bench of the Supreme Court has heard oral arguments and reserved its judgment in Anuradha Bhasin v. Union of India and Ghulam Nabi Azad v. Union of India, in which the petitioners have impugned, among other things, the ongoing shutdown of the Internet in the Kashmir Valley. The arguments raised in these petitions touch upon questions critical to the functioning of India’s democracy. This post is an effort at expounding some of the issues at stake in the case.

Facts

Sometime on August 4, on the eve of the Union government’s decision to issue presidential orders divesting the state of Jammu and Kashmir of its autonomy, a complete blockade on information and communication services was placed in the region. Since then, a few of these restrictions have been lifted, but access to the Internet in the Kashmir Valley remains elusive. As the Petitioners have pointed out, while landlines and post-paid mobile phone voice calls are now functioning, only a miniscule proportion of the population in the region have access to these services. Post-paid mobile phone SMSes remain blocked and so too pre-paid mobile phone voice calls and prepaid mobile phone SMSes. Messaging services, as we’re only too aware now, are critical to carrying out various forms of economic transactions. They are, in many ways, an essential service. Even according to the government’s own response, out of a total of nearly 60 lakh mobile phones, only 20 lakh phones are working and even on those phones SMSes remain wholly blocked. What is more, access to the Internet in the Kashmir Valley continues to be prohibited, despite the critical role that the web plays today in various kinds of economic, social and educational activities.

These orders blocking communication services, Ms. Bhasin and Mr. Azad have argued, have had a damaging effect on a number of fundamental rights. In Ms. Bhasin’s case, the newspaper she edits, The Kashmir Times, could not be distributed on 5 August and went entirely unpublished between 6 August and 11 October. Today, owing to the absence of the Internet, and the barriers placed on journalists seeking to do their job, only a pruned version of the newspaper is published. Therefore, in Ms. Bhasin’s argument, the ban on communication services, in particular the restrictions placed on the Internet, have affected both her right to free speech and her newspaper’s right to freedom of the press.

The Leader of the Opposition in the Rajya Sabha, Mr. Azad, on the other hand, who was himself prohibited from visiting the Valley, until the Supreme Court intervened, has underlined various other impacts that the bans have had on people living in Jammu and Kashmir. For example, basic livelihood, he points out, has been deeply affected. Industries such as tourism, handicrafts, manufacture, construction, cultivation, agriculture and information technology have been brought to a state of cessation, with the economy in the region suffering losses running into the thousands of crores. Access to basic healthcare too, he argues, has been impeded, with people in the Valley unable to avail of the government’s Ayushman Bharat scheme. Over and above all this, the ban has meant that people in the Valley have been entirely cut out from the rest of India. Residents outside the state have been unable to speak to their families in Kashmir, leading, Mr. Azad says, to a great deal of mental stress and anxiety.

Issues and legal arguments

It’s simple enough to deduce the issues that arise in the case: (1) Does a denial of access to the Internet violate any fundamental right? And (2) can access to the Internet ever be blocked, and, if so, under what circumstances can such an action be validly enforced?

Access to the Internet

Perhaps the finest exposition of why access to the Internet is a fundamental right is contained in a recent judgment of the Kerala High Court in Faheema Sharin v. State of Kerala. There, the court recognised that access to the Internet is today essential, because it grants people an avenue not only to information but also to a host of other services. Although the web brings with it its own set of challenges there can be little doubt, as the court held, that it enhances individual freedom, in granting to people a liberty of choice, in determining what they want to read, see and hear, in determining what kind of information they wish to access, and, more than anything else, in limiting the government’s ability to control a person’s private self.

As the High Court held, the Internet has become so central today to our lives that it plays an instrumental role in the realisation of a number of constitutional guarantees. The court, in arriving at its conclusions, relied on a United Nations General Assembly Resolution which noted how access to information on the Internet “facilitates vast opportunities for affordable and inclusive education globally, thereby being an important tool to facilitate the promotion of the right to education.” Given the importance of education to the right to life and personal liberty under Article 21 and given how important the Internet was in fulfilling these promises, access to the web, the court held, ought to be considered in and of itself as a fundamental, inalienable right.

Apart from this the court also recognised, that the Internet constitutes not only a medium for speech but also promotes a gateway to information. A right to access the Internet, therefore, in the court’s opinion, has to be seen as an integral component of a citizen’s right to freedom of speech protected under Article 19(1)(a) and can only be restricted on the grounds enumerated in Article 19(2).

