The Supreme Court, the Election Commission and the 18th Lok Sabha Elections-I: On the SC’s refusal of a Stay Order in the Election Commissioners’ Case [Guest Post]

[This is a guest post by Hardik Choubey.]

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Introduction

The elections to the 18^th Lok Sabha (which are to be conducted across seven phases) commenced on 19 April, with the final round of polling to be conducted on the 1^st of June. Several high-profile events right before (and during) the elections have raised concerns regarding the conduct of the Supreme Court (SC or ‘the Court’) and the Election Commission (ECI), during this political cycle.

In March 2023, a constitution bench of the SC had modified the process for the appointment of members of the ECI (in Anoop Baranwal v Union of India ), where the court found that the prevailing practice of the executive unilaterally appointing election commissioners was constitutionally impermissible. The court reasoned that as long as the ECI appointments procedure was executive-dominant, the commission’s independence was compromised. After recognizing that the parliament had failed to cure this constitutional infirmity, the court directed that a three-member committee comprising of the PM, the Leader of the Opposition and the Chief Justice of India would advise the President on ECI appointments, until parliament passed an appropriate law.

However, in December, the  Chief Election Commissioner and other Election Commissioners (Appointment, Conditions of Office and Terms of Office) Bill, 2023 [For our purposes, ‘the Act’ or EC Appointment Act] was passed by parliament and received the President’s assent. The act provided for an alternate process of appointments to the ECI, one where the three-member committee now consisted of the PM, a Union Cabinet Minister nominated by the PM, and the Leader of the Opposition [Section 7]. On 1 February 2024, this committee [‘Selection Committee’] was constituted and the Home Minister was notified as its member.

Almost immediately, the act was challenged before the SC (in Jaya Thakur v Union of India), where the petitioners claimed that the act contravened the judgment in Anoop Baranwal and sought a stay on the legislation. When a division bench heard the matter on 12 January, it refused to issue an ex-parte interim stay on the legislation. Rather, the judges issued notice to the Union and the ECI and listed the matter for hearing in April. In a strange development, however, EC Arun Goel resigned on 9 March, leaving the ECI as a single-member body right before the largest democratic election in human history. The petitioners filed stay applications in light of this development and the bench agreed to an urgent hearing in mid-March.

In the meantime, the selection committee convened on 15 March and recommended two ECs to fill the vacancies, and the president notified their appointment on the same day. However, at the hearing on 21 March, the bench refused to issue an interim order staying the legislation. The bench reasoned that public interest and balance of convenience did not favour a stay on the legislation when the ECI remained a single-member body right before a general election. Commentators sharply criticized the SC’s refusal to stay the legislation and the lack of engagement with the petitioners’ arguments in the order (for instance, see here), particularly given that the integrity of the electoral process could be questioned if the ECs were perceived as executive appointees.

In the months that have followed these developments, various ex-facie violations of the Model Code of Conduct (MCC) have been alleged against holders of constitutional posts and political parties affiliated with the union executive (see here, here, and here). However, the ECI has on occasion chosen to ‘not comment’ on them. This has led many commentators to question the ECI’s conduct (see here), whilst around 22% of the respondents in a Lokniti-CSDS Survey indicated at least some distrust in the functioning of the ECI (At 25).

In the context of these developments, this series of posts will look to different issues of constitutional importance that relate to the SC and the ECI during the political cycle of elections. This first piece will analyze the doctrinal landscape under which the SC refused to stay the EC Appointments Act. I will argue that the court’s evasion in issuing an interim stay over the legislation was not only doctrinally inconsistent, but it is also indicative of a pattern in the court’s willingness to grant ad-interim relief in constitutional litigation. I seek to show that although the order itself was a textbook case of ‘judicial evasion,’ a view which appreciates its structural and historical context would be more instructive. A second piece, would seek to highlight the threats to electoral fairness that have resulted from union investigative agencies’ (suspect) enforcement patterns during the political cycle.

Incremental Growth of ‘Discretion’ in the Practice of Interim Stay Orders in India:

The challenge to the EC Appointments Act in Jaya Thakur v Union of India was a writ petition filed under Article 32 of the constitution and alleged that Section 7 of the Act was ultra vires as first, it contravened the judgment in Anoop Baranwal and second, that the provision had a direct and potential impact on the conduct of transparent, free and fair elections (At ¶ 1). The thrust of the arguments arguing for a stay on the legislation was that a refusal to do so would jeopardise independent conduct of the ECI in elections and could be a threat to the democratic process.

