Saturday, July 7, 2007
Madras High Court Ruling on Quotas II: A follow-up
“[2] In this Act, unless the context otherwise requires:-
(c)"Government seats" mean-
(iii) 65% of seats in each branch in non-minority unaided professional educational institutions and 50% of the seats in each branch in minority unaided professional educational institutions, in accordance with the consensus arrived at between such professional educational institutions and the Government;
[4] Admission in unaided professional educational institutions
(1) Notwithstanding anything contained in any relevant law or any rules, regulations or by laws made there under, admission to seats, excluding the seats referred to in item (iii) of clause (c) of Section 2 in all unaided professional educational institutions shall be made by the consortium of unaided professional educational institutions approved by the Government or by any authority authorized by the Government, on the basis of the marks obtained by a student in the relevant subjects in the qualifying examination.
[5] Normalization of marks:
(4) The appropriate authority and the consortium of unaided professional educational institution shall prepare the rank lists for admission of students to the seats referred to in section 3 and section 4, respectively and allot students through centralized counseling.”
A brief background of events as relevant to the discussion below, as stated in the judgment itself, is as follows: “… a consensus was arrived at between the Government and the petitioner Consortium in the matter of admissions for the year 2006-2007. In view of the said consensus, an affidavit was filed before this Court whereby and whereunder the petitioner Consortium agreed for seat-sharing between the Government and the private self-financing institutions for the academic year 2006-2007. It was further agreed that in respect of non-minority colleges, 65% of the seats in their institutions could be filled by the Government while the remaining 35% could be filled by the respective colleges. It was also agreed that as for minority colleges, 50% of the seats could be filled by the Government while the remaining 50% could be filled by the respective Colleges and 15% of the seats within the Management quota was permitted to be filled up with non-resident Indians (NRIs). The admissions were agreed to be made based on the marks obtained in the Common Entrance Test conducted by the petitioner Consortium taken along with the marks scored in the qualifying examinations. The State Government also filed an affidavit consenting to follow the practice which was adopted for the previous academic year in the matter of admission of students by private colleges and making it clear that they do not insist that the self-financing colleges should follow the single window system. These agreements were taken on record and in terms of the settlement arrived at between the parties, the writ petitions were disposed of by this Court…The state has now enacted the Act to provide for admissions to professional degree courses such as engineering, medicine, dental, agriculture, etc. on the basis of marks scored in the qualifying examinations vide its judgment reported in 2006 (3) MLJ 648…
In the academic year 2006-2007, the private self-financing Engineering Colleges, both minority as well as non-minority, had agreed to share the seats with the Government only for the academic year 2006-2007 and accordingly, filled up the seats in terms of the consensus arrived at and this being the scenario, the State has now enacted the Act (passed by the Assembly in December 2006) to provide for admissions to professional degree courses such as engineering, medicine, dental, agriculture, etc. on the basis of marks scored in the qualifying examinations.”
The principal challenge was on the ground of the equity principle (which essentially stands for the notion that power possessed must equal responsibility shouldered, viz. since government makes no contribution to unaided colleges, it ought not to have a say in their administration) enunciated in Inamdar. The petitions here accordingly claimed inter alia that as per the judgment in that case, the Government, under either Art. 19(1)(g) or Art. 30(1), has no right either to appropriate any quota of seats or to compel the unaided professional institutions to give up a share of the available seats to the candidates chosen by the State as mentioned in section 2c(iii), or to prescribe the method of admission as in 4(1) requiring them to be made on the basis of marks in the qualifying examination, or to direct them to admit students through a centralized counseling system as stated in 5(4). Another important ground was contract violation, i.e. that the so-called consensus was limited to 2006-2007, and several provisions of the Act were never agreed to by the Consortium and represent a unilateral re-writing of it.
The court, in rejecting arguments against the first two provisions (2c(iii) and 4(1)), quoted portions of the Pai Foundation and Inamdar judgments in support of its position that the test of constitutionality of the impugned legislation is whether it is the outcome of a consensual arrangement between the private colleges and the state.