The Kerala High Court’s view that access to the Internet is a fundamental right is not only in keeping with global trend but is also consistent with India’s entrenched free speech jurisprudence. After all, as early as in 1961, the Supreme Court had in Sakal Papers v. Union of India, recognised the instrumental value of speech: that access to the news and the media’s role in facilitating the distribution of information and knowledge played a direct role in the promotion of democracy. That the Internet plays a significant part in ensuring the protection of the right to health, personal liberty and livelihood therefore ought to mean that accessing the web deserves to be considered as fundamental, as flowing out of the guarantees contained in Articles 14, 19 and 21, which, today, after the 9-judge bench’s judgment in Justice (Retd). KS Puttaswamy v. Union of India (Puttaswamy I) (2017) 10 SCC 1, together form a trident against arbitrariness.

Therefore, any blocking of the Internet would ex facie violate fundamental rights. As a result, to enforce a restriction on the Internet an action of the state must be predicated on compelling reasons and must necessarily be made in a constitutionally sustainable manner.

When can restrictions be made

It is today settled law, as is clear from a reading of the judgments of the Supreme Court in Puttaswamy I and Puttaswamy II (the Aadhaar judgment), that fundamental rights can only be limited by state actions that conform to the doctrine of proportionality. The test to determine what state actions are proportionate was laid down by a 5-judge bench of the Supreme Court in Modern Dental College v. State of MP. The court there relied on judgments of the Supreme Court of Israel and the Canadian Supreme Court to hold that the doctrine was inherent in Article 19 itself.

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 fulfilment 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.

In Puttaswamy II, the Supreme Court reiterated this test when it held as follows:

The proportionality test which is stated in the aforesaid judgment, accepting Justice Barak’s conceptualisation, essentially takes the version which is used by the German Federal Constitutional Court and is also accepted by most theorists of proportionality. 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).

 

The question therefore that the Supreme Court must now answer in Anuradha Bhasin and Ghulam Nabi Azad is whether the state actions imposing the communications ban in the Kashmir Valley meets this four-prong test or not. And given that there has been an ex facie violation of a fundamental right, the burden to establish that these conditions are, in fact, met in this case lies on the state. Here, the restrictions placed quite clearly impinge on the doctrine of proportionality for the following reasons:

  • The orders imposing the Internet shutdown have no force of law. Presently, orders shutting down the Internet are made under the Temporary Suspension of Telecom Services (Public Emergency or Public Safety) Rules, 2017 (“Telecom Rules”). These Telecom Rules were framed through the power prescribed on the Union executive by Section 7 of the Indian Telegraph Act, 1885. The Telecom Rules require the Executive, among other things, to provide a reasoned order when it directs the withdrawal of the Internet. Here, however, the orders imposing the shutdown were not made public. They were only released to the court during the course of the hearings, and, that too, with tremendous reluctance. A perusal of those orders that were released, however, the petitioners have argued showcase a complete non-application of mind. To take just one example, an order containing the subject: “Shut down of broadband services” was issued to extend an order whose subject read “Shut down of Land Line services.” What is more, while it is the Home Secretary (Govt. of India) or the Home Secretary of the state government concerned who is the competent authority to issue orders of suspension of the Internet under the Telecom Rules, in this case, the petitioner contend, the orders were issued by the Inspector General of Police. But, more than anything else, the orders themselves were bald and devoid of any reasons despite the Telecom Rules’ express mandate that orders suspending the Internet be issued for explicitly spelled out reasons.
  • The orders issued suspending the Internet are not in furtherance of any legitimate state aim. The government’s case is that it apprehends that the Internet will be misused by “anti-national” elements and will lead to a deterioration of “law and order.” However, neither phrase invoked confirms to the requirements of Article 19(2) of the Constitution. The Supreme Court has repeatedly held (see: Superintendent Central Prison, Fatehgarh v. Dr. Ram Manohar Lohia and In Re Ram Lila Maidan Incident) that the term “law and order” is not subsumed within “public order” which is the ground that Article 19(2) stipulates. In the latter case, the court held that: “the distinction between `public order’ and `law and order’ is a fine one, but nevertheless clear. A restriction imposed with `law and order’ in mind would be least intruding into the guaranteed freedom while `public order’ may qualify for a greater degree of restriction since public order is a matter of even greater social concern. Out of all expressions used in this regard, as discussed in the earlier part of this judgment, `security of the state’ is the paramount and the State can impose restrictions upon the freedom, which may comparatively be more stringent than those imposed in relation to maintenance of `public order’ and `law and order’. However stringent may these restrictions be, they must stand the test of `reasonability’. The State would have to satisfy the Court that the imposition of such restrictions is not only in the interest of the security of the State but is also within the framework of Articles 19(2) and 19(3) of the Constitution.” In this case, the orders imposing the restrictions on the Internet the orders reference “law and order” without showing us how preservation of “public order” legitimately required the restrictions as imposed. What is more, as the petitioners have contended, the term “anti-national” is simply undefinable and does not fall within any of the carefully delineated grounds stipulated in Article 19(2) of the Constitution.
  • The orders imposing the shutdown are not rationally connected to the fulfilment of the supposed purpose, that is the prevention of violence. While the state has repeatedly claimed that the Internet will be misused by miscreants and anti-national elements it has provided no actual evidence of such misuse being a real and genuine threat. Indeed, as the petitioners have shown, studies indicate the opposite, that a shutdown of the Internet leads to anxiety and unease and augment the risk of protests and demonstrations turning violent. Therefore, the state has simply failed to demonstrate the existence of a cogent and sensible nexus between the restrictions imposed and the purported aim behind the orders.
  • Finally, the orders also do not conform to the test of necessity, that there was a compelling need for these actions and that the purported objective could not have been achieved through less restrictive and less invasive means. When even according to the state’s own arguments it is only a minuscule minority that are likely to commit violence, and when a whopping majority of the populace represent no threat to public order it is difficult to conceive how a complete shutdown of the Internet can constitute a necessary and proper action. Indeed, as the petitioners have shown, the state has often, in the past, isolated persons prone to terrorising from others, based on their registered mobile phone numbers. What is more, the state could quite easily have also resorted to blocking certain websites alone if the intention was to prevent incitement of violence. That a wholesale blockade of the Internet has been in force for more than four months evinces the fact that the State hasn’t so much as made an effort at ensuring that it adopts the least restrictive means possible to ensure that violence isn’t perpetrated in the region.

Ultimately, therefore, the actions of the state in enforcing a host of communication barriers in the Kashmir Valley, in particular its decision to entirely restrict access to the Internet, constitute a collective punishment on the people of the region and violate, among other things, the fundamental rights guaranteed under Articles 19(1)(a) and 21 of the Constitution.

Notes from a Foreign Field: The Hong Kong High Court’s Judgment on the Right to Protest (with Face Masks)

Earlier this morning, the High Court of Hong Kong handed down an important judgment on the “balance” between personal liberty and national security. Readers will be aware that for the last few months, there have been mass public protests in Hong Kong. In response, the Hong Kong government passed the Prohibition on Face Covering Regulation [“PFCR”] which, as the name suggests, prohibited protesters in public spaces from wearing face masks to hide their identities. The PFCR was passed under the authority of the Emergency Regulations Ordinance (ERO), a colonial-era law that allowed sweeping powers to the Executive in an “Emergency” or during times of “public danger.”

The PFCR was passed on 4th October. It was promptly challenged (along with the ERO). The High Court heard arguments at the end of October, and handed down its judgment today. The Court struck down the ERO to the extent of its application during times of “public danger”, while leaving open the question of whether it was valid for “Emergencies.” The Court went on to hold that the PFCR was an unconstitutional and disproportionate violation of the freedom of expression of the citizens of Hong Kong.

In this post, I will discuss both holdings. The striking thing about this judgment is that despite conceding a high margin of discretion to the Executive, and despite accepting the Executive justification of maintaining law and order, the Court still found that the indiscriminate and non-targeted nature of the measure, which failed to distinguish between violent protesters and ordinary citizens, was disproportionate. As we shall see, this is by no means the judgment of an activist Court, which placed the claims of personal liberty beyond all question. On the contrary, this was a judgment by a cautious and deferential Court, which still found the ERO and the PFCR to violate Hong Kong’s Basic Law (the Constitution). And at the heart of its judgment, as I shall show, was a very simple logic: Constitutions allow the government to declare states of Emergency, and suspend certain civil rights. If, however, the government has elected not to declare an Emergency, it is not for the Court to presume their exists one. In terms of law and constitutionalism, there is no halfway house between Emergency and normalcy, where – in the absence of an Emergency proclamation – the Court nonetheless adopts a hands-off approach towards civil rights violations. Rather, if there is no Emergency, then the judicial approach towards civil rights violations must be one that applies constitutional principles with their full rigour.