The 10-page order refusing a stay highlighted the established considerations of balance of convenience, a prima facie case and irreparable injury that courts ought to appreciate while deciding on grant of stay or injunction (At ¶12). However, as Gautam Bhatia observed, the order never described any of these considerations or even undertook their analysis. Instead, whilst denying stay, the order cursorily observed that a grant of stay ‘would lead to uncertainty and confusion, if not chaos’ (At ¶12).

The law on preventive injunctions or stays in India emanated from the principles in private law laid down by the Courts of Chancery in England. Historically, it was well-established that preventive equitable remedy such as a stay or injunction may either stay a proceeding in a court or tribunal or before an arbitrator, or it may forbid an individual, a corporation or the state from doing an act (such as the enforcement of a legislation) [At 1]. In England, since these remedies were granted under the equitable jurisdiction of courts, they could not be asked as a matter of right (legal remedies were a matter of ‘right’ and were granted only after trial on merits), but were purely discretionary. Another discretionary jurisdiction in England was the issue of prerogative writs by courts in the nature of habeas corpus, mandamus, certiorari, prohibition and quo warranto, which were originally issued by courts in exercise of the prerogative jurisdiction of the monarch. However, at the time of deliberation over Article 32 of the Constitution, Dr. Ambedkar highlighted that the guarantees under that article fall into two categories: prerogative writs and ‘writs in action’. He explained that the prerogative writs were essentially that ‘they can be sought for by an aggrieved party without bringing any proceedings or suit’ and that the object of these writs ‘was really to… grant interim relief.’

Seervai argued that Articles 32 and 226 deliberately conferred the power to issue writs (as opposed to merely orders) on the SC and HCs to indicate that insofar as the writs were to be issued for enforcement of FRs, the exercise of such power was not to be ‘discretionary’  [At 818-820]. This view could be seen in the early practice of the SC and HCs in Independent India, where stay orders or injunctions over land reform and other welfare legislation were granted at a (reportedly) high frequency. State of Bihar v Sonabati Kumari (1960) is emblematic of this early practice, where the subordinate judge had temporarily injuncted (using Order XXXIX of the Civil Procedure Code) the state from notifying against the plaintiff under the Bihar Land Reforms Act, 1950. The HC upheld such a stay and the SC penalised the state for contravening the injunction. In Narayan Row v Ishwarlal (1965), the SC further expanded its jurisdiction to grant stays or injunctive relief by holding that writ petitions before HCs under Article 226 were ‘nothing but civil proceedings’ within the meaning of Article 133.

However, as arguments regarding the conflation of the ‘original jurisdiction’ of the SC with its ‘extraordinary original jurisdiction’ under Article 32 started holding sway, the SC in Tilokchand Motilal v HB Munshi (1970) held that it would treat the remedy by way of writs under Article 32 as ‘discretionary’ and not as a matter of right (Bachawat, J. and Mitter J.’s Opinions for the majority). As V.S Deshpande showed in a study conducted in the 1970s, stay orders were granted in about half of the total number of cases in which stay was prayed for (At 150). I submit that this trend led to a ‘course-correction’ by the SC, where successive orders were passed admonishing the practice of stays on laws, executive proceedings or private actions. New tests for deciding on interim stays were laid down by the SC in this period.

In Siliguri Municipality & Ors. v Amalendu Das (1984), the SC for one of the first times, overtly criticized the practice of HCs to ‘grant interlocutory orders for the mere asking’ (and emphasized the consideration of ‘public interest’ in granting stays upon the operation of legislation or recovery by tax authorities when legislation has been challenged (¶2-5)). It must be noted that this consideration of ‘public interest’ raises interesting questions of its own, particularly in constitutional law challenges to legislation or executive action, as what constitutes ‘public interest’ is exceedingly hard to predict for any petitioner who alleges a violation of their fundamental or legal rights. The existence of this consideration builds in a troubling level of ‘discretion’ into the tests for grant of interim relief that traditional tests did not account for. To take an analogous example, in Société de développement de la Baie James vs. Chef Robert Kanatewat [Quoted at ¶50], the Quebec Court of Appeals dismissed an application for interlocutory injunction which would have required the state to halt a hydroelectric project by (vaguely) balancing the interests of the indigenous population affected and ‘the growing energy needs of Quebec as a whole.’ Whilst the other considerations of prima facie case, irreparable injury or balance of convenience are themselves not highly discretion-restrictive, they operate within the confines of the facts and circumstances presented to the court, this is not necessarily the case with the consideration of ‘public interest’, where vague notions can influence whether an alleged constitutional violation is preventively inhibited whilst hearings on merit are underway.