Para 68 from Pai Foundation states:
"It would, therefore, be permissible for the university or the Government, at the time of granting recognition, to require a private unaided institution to provide for merit-based selection while, at the same time, giving the management sufficient discretion in admitting students. This can be done through various methods. For instance, a certain percentage of the seats can be reserved for admission by the management out of those students who have passed the common entrance test held by itself or by the State/University and have applied to the college concerned for admission, while the rest of the seats may be filled up on the basis of counseling by the State agency. This will incidentally take care of poorer and backward sections of the society. The prescription of percentage for this purpose has to be done by the Government according to the local needs and different percentages can be fixed for minority unaided and non-minority unaided and professional colleges."
Para 126 from Inamdar ‘clarifying’ the above mentioned paragraph of the Pai Foundation reads:
". . .reading the whole judgment (in the light of previous judgments of this Court, which have been approved in Pai Foundation) in our considered opinion, observations in para 68 merely permit unaided private institutions to maintain merit as the criterion of admission by voluntarily agreeing for seat-sharing with the State or adopting selection based on common entrance test of the State. There are also observations saying that they may frame their own policy to give freeships and scholarships to the needy and poor students or adopt a policy in line with the reservation policy of the State to cater to the educational needs of the weaker and poorer sections of the society."
Again, para 128 of Inamdar reiterated thus:
"We make it clear that the observations in Pai Foundation in para 68 and other paragraphs mentioning fixation of percentage of quota are to be read and understood as possible consensual arrangements which can be reached between unaided private professional institutions and the State." Hence, the learned judge concluded, “… it was held that fixation of percentage of quota is to be read and understood as possible consensual arrangements which can be reached between unaided private professional institutions and the State…”
The court, also noting that the previously filed affidavits did not mention any limitation of the consensual arrangement to 2006-2007 and that the seat distribution pattern being very similar to what has been in vogue for nearly twenty years could not be termed a rewriting of the contract, concluded that “section 2(c)(iii) of the Act is not, in any way, in infringement of the constitutional rights guaranteed under Article 19(1)(g) or 30(1) of the Constitution and it is also not in violation of the rulings of the Supreme Court in Pai Foundation case and Inamdar case”.
The court, while dismissing other technical objections (not mentioned here) to section 4(1), without detailed elaboration, simply stated that “admissions to seats other than the seats mentioned in Section 2(c)(iii) are made by the consortium and approved by the Government or any authority authorized by the Government and this power of the State to allot seats to admission made by the consortium in respective Colleges is in conformity with the decision of the Pai Foundation case which is reiterated in Inamdar case and is also not in violation of Article 30 of the Constitution. In that view of the matter, this Court holds that there is no infringement of rights of the minorities or the non-minorities in admitting students in accordance with the provision of Section 4(1) which is unambiguous…”
In regard to section 5(4), the court quoted para 138 of the Pai Foundation judgment:
"It needs to be specifically stated that having regard to the larger interest and welfare of the student community to promote merit, achieve excellence and curb malpractices, it would be permissible to regulate admissions by providing a centralized and single window procedure. Such a procedure, to a large extent, can secure grant of merit-based admissions on a transparent basis..."
Also, para 136 from the Inamdar opinion maintained thus:
“Holding of such common entrance test followed by centralized counseling or, in other words, single-window system regulating admissions does not cause any dent in the right of minority unaided educational institutions to admit students of their choice. Such choice can be exercised from out of the list of successful candidates prepared at CET without altering the order of merit inter se of the students so chosen." It followed from this, the learned judge held, that section 5(4) was in accordance with the rulings of the Supreme Court and therefore not unconstitutional.
In summary, the court seems to have relied upon two grounds primarily for its decision: (1) that the Act represented a consensus between the colleges and the state and the petitioner Consortium’s grievances and claims notwithstanding, the ‘consensus’ represented the absence of coercion and hence, violation of the equity principle did not come into play (2) aspects of the impugned provisions, even if not part of the contractual arrangement, are nevertheless consistent with past rulings of the Supreme Court.