The ERO

The ERO was a 1922 law, passed by the colonial British regime. Effectively, it authorised the Chief Executive in Council [“CEIC”, or “Executive”] to make “regulations” in times of Emergencies or public danger. These regulations were extremely wide in scope, including powers of censorship, seizure of property, amendment of laws, trial and punishment, and so on.

The High Court struck down the ERO on seven substantive grounds. Under Hong Kong’s basic law, it found that the Legislative Council [“LegCo”] was the primary legislative organ. The CEIC’s powers were limited to accepting or vetoing bills, and passing subordinate legislation. This is, of course, a familiar arrangement in parliamentary democracies. The Court then made the familiar point that “this constitutional scheme does not permit the LegCo to grant and the CEIC (or, for that matter, any other body) to receive and be vested with what is essentially the LegCo’s own constitutional power and function as the legislature of the Hong Kong SAR to enact, amend or repeal laws, except for an authorisation of subordinate legislation.” (paragraph 52)

This, of course, is the “excessive delegation” test known to students of constitutional and administrative law everywhere. Applying this test, the Court found that the “ERO confers general legislative powers on the CEIC.” (paragraph 55) This was because:

… the ERO is not a statute that legislates on a subject matter in principle leaving another body to devise the detailed legal norms that elaborate or put flesh on the broad matters laid down in the primary legislation. The long title of the ERO specifies that its object is to confer on the CEIC power to make regulations on occasions of emergency or public danger. But it gives no shape or direction of what the regulations that may be made are to be about. For example, the PFCR was enacted under the ERO not to work out and fill in the details for certain broad norms established by primary legislation, but as the very first piece of legislation in Hong Kong that has anything to do about face covering. This is fundamentally different from one’s ordinary conception of subordinate legislation. (paragraph 56)

Next, the Court found that the scope of the power delegated to the CEIC was extremely broad – to make “any regulations whatsoever” that it considered to be in the public interest. Thirdly, the powers could be invoked “on any occasion” when the CEIC was satisfied that there existed an emergency or public danger – neither of which were defined in the statute. In other words, such wide power was accorded to the Executive, that it was virtually unconfined – effectively (as the Court noted) it could never be argued that the Executive was going beyond the authority conferred by the  Legislature, as the authority itself had no boundaries. Not only that, but the ERO actually authorised the CEIC to amend existing legislation – i.e., it conferred – in so many terms – legislative power upon the executive (the Court’s fourth point). Furthermore, the powers of punishment conferred upon the Executive went beyond what was authorised in primary legislation (fifth); and there was no time limit upon the “validity and force of the regulations made under the ERO, nor any mechanism for constant review” (paragraph 68) (sixth).The power of “negative vetting” was held not to be a substantial check on the executive (seventh).

Drawing upon insights from comparative law, the High Court therefore concluded that:

“…the ERO, once invoked, seems to us to create in Hong Kong a separate source of laws that are primary legislation in all but name, but which are not made by the legislature in accordance with legal procedures (Art 73(1)) or reported to NPCSC (Art 17), and are not subjected to the scrutiny concomitant with the normal legislative process. Whenever the CEIC considers an occasion falling within the ERO has arisen, the CEIC becomes a legislature.” (paragraph 80)

This was evidently unconstitutional. And in response to the government’s argument that there were times that necessitated “swift and decisive action”, the High Court made the crucial observation that “the need for an urgent response is no justification for departing from or impugning the constitutional scheme.” (paragraph 95)

The PFCR

Let us now come to the prohibition of face coverings in public spaces. The PFCR prohibited the use of “facial covering that is likely to prevent identification” while a person was at an unlawful assembly, an unauthorised assembly, or even an authorised or lawful assembly (see paragraphs 25 – 29 for an explanation of these terms in Hong Kong law). It was common cause between the parties that the PFCR restricted the freedom of speech, assembly, and privacy. It was also common cause that the constitutional validity of the restrictions was to be determined according to the proportionality standard:

“…(1) does the measure pursue a legitimate aim; (2) if so, is it rationally connected with advancing that aim; (3) whether the measure is no more than reasonably necessary for that purpose; and (4) whether a reasonable balance has been struck between the societal benefits promoted and the inroads made into the protected rights, asking in particular whether pursuit of the societal interest results in an unacceptably harsh burden on the individual.”