In Assistant Collector v. Dunlop (1984), the SC again came down heavily against the practice of HCs staying legislations and executive actions and went even further to hold that (At ¶7): ‘The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest. [Emphasis Mine]’

In Bhavesh D Parikh v. Union of India (2005), in what could arguably be conceived as obiter dicta, the court expanded the benefit of the presumption of constitutionality for economic or fiscal legislations at the interim remedy stage. The bench observed:

When considering an application for staying the operation of a piece of legislation, and that too pertaining to economic reform or change then the courts must bear in mind that unless the provision is manifestly unjust or glaringly unconstitutional, the courts must show judicial restrain in staying the applicability of the same. Merely because a statute comes up for examination and some arguable point is raised, which persuades the courts to consider the controversy, the legislative will should not normally be put under suspension pending such consideration. [Emphasis Mine]

The pre-existing ‘test’ on grant of ‘interim stays’ was essentially borrowed from private law decisions such as American Cyanamid (1975), where private parties could be granted damages as a remedy if their legal rights were violated whilst the dispute was heard on merits. Although such an approach might be workable in private law disputes, in fundamental rights challenges, such an approach is mostly not possible as damages for human rights violations are hardly easily quantifiable, if they are quantifiable at all (see Kent Roach’s work on human rights violations and intermediate remedies). The SC’s ‘course-correction’ judgments essentially tilt the balance of the ‘private law standards’ on grant of interim stays heavily in the favour of the state action. It is hardly ever possible for a petitioner to meet the standards of establishing ‘glaring unconstitutionality’ or ‘eliminating the slightest likelihood of prejudice to the public interest’ at an interim stage without making their case on merits. In Jaya Thakur v Union of India, the hearing on stay applications lasted merely over an hour.  They also inculcate a high level of discretion with judges in granting what were initially envisioned as constitutionally mandated interim remedies. Recent stay orders in the Farm Laws Challenge, the Challenge to the IT (Amendment Act) FCU, etc. have not even adhered to mentioning the standards over which the imperative to stay statutory law was analyzed (see here, here and here).

The EC Appointments Act Challenge and the (Lack Of) a Stay Order

The absence of a discernable standard for grant of interim stays or injunctions cuts both ways, however, where the court in Jaya Thakur v Union of India merely applied, what must have appeared to the bench to be a justifiable consideration of ‘public interest’ in there being a three-member ECI instead of a single-member body right before a general election, which would not contravene the SC’s prevailing doctrine (if one could call a fusion of deference to the executive and judicial evasion a doctrine) on staying legislation.

Even still, the order is still perplexing on one important issue. During the hearing on stay applications, a counsel for the petitioners had suggested that the Selection Committee prescribed in Anoop Baranwal could meet and select the two ECs in the interim till the case was decided on merits. The bench, in its order noted that ‘this would be plainly impermissible, without declaring Section 7(1) as unconstitutional. Further, we would be enacting or writing a new law replacing or modifying Section 7(1) of the Act, as enacted by the Parliament, if such a contention were accepted.’

I submit that this reasoning, to put it bluntly, is incorrect. If the bench had agreed to stay the legislation, the effect of the order under Article 32 would have been to put the legislation in a ‘suspended’ state, and any action (such as the one suggested by counsel) would operate until a declaratory judgment was not given (See here and here for the nature of interim orders for stay or injunction). Preventive relief in the form of orders for stay or injunction are not declaratory, but interlocutory (See here). I submit that the refusal to engage with the counsel’s suggestion could be suggestive of an approach where any indications of infirmity with a legislation at a preliminary stage, particularly one regulating a core constitutional function, by staying it, would be seen as prejudicing the state and thus impinging upon the presumption of constitutionality. It may also show an institutional evasion of assessing options for intermediate remedies when the risks of harm are between the parties are not commensurate, and there is no common scale to measure the competing claims of irreparable harm.

Conclusion

The Supreme Court’s refusal to grant an intermediate remedy to the petitioners in Jaya Thakur v Union of India has led to the appointment of two career bureaucrats to the institution which is most directly responsible for the conduct of fair elections, via an executive dominated process. The court’s order gave (self-) assurances regarding the appointees: that once these persons have been appointed, they would be expected to act in a manner consistent with the constitution. Though the court quoted Dr. Ambedkar on this point, the quote was not (as the bench appears to use it), a hopeful proclamation regarding the conduct of all future constitutional post-holders. Rather, in the context of his speech, it is better construed as a call to all who want the constitution to work, to take steps in that direction, and ensure its health.

In the aftermath of the court’s order, the election cycle has developed in earnest. The consequences of the court’s order in Jaya Thakur will have to be judged on the conduct of the ECI in the upcoming months. In the next post, I will analyze questions relating to the fairness in the general election in the context of allegedly suspect enforcement by union investigative agencies and the scope of possible relief that the SC and the ECI could provide.