A few questions are relevant here. (1) Since when does the constitutionality of a statute depend on ‘consensus’? Are legislatures bound by such ‘consensual’ determinations in which they may not have much of a say? Finally, as a consequence of this, can constitutional principles be overridden by the State’s contractual obligations to private parties? By the same argument, if the union government were to claim in court, in the defense of an impugned legislation, that the statute was actually the outcome of a broad consensus amongst political parties and/or various lobbyists, would that suffice to meet the test of constitutionality? (2) The other question is the fate of this equity principle itself, so widely hailed in the press at the time Inamdar was decided. By allowing virtually the entire admission process to be choreographed and monitored by the government at every stage, the judgment while clearly not being the last word, in effect, seems to have given this principle a near-fatal blow if not a burial.
In fairness, the court did quote the key paragraph 125 from Inamdar which expounded this principle:
“. . . neither in the judgment of Pai Foundation nor in the Constitution Bench decision in Kerala Education Bill which was approved by Pai Foundation, is there anything which would allow the State to regulate or control admissions in the unaided professional educational institutions so as to compel them to give up a share of the available seats to the candidates chosen by the State, as if it was filling the seats available to be filled up at its discretion in such private institutions. This would amount to nationalization of seats which has been specifically disapproved in Pai Foundation. Such imposition of quota of State seats or enforcing reservation policy of the State on available seats in unaided professional institutions are acts constituting serious encroachment on the right and autonomy of private professional educational institutions. Such appropriation of seats can also not be held to be a regulatory measure in the interest of the minority within the meaning of Article 30(1) or a reasonable restriction within the meaning of Article 19(6) of the Constitution. Merely because the resources of the State in providing professional education are limited, private educational institutions, which intend to provide better professional education, cannot be forced by the State to make admissions available on the basis of reservation policy to less meritorious candidates. Unaided institutions, as they are not deriving any aid from State funds, can have their own admissions if fair, transparent, non-exploitative and based on merit.”
As can be seen from the above paragraph, the principle is not so categorically stated but qualified by the need for the procedure to be ‘fair, transparent, non-exploitative and based on merit’ – the key question of who decides and how whether those criteria are met without violating institutional autonomy is left unaddressed (this begs the very question to be answered). To be sure, Pai Foundation did not cite any such principle and the bench in Inamdar which was only ‘interpreting’ it, while stating thus, tried its best to explain away the contradictions that it created with the examples cited in the former opinion. If J. Dhanapalan’s view also holds up in the Supreme Court, it would at least indicate one thing, namely, that the equity principle is at the most a default position which the state is free to overturn by appropriate legislation. That being the case, the belief that this is really a constitutional principle and integral to the basic structure is unlikely to hold water; on this basis alone, it would appear, at least the first part of Art. 15(5) (excluding the minority exception), currently under challenge, should hold up in court.
A detailed examination of issues relating to Retail in India
Friday, July 6, 2007
Opportunity for Review of the SEZ Policy
It has been reported in the press today (Panel no to new zones till Act amended, Joshi panel seeks freeze on SEZ clearances) that a Parliamentary Standing Committee on Commerce headed by Murali Manohar Joshi has submitted a report to the Government calling for a freeze on approval of new SEZs unless the entire policy on SEZs including the SEZ Act are reviewed. This comes in the wake of demands from various quarters for a need to take a relook at important concerns such as land acquisition and rehabilitation of displaced land-dwellers.
This provides a timely opportunity for the Government to review the entire policy on SEZs, which has been affected by controversies throughout the country. From and law and policy standpoint, an important aspect relates to land acquisition, where various options are being explored by the policy-makers: (i) have the Government acquire the land (for example, under the Land Acquisition Act); or (ii) have the private developers of the SEZs acquire land directly from the land owners by the process of negotiation without any Government intervention.
As we have discussed on this blog in the past, neither presents a workable solution. What is required is acquisition with full consent of land owners. However, the Government needs to play a supervisory role to ensure that land owners (who, in the case of a large number of SEZs happen to be illiterate or semi-literate farmers) are not shortchanged. These, among other issues, need to be considered in full before the policy and the Act on SEZs is amended. Press Reports suggest that the Commerce Ministry will have to submit an action-taken report on the findings of the Parliamentary Committee.
Thursday, July 5, 2007
Foreign Investment in Retail Trade (…contd.)