The government argued that the goal of the prohibition was “(i) deterrence and elimination of the emboldening effect for those who may otherwise, with the advantage of facial covering, break the law, and (ii) facilitation of law enforcement, investigation and prosecution.” (paragraph 130) The question then arose: why was the measure blanket in nature, targeting both potential law-breakers as well as legitimate public protesters? To this, the government argued – on the first count (deterrence) – that “those protesters who are not prepared to break the law may comply with the PFCR and this would generally result in lessening the support for the more radical and violent protesters”; that “masked protesters mix themselves into larger groups and instigate violence and vandalism“; that “non‑radical protesters will be less likely to be influenced by or emulate their violent peers and will think twice before emulating them when they know their identity is not concealed“; that “the PFCR can act as an effective deterrent against at least some students from wearing masks when joining a protest (lawful or unlawful), which thereby substantially reduces the chance that they will be induced to break the law.” (paragraph 133) On the second count (law enforcement), the government argued that protesters were using “black bloc” tactics (i.e., appearing in indistinguishable groups and wearing similar clothing), which made specific and targeted identification difficult. A prohibition on face covering would facilitate the police in being able to identify which of the protesters were acting unlawfully.

The government’s arguments will sound eerily familiar to those following the litigation around the communications lockdown in Kashmir. In both cases, the State’s primary justifications for blanket restrictions is (i) targeting is impossible, and (ii) the bad guys will mingle with and influence the innocent guys, and so we have to restrict everyone’s freedom. The only difference is that the Hong Kong government’s arguments before the Court at least sounded more sophisticated and plausible than the Indian government’s ham-fisted “terrorists use mobile phones” justification.

How did the Court engage with this argument? The first thing to note is that it did not deny that there existed an ongoing law and order situation in Hong Kong. In paragraph 132, it observed that:

“… there is evidence before us of the enormity of the damage and danger created by some of the protesters. In the few months leading to 4 October 2019, Hong Kong has witnessed numerous instances where certain protesters charged police cordon lines with weapons, blocked public roads and tunnels with a variety of large and heavy objects, attacked drivers who voiced complaints at such blockades, vandalised public facilities and buildings, burned public property, hurled inflammable liquid bombs at the police and at and inside Mass Transit Railway stations, damaged shopping malls, shops, banks and restaurants (with reports of looting and theft in some of the damaged shops), damaged residential quarters of the disciplined forces, crippled the operations of transport infrastructure, and harassed and attacked ordinary citizens holding different political views. These acts of violence and vandalism had increased in intensity and frequency, with the incidents on 1 October 2019 being especially serious. The more violent protesters were often all suited up and masked by facial covering such as surgical masks, balaclavas and gas masks which concealed their identity.”

Along with these facts, the Court also conceded that the government had to be given a “wide margin of discretion”, and that the necessity prong within the proportionality standard required only that the government’s action was “reasonably necessary.” Now within this framework, how did the Court apply the proportionality standard? It began by noting that “some participants in demonstrations may wish to wear facial covering for legitimate reasons, such as to avoid retribution.” (paragraph 148) Consequently, the restriction on freedom was not minor or trivial, but a serious one. By contrast:

… the effect of s 3(1)(b), (c) or (d) is to impose a near‑blanket prohibition against the wearing of facial covering by the participants, without any mechanism for a case‑by‑case evaluation or assessment of the risk of any specific gathering developing or turning into a violent one such as would make it desirable or necessary to impose the prohibition in relation to that gathering only. (paragraph 155)

Furthermore:

It is not clearly stated whether, to be caught by the prohibition, the person must be a participant in the relevant gathering, or whether it suffices for that person to be merely present at the gathering, eg a person who goes to the scene for the purpose of taking photographs, or giving first-aid to persons in need of help, or even a mere passer‑by who has stopped to observe the gathering. (paragraph 156)

This was, thus, prima facie evidence of over-breadth and disproportionality. What of the government’s argument that it was the only way to prevent violence? The Court noted in response that “the evidence before us is far from clear that the PFCR has achieved to any substantial degree the intended aims of deterrence and elimination of the emboldening effect for those who may otherwise, with the advantage of facial covering, break the law, or facilitation of law enforcement, investigation and prosecution.” (paragraph 164) In other words, under the proportionality standard, the burden was upon the government to justify its rights-infringing measures on the touchstone of necessity and proportionality, with evidence (and not in a sealed cover). And the Court was unimpressed by the government’s exhortations of public danger, noting that “even in these challenging times, and particularly in these challenging times, the court must continue to adhere to and decide cases strictly in accordance with established legal principles.” (paragraph 165) Thus:

… having regard to the reach of the impugned restrictions to perfectly lawful and peaceful public gatherings, the width of the restrictions affecting public gatherings for whatever causes, the lack of clarity as regards the application of the restrictions to persons present at the public gathering other than as participants, the breadth of the prohibition against the use of facial covering of any type and worn for whatever reasons, the absence of any mechanism for a case‑by‑case evaluation or assessment of the risk of violence or crimes such as would justify the application of the restrictions, the lack of robust evidence on the effectiveness of the measure, and lastly the importance that the law attaches to the freedom of expression, freedom of assembly, procession and demonstration, and the right to privacy, we do not consider the restrictions of rights imposed by s 3(1)(b), (c) and (d) to be proportionate to the legitimate aims sought to be achieved by the imposition of those restrictions. (paragraph 166)

Thus, except insofar as it applied to unlawful gatherings, the prohibition was struck down. The Court used similar analysis to strike down Section 5, which empowered “a police officer to stop any person in any public place who is using a facial covering and to require that person to remove it so that his or her identity may be verified, if the officer reasonably believes the facial covering is likely to prevent identification.” The Court held that its indiscriminate character (“no limitations as to circumstances or period”) violated the proportionality standard.

Conclusion

The Hong Kong High Court’s judgment is a shot in the arm for civil rights. It demonstrates that even in the time of the proverbial “clash of arms”, courts can ensure that the laws are not silent. A few salient features of the analysis stand out. First, the High Court took seriously the indiscriminate and blanket nature of the prohibition, which failed to distinguish between criminals, and those who were lawfully exercising their constitutional rights to demonstrate and protest. This was perhaps the most damning feature of the government’s measure. Secondly, the government’s efforts to justify this fell flat. In particular, given that the restriction was blanket and indiscriminate, the onus was on the government to show that there was no other way to achieve the goals of law and order – and to show this with evidence. Unsurprisingly, the government failed, because there was no evidence. And lastly, the Court thoroughly rebuffed the government’s efforts to immunise its actions by making claims about the law and order situation. The Court’s approach to this issue can be summed up in paragraph 108:

  • In times of a public emergency officially proclaimed and in accordance with the other requirements of s 5 of the HKBORO, measures may be adopted under the ERO which derogate from the Bill of Rights (even so, excepting the specified non‑derogable provisions and discrimination on the prohibited grounds). Subject to the conditions of s 5 (including that the derogations are limited to those strictly required by the exigencies of the situation), this may have the effect of temporarily suspending the relevant human rights norms.
  • In other situations, measures adopted under the ERO may not derogate from the Bill of Rights, which means that if any such measure has the effect of restricting fundamental rights, then like any other restriction in normal times, it has to satisfy the twin requirements that the restriction is prescribed by law and meets the proportionality test.

 

The important of this observation cannot be understated. What the Hong Kong government was trying to do in this case – and indeed, what the Indian government is trying to do in the Kashmir litigation – is to create a third, midway category of (what is effectively) a “permanent, undeclared Emergency.” For political reasons, the government is wary of formally declaring an Emergency and suspending civil rights. But by repeated invocations of “law and order” and “security”, it is attempting to persuade the Court to act as if the situation is one of Emergency, and thereby, adopt the “judicial hands-off” approach” that it would be compelled to do if there was an Emergency. Paragraph 108 of the Hong Kong High Court’s judgment refutes this disingenuous and dangerous argument: it makes it clear that if there is no Emergency, then the restriction on civil rights must be judicially examined as “in normal times”, and the usual doctrines of reasonableness and proportionality applied. And as we have seen, proportionality takes a particularly dim view of blanket and indiscriminate restrictions (which are in effect, if not in form, Emergency-style suspension of rights – if everyone is prohibited from exercising a certain right, then it is hardly deniable that that right has been suspended for the relevant territory altogether). Such measures, therefore, must almost always be struck down as disproportionate.

It remains to be seen whether the excellent judgment of the Hong Kong High Court will be followed elsewhere, where governments make similar arguments to deny civil rights to their citizens.