The Unexamined Law: On the Supreme Court’s Stay Order in the Election Commissioners Case

In a previous post (“The Mysterious Disappearance of the Stay Hearing“), I had pointed to the Supreme Court’s refusal to hold stay hearings in cases involving time-sensitive constitutional challenges. Perhaps the only thing worse than a refusal to substantively decide a stay application is a judicial order that purports to decide it, but on scrutiny, turns out to be a caricature, or a parody, of legal reasoning. This is the Supreme Court’s order of 22nd March, that dismisses the applications for staying the Election Commissioners Act (that we have discussed extensively on this blog).

The striking thing about the Supreme Court’s ten-page order – authored by Khanna and Datta JJ – is its refusal to engage with the core of the constitutional challenge before it – indeed, its refusal to even advert to it. Recall that the challenge was, in effect, that by replacing the Chief Justice of India in the selection committee for the Election Commissioners (the “interim arrangement” set out in the Anoop Baranwal judgment) with a cabinet minister nominated by the Prime Minister, the impugned legislation impermissibly modified, or overturned, the Court’s judgment. In paragraph 9 of its order, the Court purports to deal with this argument by stating that the committee constituted in Anoop Baranwal (the CJI, the PM, and the LoP) was a “pro-tem measure.” This is correct on its own terms, but also, it is a highly selective reading of Anoop Baranwal. As noted in this blog’s analysis of Anoop Baranwal, the interim committee constituted by the Court did not pop out of thin air. The basis of Anoop Baranwal was that Article 324 of the Constitution encoded a constitutional expectation that the manner of appointment of the Election Commission would ensure institutional independence from the executive. This is repeated multiple times in Anoop Baranwal, most specifically in paragraphs 32-33, and then even more categorically in paragraph 215:

We have set down the legislative history of Article 324, which includes reference to what transpired, which, in turn, includes the views formed by the members of Sub-Committees, and Members of the Constituent Assembly. They unerringly point to one conclusion. The power of appointment of the Members of the Election Commission, which was charged with the highest duties and with nearly infinite powers, and what is more, to hold elections, not only to the Central Legislature but to all the State Legislatures, was not to be lodged exclusively with the Executive. It is, accordingly that the words ‘subject to any law to be made by Parliament’ were, undoubtedly, incorporated. 

The “pro-tem measure” that the Supreme Court’s order refers to – as is therefore obvious from a very basic reading of Anoop Baranwal – was pro-tem because Parliament had failed to enact a law consistent with its obligations under Article 324; these obligations were – to repeat – to ensure that, under the legislation, the Election Commission would be institutionally independent, and not subject to executive dominance. The “pro-tem measure”, thus, was not “pro-tem until parliament passes any law that it pleases”, but “pro-tem until parliament passes a law consistent with maintaining EC independence from the executive.”

The real question before the Court in the stay application, therefore, was whether the impugned law – on a prima facie reading – violated the institutional independence of the EC. This is a question which the Court entirely evades answering, for the very good reason that it has no answer: under the impugned law, the members of the EC are, in effect, appointed by the executive. Quite apart from the fact that this would be impossible to reconcile with institutional independence, it would also by hypocritical, given that the Court, in considering the question of its own independence, has held that executive dominance in appointments was inconsistent with institutional independence (the NJAC judgment). No wonder, then, that the stay order passes delicately over the real question that it had to answer, and instead answers a question that nobody has asked.

To mask the absence of reasoning, in paragraph 10, the Court then recites well-worn principles of judicial deference when considering stay of legislation, but – unsurprisingly – does not apply those principles to the case before it, and does not explain how they apply. Remarkably, however, the order then gets even worse. In paragraph 11, the Court states that “any interjection or stay by this Court will be highly inappropriate and improper as it would disturb the 18th General Election, which has been scheduled and is now fixed to take place from 19.04.2024 till 1.06.2024.” On a bare reading of this paragraph, one would think that the Petitioners had only shown up to Court the day before; however, as the order sheet demonstrates, the case was first called for hearing on 12th January, 2024, and posted to April 2024 for hearing. One would be hard-pressed to think of a more self-serving piece of judicial reasoning: the Court itself schedules a stay hearing more than two months after the case is filed, and then uses its own delay as a ground to deny stay, because it is now too close to the general elections. One is reminded of the Chief Justice Ranjan Gogoi’s infamous order declining stay of the electoral bonds scheme ahead of the 2019 General Elections, on exactly the same grounds – and after the Supreme Court had, itself, refused to consider the issue for two years. Readers of this blog will, of course, be well aware of what finally happened to the electoral bonds scheme, and consequently, how much damage the Court’s six-year delay in considering the issue caused.