However, there appears to be a change in the stance of the Government. Today’s Business Standard reports that officials of the Finance Ministry are of the view that the restrictions on foreign direct investment in the retail sector may not apply to franchise agreements.
The report states:
“Franchise agreements are basically service agreements and in the case of services there can be no distinction between retail and wholesale, hence the present guidelines can only apply to retail in goods and not franchise agreements, hold ministry officials.
This view is significant as there have been speculations about the government banning franchise arrangements, which many consider a loophole that single-brand and multi-brand retail giants have been leveraging to enter India.”
The Government is reviewing its entire policy on foreign investment in the retail sector. We will have to wait and watch whether the Finance Ministry’s view will be accepted once the FDI policy is reviewed.
Monday, July 2, 2007
Specialised Tribunals as an Alternative to Courts
(i) a lack of personnel with the requisite expertise in those specialized fields to resolve complicated disputes;
(ii) an overburdened judicial system with substantial backlog resulting in inordinate delays in resolving such disputes.
One of the basic reasons for these drawbacks is the fact that specialised disputes are decided by mainstream courts such as the High Courts and other civil courts. However, there have been recent efforts to ‘tribunalise’ the justice system for specialised disputes: examples that are the subject matter of debate relate to the National Company Law Tribunal (NCLT), National Tax Tribunal (NTT) and the Competition Commission (CC). Although the enabling legislation for all of these bodies have been enacted by Parliament, they have not only been mired in controversy, but also have been the subject-matter of litigation challenging the establishment of such bodies. For these reasons, the bodies are yet to see the light of day.
In an article titled Will Tribunals Trivialise Justice Delivery? appearing in today’s Economic Times, K. G. Narendranath sets out the advantages as well as shortcomings of establishing specialised tribunals. He says:
“It’s increasingly a conflict between the judiciary and the quasi judiciary, seen by many as closer to the executive than the judiciary. The question is whether the new, powerful tribunals and commissions proposed by the government to speed and “modernise” dispensation of justice in the economic, financial and social arenas would also result in its “trivialisation”.”
Although care needs to be taken to ensure that the tribunals function in a proper manner with due regard to principles of natural justice, there are several advantages as well as checks and balances in establishing such a system:
(i) it enables expert determination on specialised disputes, as the tribunals would have as its members persons who are experts in the relevant field. Apart from this, the constitution of the tribunals can also include members from the higher judiciary so that the proceedings can be carried out like a judicial body rather than an administrative body;
(ii) it would lighten the burden of the already overburdened mainstream judicial system;
(iii) it would have a more flexible procedure (without being bound by the detailed procedures under the CPC, CrPC and Evidence Act), but with due regard to the basic principles of natural justice enshrined in the Constitution;
(iv) the decisions of the tribunals would be subject to appellate review by the higher judiciary.
However, the establishment of these tribunals to accelerate justice delivery has itself been the victim of delay in the judicial process. For example, although the proposal for establishment of NCLT was enacted in the Companies Act in 2002, a decision on its validity is still pending before a Constitution bench of the Supreme Court nearly 5 years later. The establishment of the Competition Commission too has been delayed because of challenges to its constitutional validity.
There is no doubt that there is a dire need for such specialised tribunals. What is required is a final determination from the Supreme Court on the constitutionality of such tribunals and perhaps guidelines on the manner in which they are to be operated so that they system can be put in place sooner rather than later.
Madras High Court ruling on quotas in unaided educational institutions
"The Madras High Court on Monday upheld the constitutional validity of a State legislation and a consequent Government Order directing the unaided professional colleges to surrender a certain percentage of seats to the State quota and also to follow centralised counselling for admission for management quota seats.
Justice V. Dhanapalan, dismissing a batch of writ petitions filed by various associations of self-financing professional colleges, said the Tamil Nadu Admission in Professional Educational Institutions Act 2006 had been given effect to “taking note of the local needs and, specifically, larger interest and welfare of the student community and to promote merit, achieve excellence and curb malpractices.”
The petitions challenged three specific clauses of the Act relating to the surrender of 65 per cent of the total seats to Government by non-minority institutions and surrender of 50 per cent of seats by minority institutions; admission of students for management quota seats through the centralised counselling or single window system (SWS); and admissions on the basis of marks obtained in the qualifying examinations alone."
