Source: http://centreright.in/2011/02/islamic-banking-ii-kerala-hc-judgment-in-subramanyam-swamy-v-state-of-kerala/
Timestamp: 2016-09-28 06:50:26
Document Index: 181968004

Matched Legal Cases: ['Art.30', 'Art.290', 'Art.28', 'Art.298', 'Art.27', 'Art.14', 'Art.14', 'Art.14', 'Art.298']

By Dilip Rao	/ In Short Posts	/ February 6, 2011	Close
The full judgment of the Kerala High Court in Subramanyam Swamy v. State of Kerala (better known as the ‘Islamic Banking’ case) is available on Judis (WP(C) No.35180 of 2009, J.Chelameswar CJ and P.R.Ramachandra Menon, Date: 27/01/2011). It is fairly well written and well reasoned; so I encourage readers to go through it in detail. For background information regarding Islamic Banking and legal and policy issues in play, I refer the interested reader to the previous post on this topic by Amit Malviya. Briefly, the reasoning it provides is as follows.
Preliminary objections on the ground that petitioners Subramanyam Swamy and others are pro-Hindu, Anti-Muslim and ‘fundamentalist’, the petitions being a vehicle for communal baiting were dismissed by the Court on several grounds, namely that such stereotyping would have the effect of shutting out all public discourse, due process of law is not denied to even terrorists let alone ‘fundamentalists’, all shareholders in the company would be impacted by the outcome regardless of religion, legal objections in a Constitutional Court can never be said to promote communal disharmony and the issues transcend religion, a secular state and fundamental rights being guaranteed to all.
Coming to the substantive questions, the Court first addressed the question of whether Kerala State Industrial Development Corporation’s (KSIDC) 11% equity in the Al Barakh Financial Services Ltd., a registered non-banking financial company (NBFC) committed to offering Sharia compliant financial services, constitutes “undue association with a religious activity amounting to [State] favoring or promoting a religion”. It explained the well recognized position that the Indian constitution does not specifically prescribe a wall of separation between religion and state. Not only are specific exceptions to the secular doctrine made in the Constitution itself (citing Art.30(1) which grants minorities the right to administer educational institutions and Art.290A which allows for transfer of funds from the consolidated fund of India to certain temples in Tamil Nadu and Kerala for their maintenance) but State association with religious institutions is ordinarily permissible as well both in education (citing Art.28(2) and 28(3) which allow the State to administer and/or aid educational institutions set by religious endowments or trusts where religious education may be imparted) and commercial enterprise (Art.298 which grants broad executive authority to the state to engage in commercial interactions with no mention of any exception against involvement with religious denominations) so long as these ventures do not amount to the maintenance or promotion of religion (barred under Art.27). The Kerala government’s notification makes clear that the purpose here is to raise resources through commercial activity for developing the state and this does not amount to the maintenance or promotion of religion. Further, interactions between human beings as prescribed in any religion is required to be treated as a secular aspect of that faith and any association with such activity cannot be condemned as promoting or aiding the religion. State investment in a commercial venture which is to be carried out in adherence with the laws of the land would not violate secularism merely because the company in question is also, in addition, committed to compliance with the Sharia.
As far as violation of the regulatory framework is concerned, the Court did not go into it being of the view that the RBI had not yet looked into the matter and it was not its intention to preempt such an examination.
With regard to violation of equality requirement under Art.14, the petitioners’ contention was that the investment was not done in a transparent manner and was thus arbitrary (arbitrariness has been considered a ground for violation of Art.14 under the Supreme Court’s much criticized precedent in E.P.Royappa v. State of Tamil Nadu). The company argued through Rajeev Dhavan that public auction is not an absolute requirement and may be departed from when rational compelling reasons are present. The Court accepted the latter argument stating that in this instance, the nature of the transaction justified the absence of invitations for tender.
Generally speaking, with respect to the facts of the case, I find the Court’s reasoning to be sound. Without having looked at the briefs of the parties, I will mention a couple of noteworthy points.
(a) The Court did not address any Art.14 challenge on the ground that implications of this venture would unduly benefit/disadvantage some section of the public. This is not surprising considering that no discriminatory intent was evinced by the respondent State or company. To the contrary, they affirmed that services would be provided to all.
(b) The Court’s rather broad argument that all interactions between human beings as prescribed in any religion ought to be treated as secular aspects of that faith is intriguing. There are many cases where the SC has held that only the “essential” aspects of a religion are protected under the fundamental rights but I am aware of no precedent for this view. Nor does the Court cite any reference to support it. If it comes to be accepted, it could imply that any such aspect will be open to state regulation. Many rituals and practices are prescribed by scriptures to be performed by families as a unit or by the community; even when a single individual performs a rite, a priest is often present and some interactions with him/her are an integral part of it. It raises the question whether it can be said that all such interactions, howsover integral they might be to the faith, are “secular” aspects of it and thus not “essential”? Such a proposition may be hard to accept.
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I agree with your concluding comment.
Say, there is a group of individuals belonging to a religion, say X, that prescribes killing all persons who do not belong to that religion. Using verses from their ‘holy book’ as motivation, these individuals kill a person not belonging to their religion. Is this murder to be treated as a secular aspect of that religion?
Say, a group of individuals belonging to a religion Y, get together to perform a ritual as prescribed by their ‘holy book’. Is the ritual to be treated as a secular aspect of that religion?
It is hard to agree with the court’s reasoning that *all* interactions between persons belonging to a certain religion must be treated as secular aspects of that religion.
What I see is a state body – KSIDC – investing public funds in an activity that is based on and motivated by religious doctrine. A clear violation of secular principles.
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Secular aspect of a religion implies that such conduct can be regulated by the State. Thus, as for your first example, murder would be secular under this view and therefore can be prevented by the State. In any case, the right to religion is not thought to encompass any right to harm anyone else – so, regardless of whether it is secular or not, the State has authority to prevent it. The issue, of course, is with the second group belonging to religion Y. Here, I think the Court’s view is too broad and it would be better to come up with a more limited construction.
Regarding the last point, there are a couple of reasons why that view is erroneous. As explained in the post, firstly, the government has broad authority under Art.298 to invest in commercial ventures including those that may be inspired and motivated by religious doctrine. What is disallowed is the use of state funds to promote and maintain religion. Here, the purpose of KSIDC’s investment is to benefit from a commercial activity but not to promote the religion as in, the money is not going towards maintenance of any mosque, pilgrimage, proselytization, etc. It has been done with the entirely secular intent of harnessing funds for development.
Secondly, activities motivated by religious and secular doctrines are not mutually exclusive. Organizations motivated by religious principles may be engaged in activities that the State is equally inclined to promote. The Court gave the example of giving food to the needy, a principle that all major religions support and the State endorses as well. Here too, Sharia compliance is in addition to and not in derogation of secular laws. Hence, there is no violation of secular principles.
Talk4Justice
Which religion and which Holy book asks people to kill others who does not belong to their religion? This is insane. I dont think any of the religion that exist in the world will say so. U r highly mistaken brother.