Quite apart from the self-serving nature of this reasoning, the Court never explains why the administrative difficulties caused by a stay outweigh the potential “irreparable injury” caused by an election conducted by an Election Commission where two out of three Commissioners have been unconstitutionally appointed: indeed, one would imagine that when placed in the balance, electoral integrity would outweigh administrative inconvenience (for which, again, no empirical evidence is actually provided). However, there is no reasoning as to why the administrative concern outweighs the constitutional concern, other than a statement of simple judicial fiat.

To sprinkle salt on the (constitutional) wound, the Court then records numerous procedural issues with the selection, including lack of information provided to one of the Committee members (the LoP) (paragraph 14). Having said this, it then goes on to note that “in spite of the said shortcoming, we do not deem it appropriate … to pass any interim order or directions.” One wonders why, if the Court is not minded to pass any orders, it felt the need to make comments on the procedure: it behooves a Constitutional Court to decide the legal questions before it, and not to engage in moral sermons which are not attended by any legal consequences. Instead, the Court finishes with a classic exposition of its unique brand of “hope and trust jurisprudence”, noting that “the assumption is that they [the election commissioners] shall adhere to constitutional role and propriety in their functioning.” No justification is provided for this assumption, but there is – of course – the obligatory quote from Dr. Ambedkar that follows (paragraph 15).

Socrates was said to have observed at his trial that the unexamined life is not worth living. For the Supreme Court, however, it seems that the unexamined law is certainly worth upholding. Its order on the Election Commissioners stands as a stark example of that aphorism.

The Social Health Insurance Act and the Housing Levy: On Stays and Irreversibility at the Kenyan Court of Appeal

We have, on this blog, recently discussed the issue of interim orders in constitutional challenges. Two recent interesting orders of the Kenyan Court of Appeal highlight the considerations that judges must balance in scenarios such as these.

In Cabinet Secretary, Ministry of Health vs Joseph Enock Aura and Ors (19th January 2024), the Court of Appeal was considering a set of constitutional challenges to the Social Health Insurance Act of 2023, the Primary Health Care Act of 2023, and the Digital Health Care Act of 2023. On 27th November 2023, at the High Court, Mwita J issued ex parte “conservatory orders” (i.e., the Kenyan equivalent of a stay), restraining the State and its agents from implementing any of the impugned laws. The State then entered appearance and contested the ex parte orders, but the High Court confirmed the stay. The State accordingly appealed.

Before the Court of Appeal, the primary argument of the State was that the conservatory orders were creating a regulatory vacuum, leaving millions of patients in the lurch (pg 10). In response, the Court noted that there was a three-pronged test to determine whether a judicial order ought to be stayed on appeal: first, the appeal ought to be “arguable” on at least one point; secondly, that failure to grant a stay would render it nugatory; and thirdly, the public interest (pg 16). While it was straightforward enough for the Court to find that the appeal was arguable, it appeared to conflate the second and third prongs, noting first that the argument from regulatory vacuum was a “public interest” argument, but also that the “disproportionate hardship” caused by the regulatory vacuum in effect rendered the appeal nugatory unless the High Court’s suspension order was stayed. While not much turned on this conflation one way or another in this case, one can imagine future cases in which it would be important to keep the second and third prongs cleanly separate.

Interestingly, however, the Court of Appeal upheld the High Court’s conservatory orders with respect to certain “arguably irreversible effect[s]” of some of the provisions of the Social Health Insurance Act. In particular, the Court of Appeal held that registration and contribution requirements to avail of healthcare services, as well as a “unique identification” requirement, would remain suspended pending a final hearing. This is important because – although the Court did not spell out its reasons – it is clear that these provisions were ones that made the access to health services conditional upon registration, and provision of personal data. What seemed to weigh with the Court, then, was the irreversibility of the State’s data gathering – especially in the context of “identifying” people for welfare benefits – and the potential of serious rights violations by making access to social services dependent upon such State action. To those familiar with the long battles around this issue, this will come as a welcome holding.

The second case was The National Assembly and Anr vs Okiya Omtatah Okoiti and Ors (26th January 2024). This was the latest salvo in the latest battle over the 2023 Finance Act, which has been covered extensively on this blog. Recall that in the last round – which was the merits hearing before the High Court – certain parts of the Finance Act had been upheld, while others – in particular, the housing levy – had been struck down (discussed here). As a result, both parties now appealed to the Court of Appeal, and asked that the specific parts of the judgment that had gone against them, be stayed pending the determination of the appeal (the added twist in this case was that the High Court had stayed its own judgment partially striking down the Finance Act for forty-five days, in order to give the State a chance to appeal – this stay lapsed on 10th January, 2024).