Sunday, July 1, 2007
Presidential Polls : Part III – Similarities between Shiv Kripal Singh case and the present one
Arun correctly points out that in Shiv Kripal Singh case, the Supreme Court found the allegations against Sanjeeva Reddy, the losing candidate, fictitious and completely baseless. But as Dilip has pointed out, and the reading of the entire judgment shows, we are unable to know how the SC arrived at this conclusion. May be the pamphlet being distributed then was not backed by documentation or evidence.
In Ms.Patil’s case, if one follows the media coverage closely, one can see that Abhishek Singhvi, the Congress spokesperson has disputed even the facts of the allegations against her, the amount of money involved in the transactions alleged against her brother, and whether the borrowers (Ms.Patil’s kin) have returned the loan amount to the bank, and when. May be the Congress wants to wait till the last date for the nomination is over, to properly answer the allegations against her. Why should we insist – as many of the commentators seem to be in a such a hurry as if all would be lost - that the Congress must answer all the charges even before the nominations close. There is a campaign period ahead, when all these allegations will again be raised and answered. There have been good presidents, and bad presidents. In certain cases, bad presidents have turned out to be good presidents because of circumstances. The so-called good presidents, to begin with, did not live upto the expectations.
In Ms.Patil’s case, there is a suspicion that she must have had a hand in the number of allegations against her kith and kin. Now, this suspicion has to be substantiated. Even the complainants in those cases have not alleged this. Being the highest office, the Presidency does not offer any immunity to the incumbents from cases which have to do with her actions in her personal capacity, before she assumed the office.
Take the pamphlets against Sanjeeva Reddy. The allegations might have been true or false. The SC probably found the pamphlets issued by anonymous persons as lacking evidentiary value. None had the courage to provide the evidence, probably. The SC did not explain why it found the pamphlet baseless and fictitious. Had the evidence subsequently come up, and if Sanjeeva Reddy had been elected as President in 1969, would he have enjoyed any immunity? No. Therefore, there is a flawed assumption in the case of Ms.Patil, that she would interfere with the cases faced by her kith and kin, and therefore, she should not stand for the Presidency.
If you read that judgment carefully, the SC did not want to go into the allegations in the pamphlet, to determine whether they had any basis, or even prima facie raised any suspicion of wrong doing. It simply said even the dissemination of such a pamphlet amounted to undue influence because it cast aspersions on the integrity of the candidate. It is not for the pamphlet-distributor to come up with hard evidence to convince the Court. The truth or falsehood of the pamphlet must have been already established, so that there can be no possibility of a debate on it. The crucial paragraph in that judgment is this:
“ It seems to us that these allegations are covered under Section 171-C. even if they may be covered under Section 171G. But we are not concerned with Section 171G because that section has not been made a ground for setting aside an election. We are only concerned with Section 171C. Be that as it may, we cannot add another subsection to Section 171C, as follows :A false statement of fact in relation to the personal character or conduct of any candidate even if made with the intention of interfering with the electoral right shall not be deemed to be interference within the meaning of this section.”
In other words, the SC had two sections before it: Sections 171C and 171G. Section 171C (1) says: Whoever voluntarily interferes or attempts to interfere with the free exercise of any electoral right commits the offence of undue influence at an election. This sub-section is very general, and the subsequent sub-sections (2) and (3) (which are not relevant to this case) have been added without prejudice to sub-section (1).
Section 171G says whoever with intent to affect the result of an election makes or publishes any statement purporting to be a statement of fact which is false and which he either knows or believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate shall be punished with fine.
As the Supreme Court’s clarification shows, S.171 G is not a ground of attack in that case. Under S.171C also, the court was in no mood to exempt false statements of fact from the purview of “voluntary interference with the free exercise of right”.
In Ms.Patil’s case, it is premature to say whether S.171 G would be relevant. But S.171C? What are the exemptions under S.171C?
S.171C (2) (a) and (b) is not attracted in Ms.Patil’s case. Nor was it attracted in Shiv Kripal Singh case. These refer to some specific illustrations of interference (Readers are requested to refer to IPC), which are not exhaustive of the offences to be covered by S.171C (1).