The Court declined all requests, thus essentially making the High Court’s judgment final (pending a substantive determination of the appeal). With respect to the original petitioners before the High Court, the Court of Appeal’s ruling was unremarkable: the High Court had already ruled that the relevant parts of the Finance Act were unconstitutional, and it would be a tall order for such a finding to be stayed in an interim order. What is more interesting, however, is the Court’s response on the question of the housing levy.

The State attempted to argue that failure to grant a stay would render the appeal nugatory: the State would not be able to collect the housing levy for this period, even if they were to subsequently succeed in the main appeal; and also, the government had entered into various contracts on the basis of the Finance Act, and would be forced to pay heavy damages in case of breach. Effectively, these were arguments based on the economic consequences of allowing the High Court’s finding of invalidity to come into effect (para 19).

The Court, however, gave short shrift to these arguments. On the question of contracts and job losses, it noted that the State had provided no evidence or documents to substantiate this claim, and that the Court could not infer the existence of such evidence in its absence (paras 62-63). On the issue of tax collection, the Court noted that the government was entirely capable of backdating taxes, and collecting them later (as indeed it had done when the High Court had first issued conservatory orders on the Finance Act) (para 61). Consequently, it could not be said, in any sense, that the failure to stay the High Court’s judgment on this point would render the appeal “nugatory.” Even more interesting was the Court’s finding on public interest: the State argued that stopping it from collecting tax and depriving it of revenue – pending final determination of the appeal – would not be in the public interest. In response, the Court held that “public interest is represented by constitutional values.” (para 81) Therefore, once the High Court had held that the housing levy was unconstitutional, public interest lay in immediate compliance with that finding. Thus:

The presumption of constitutional validity in respect of the impugned sections was extinguished the moment the trial Court issued the declaration. The question that begs an answer is whether in the circumstances of this case it would be in public interest to grant a stay whose effect is to allow a statute that has been found to be constitutionally infirm to continue being in the law books pending the hearing of an appeal. We do not think so. This is because should the Court hearing the appeal affirm the constitutional invalidity of the impugned laws, then all actions that will have been undertaken under the impugned sections of the law during the intervening period will be legally frail. (para 88)

And nor was this a case where (as in the Social Health Insurance Act), the strike down would result in a legislative vacuum, thus justifying a suspended declaration of invalidity. Consequently, the Court held that no case was made out for any further stay upon the finding that the housing levy was unconstitutional.

These two judgments, thus, mark an incremental refinement of the three-pronged test for a stay, and the infusion of concrete content into the “nugatory” and “public interest” requirements. They are also illustrations of how the judiciary can balance competing considerations, especially when it comes to time-sensitive laws, where the stakes are both high and immediate, and without being unduly deferential to the executive. It will be interesting to see how this jurisprudence evolves further.

Guest Post: Sleeping Sentinel? – The Kenyan Court of Appeal’s Ruling on the Finance Act

[This is a guest post by Joshua Malidzo Nyawa.]

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Introduction

In previous posts on this blog, Gautam and I considered the ruling of the High Court of Kenya, where Justice Thande suspended the operation of the newly enacted Finance Act through conservatory orders pending the hearing and determination of the petition challenging the Act both on procedural and substantive grounds. In the previous post, I commended the High Court for acting as the People’s Court by blowing the whistle in the 10^th minute of a 90-minute football match, in order to preclude threats of constitutional violations from continuing through the game. Unfortunately, on 28 July 2023, the Court of Appeal in a retrogressive ruling lifted the conservatory orders pending the hearing and determination of an appeal challenging the High Court Ruling.  

In this post, I will argue that the Court of Appeal erred in its orders, and that its ruling betrays an underlying deference to the executive that is inconsistent with the principles and premises of the Constitution.

New wine into old wineskins: Considering the test for Rule 5(2)(b) applications

Reading the ruling reminded me of the parable in Luke 5:37 that one should not put new wine into old wineskins. Unfortunately, the Court of Appeal went against this biblical caution. Rule 5(2)(b) of the Court of Appeal Rules grants the Court of Appeal the power to stay the execution of a judgment or ruling or issue an injunction pending the hearing of an appeal. This power is granted in subsidiary legislation under the Appellate Jurisdiction Act enacted in 1977. Although the Court of Appeal Rules 2010 were revoked by the Court of Appeal Rules 2022, the content remained the same. Rule 5(2)(b) provides as follows:

(b)in any civil proceedings, where a notice of appeal has been lodged in accordance with rule 75, order a stay of execution, an injunction or a stay of any further proceedings on such terms as the Court may think just.

The Court of Appeal reiterated the usual test set out by the court as follows:

30. Turning to the nucleus of the application, it is common ground amongst all the parties that the applicants must satisfy the twin principles – the appeal should be arguable and not frivolous and that if the stay is not granted, the appeal will be rendered nugatory.

However, the wording of rule 5(2)(b), and the test developed by the Court of Appeal over the years has been in the context of purely private disputes (private remedies) in civil matters. Therefore, an applicant is only required to show that the intended appeal is arguable and the same would be rendered nugatory if the stay is not granted. However, when transplanted into the public law context, the test adopted by the Court of Appeal is a weak test that ignores the nature and purpose of public law remedies. Public law remedies go beyond the parties and are meant to vindicate the Constitution and safeguard the values in the Constitution. In an application to lift public law remedies, this aspect should feature in the Court’s analysis. To consider if an appeal is arguable and whether it will be rendered nugatory without more defeats the purpose of public law remedies and back-peddles the evolution of conservatory orders in particular.

Put differently, the traditional two-tier test adopted by the Court of Appeal is a test caught up in a time warp: its hands-off character is inconsistent with the Constitution, as it stultifies the transformative potential of Article 23 (which provides for public remedies).

Judicial precedent supports this reading. In the previous post, I pointed out that conservatory orders are public remedies with the supreme court noting that they have a  ‘more decided public-law connotation’ meant to secure the enforcement of the Constitution. Due to this public connotation, the supreme court created a test that is different from the test to grant normal injunctions. The Supreme Court in Gitirau Peter Munya vs. Dickson Mwenda Kithinji expressed itself thus

Conservatory orders’ bear a more decided public law connotation: for these are orders to facilitate ordered functioning within public agencies, as well as to uphold adjudicatory authority of the Court, in the public interest. Conservatory orders, therefore, are not, unlike interlocutory injunctions, linked to such private-party issues as the “prospects of irreparable harm” occurring during the pendency of a case; or “high probability of success’ in the applicant’s case for orders of stay. Conservatory orders consequently, should be granted on the inherent merit of the case, bearing in mind the public interest, the constitutional values, and the proportionate magnitudes, and priority levels attributable to the relevant causes… However, in the context of the Constitution of Kenya, 2010, a third condition may be added, namely…That it is in the public interest that the order of stay be granted. This third condition is dictated by the expanded scope of the Bill of Rights, and the public spiritedness that run through the Constitution.

Therefore, if the grant of conservatory orders is based on the preservation or enhancement of constitutional values, the Bill of Rights etc., how can an application meant to suspend the conservatory orders issued ignore such a criterion? A proper test in my view is the test proposed by the Supreme Court (for the most recent reiteration – albeit with problematic application – see Kenya Brewers Association). The Court of Appeal while considering the lifting of conservatory orders, should also centre its decision on the enhancement of constitutional values and the bill of rights.

This position is supported by various provisions of Kenyan law. First, the Constitution demands that statutes conform to the Constitution. An interpretation or application of a statute must reflect the values that run through the Constitution. Article 10 provides that the national values bind state organs and all persons whenever any of them applies or enacts any law. This provision alone imposes an obligation on the Court of Appeal to promote the values when it applies a statute. Consideration of a 5(2)(b) application involves the application of statutes to a dispute and they cannot be divorced from the reach of Article 10.

Second, article 20(4) obligates courts to promote the values that underlie an open and democratic society and also the spirit, purport and objects of the Bill of Rights.  Again this is a fundamental obligation imposed on the courts. Had the Court of Appeal considered the spirit, purport and objects of the Bill of Rights and in particular article 23, they would have realised that the normal test for a stay of execution is not in line with the constitutional language.

Third, Article 20(3) obligates courts to develop any law to the extent that it does not give effect to a right. The reliance on precedents on the test for a stay of execution by the court of appeal without considering whether the test gives effect to the Bill of Rights is unjustifiable. The court of appeal was required to ‘step over the trip-wires of previous cases and to bring the law into accord with the needs of today’. It is no longer justifiable for the Court of Appeal to rely on previous precedent, especially when such precedent has been overtaken by the Constitution.

Whose public interest?

The most problematic part of the decision however is its consideration of what it termed the public interest criterion. Firstly, the court of appeal considers the aspect of whether the appeal will be rendered nugatory as it considers the public interest (See para 41).  Second, the court proceeds to state that the finance act is a unique statute and it is instrumental in defining the government policy as it is used to raise revenue (see para 42). Third, the court proceeds to state that tax is a continuous process and the public can get a rebate for overpaid taxes and finally ‘had the trial Judge considered the substantial and irreversible public interest in this matter, the court would have been hesitant to suspend the whole Act’ (see para 43). The Court of Appeal, therefore, found that the public interest tilted in favour of setting aside the conservatory orders (before anything more, to set the record straight, the court of appeal was factually incorrect. As it will be shown below, it is not true that the high court did not consider the public interest).