S.171C (3) says a declaration of public policy or a promise of public action, or the mere exercise of a legal right without intent to interfere with an electoral right, shall not be deemed to be interference within the meaning of this section. This sub-section also will not apply to either cases.
In other words, S.171C does not provide for any exceptions apart from this. The crucial question, therefore, to be asked in both the cases, is: whether the allegations amount to “voluntary interference with the free exercise of right” as meant by S.171C (1). The basis of the allegations, whether it is true or not, is not exactly relevant at this stage. It was not relevant to the court in Shiv Kripal Singh case. The mere dissemination of the pamphlet amounted to “voluntary interference with the free exercise of right” to the Court. Therefore, the argument that the allegations may be true, and that there is no effective challenge to the facts established by the allegations cannot come to the aid of Ms.Patil’s critics. The Court in that case was not bothered about the anonymity of the authors of the pamphlet. Had it been concerned about the truth or otherwise of its contents, it could have ordered an inquiry into it to arrive at the truth. It was not concerned even to explain, as it felt the pamphlet so distributed, in its view, appeared to be fictitious and baseless. But it is not this view which determined the outcome of this case.
I agree that the discussion is largely academic, as Ms.Patil would most probably win the contest, and the occasion for the Court to determine whether the allegations materially affected the result (in terms of S.18 of the Presidential and Vice-Presidential Elections Act) of the election may not arise at all. Be that as it may, as the discussion raised the issue whether allegations against Ms.Patil, would come under S.171C (1), which is independent of the Presidential and Vice-President Elections Act, I thought the SC’s ruling in Shiv Kripal Singh would be highly relevant.
To conclude, I repeat what the Supreme Court said in that case with regard to the scope of S.171C(1):
"The legislature has wisely refrained from defining the forms interference may take. The ingenuity of the human mind is unlimited and perforce the nature of interference must also be unlimited.”
Secondly, the SC judgment in the Association of Democratic Rights case, which directed the E.C. to seek and publicise information about the background of the candidates in terms of the right to information of the voters does not include information about allegations and insinuations being faced by the candidate.
1974 AMENDMENT:
S.18 of the Presidential and Vice-Presidential Election Act, 1952 was amended in 1974. The amendment, apart from other things, carried out two major changes in the Act, which are relevant to the present discussion. One is the word connivance was changed as consent in S.18(1) (a). The second important change, which I missed, but which formed the basis of the Shiv Kripal Singh judgment is this: it omitted S.18(1) (b) as it stood in the unamended Act. This sub-section in the unamended Act said as follows:
(b) that the result of the election has been materially affected (i) by reason that the offence of bribery or undue influence at the election has been committed by any person who is neither the returned candidate nor a person acting with his connivance....the Supreme Court shall declare the election of the returned candidate to be void.
The effect of this amendment would be that the pamphlet against Sanjeeva Reddy, which was the issue in the Shiv Kripal Singh case, is unlikely to be an issue in a similar case. At the most, those who make similar allegations against Presidential candidates in the recent election could be prosecuted under S.171C or S.171G under IPC, and can get away with a punishment of fine, if found guilty. The successful candidate cannot be unseated even if the campaign of undue influence – carried out without the consent of the candidates or his representative - materially affected the results. The discussion in the posts and the comments section, therefore, must be understood in the background of this important change, which I missed earlier.I stand corrected insofar as the 1974 amendment almost eclipsed the similarity between the Shiv Kripal Singh case and the present campaign, by deleting S.18(1)(b) of the unamended Act. But the similarity with regard to S.171C(1) remains, even though the prospect of the Court declaring the election as void on this ground, if others without the candidates' consent, are found guilty of this offence, is no longer there. The Supreme Court is mercifully spared of the effort to determine whether the result is materially affected by the undue influence of those who did not have the consent of the candidates. Was this amendment a result of the legislative wisdom that the Shiv Kripal Singh judgment's reasoning, as Arun argues in the Comments section, is inadequate? But if the plea of implied consent is taken, then perhaps the original objective of the 1952 Act in keeping the Presidential and Vice-Presidential election campaign free from undue influence of any kind, may be given effect to.