It is by virtue of such language that the Court of Appeal’s order sounded more executive-minded than the executive, or engaging in the vocabulary of the executive (“an executive court.”) To consider the collection of taxes as carrying more public interest than adhering to the dictates of the constitution is, in essence, executive’s language: as  the High Court noted, public interest lies in ensuring that all laws enacted by parliament conform to the constitution. Thus, as Justice Thande had held in the High Court:

50. … even where as in the present case, the prejudice complained about is the loss of taxes, this has to be balanced with the legal requirement that all taxes must grounded on the law. The Petitioners have raised several grounds upon which they claim that the Finance Act in respect of which conservatory orders were issued, is unconstitutional. My view is that were the Court to set aside the conservatory orders, the Petition would be rendered a mere academic exercise. The further public interest requires that this Court must discharge its constitutional mandate of protecting the supremacy of the Constitution by ensuring that all laws conform to the Constitution.

As I pointed out in the previous blog and I would reiterate the point, the High Court has been straightforward with this argument. Although the High Court has noted in Okiya, the mandatory minimum tax ruling and the ruling suspending the Tax Laws (Amendment) Act, 2020, that the executive is allowed to collect taxes, it has also held that the mere loss of taxes cannot justify the setting aside of the conservatory orders on the simple basis that taxes must be grounded on the law. Secondly, there is no greater public interest other than the ’….the court playing its constitutional mandate of ensuring that all laws and actions of public bodies including imposing taxes conform with the law’.

Even if one were to agree with the Court of Appeal that there is an aspect of public interest in collecting taxes, there is something else that should not be lost: the point is that with such a ruling, the Court of Appeal allows the executive to create a scenario where the executive commits a potential illegality and when taken to court, it responds by stating that its actions should not be suspended because the consequences of suspension are irreversible. As noted in the previous post, the Court of Appeal’s ruling incentivizes constitutional hardball.

Finally, the Court of Appeal is of the view that the public is capable of getting a rebate on overpaid taxes. The Court of Appeal ignores two things: both substantive and practical. First, the Court of Appeal suggests that the public should be compelled to pay taxes based on a law which is capable of being found unconstitutional in future. This ignores the wording of articles 22 and 258 where courts can be approached to prevent threats to the constitution. Second, on practicality: how, precisely, will the citizens who have paid VAT be reimbursed? Is the court suggesting that if the Act is declared unconstitutional, the government will be forced to return the taxes paid to the individuals? This is impractical: for example, if the new taxes cause fuel price rise, on what basis will the refund be calculated?

Ignoring its past precedent

This was not the first time that the Court of Appeal was considering the lifting of conservatory orders. The court in Attorney General & another v Coalition for Reform and Democracy held that constitutional supremacy has a higher place than public interest. While rejecting to lift the conservatory orders, the court noted thus:

When weighty challenges against a statute have been raised and placed before the High Court, if, upon exercise of its discretion, the Court is of the view that implementation of various sections of the impugned statute ought to be suspended pending final determination as to their constitutionality, a very strong case has to be made out before this Court can lift the conservatory order. The State would have to demonstrate, for example, that suspension of the statute or any part thereof has occasioned a lacuna in its operations or governance structure which, if left unfilled, even for a short while, is likely to cause very grave consequences to the general populace.

Taking this precedent into account, the court was supposed to pose the question whether the suspension had created a lacuna in the operations of the government and whether, if left unfilled, there would be very grave consequences to the general populace. This was not demonstrated by the state. This is for the simple reason that the government was able to collect taxes and was able to remain afloat. Further, newspapers have just reported that the government has backdated the taxes upon the suspension of the conservatory orders. In simple terms, there was no lacuna at all.

Conclusion

The Court of Appeal’s strategic plan for 2020-2024 provides for the mission of the court to uphold the constitution of Kenya, the rule of law, advance indigenous and robust jurisprudence that can be benchmarked regionally and globally and provide access to appellate justice to all. Unfortunately, its jurisprudence won’t be benchmarked if it is this kind of jurisprudence: that is, a jurisprudence that answers the question of whether a court of law can be called upon to aid the furtherance of a constitutional breach in the positive, or a jurisprudence that ignores the intestinal fluid that nourishes the Constitution but embraces the executive’s story without question. This jurisprudence is one that is dwarfed by the progressive jurisprudence of the High Court.

It is therefore respectfully submitted that should consider returning to basics: that is, it must be a watchful guardian of the constitution and refrain from judicial deference when threats of constitutional violations are demonstrated at the threshold.