Source: https://indconlawphil.wordpress.com/2020/05/
Timestamp: 2020-08-09 22:42:05
Document Index: 556755270

Matched Legal Cases: ['Art. 293', 'Art. 256', 'Art. 293', 'Art. 256', 'Art. 293', 'Art. 293', 'Art. 256', 'Art. 266', 'Art. 282', 'Art. 282', 'Art. 293', 'Art. 293', 'Art. 293', 'Art. 275', 'Art. 293']

May 2020 – Indian Constitutional Law and Philosophy
May 31, 2020 ~ Gautam Bhatia	~ Leave a comment
May 31, 2020 May 31, 2020 ~ Gautam Bhatia	~ 1 Comment
May 30, 2020 May 30, 2020 ~ Gautam Bhatia	~ 1 Comment
Guest Post: Preventive Detention and the Dangers of Volcanic, Ever-Proximate, Ideologies
May 29, 2020 ~ Gautam Bhatia	~ 1 Comment
[Editorial Note: On 8th February, I hd written this blog post, about the judgment of the Jammu and Kashmir High Court upholding the administrative detention of Mian Abdool Qayoom, the 76-year old President of the Jammu and Kashmir Bar Association. In that post, I had pointed out that the High Court’s quotation of a line spoken by the Greek King Menelaus, in Sophocles’ play Ajax (itself copied without attribution from a prior judgment by Dipak Misra J) was unwittingly revealing: it demonstrated how Qayoom’s detention could not be justified under any framework of legal or constitutional reasoning, but only by an appeal to the brute power of arms (sticking with classical Greece, as the Athenians would say, “the strong do what they can and the weak suffer what they must.”)
At that time, it was difficult to imagine a future judgment of this High Court sinking even lower; but when the bottom is an abyss, it seems there is no limit to just how low you can go. A judgment by a division bench of the J&K High Court – also involving Qayoom’s detention (now approaching its tenth month, without trial) has achieved the spectacular feat of besting even the February judgment’s Greek fantasies in its intemperate language, its partisanship, its ignorance of basic constitutional principles, and its desire to defeat all other comers in achieving a swift and seamless merger of the judiciary with the executive. This is a guest post by Abhinav Sekhri, analysing it (cross-posted from the Proof of Guilt Blog. – G.B.]
81. As mentioned in para 37 of this judgment, while addressing his arguments on the ideology nourished and nurtured by the detenue, the learned Advocate General submitted that such ideology cannot be confined or limited to time to qualify it to be called stale or fresh or proximate, unless, of course, the person concerned declares and establishes by conduct and expression that he has shunned the ideology (emphasis supplied in original).
82. In light of the above legally rightful and sound argument taken by the learned Advocate General, we leave it to the detenue to decide whether he would wish to take advantage of the stand of the learned Advocate General and make a representation to the concerned authorities to abide by it. … (emphasis mine)
[Extract from Mian Abdool Qayoom v. Union Territory of J&K & Ors., LPA No.28/2020, decided on 28.05.2020]
This exchange is not part of the judgment of the Jammu & Kashmir High Court dismissing Mian Abdool Qayoom’s appeal against a Single Judge order that had rejected his challenge to order condemning him to preventive detention under the Public Safety Act. Instead, it is part of the order dismissing an application seeking Qayoom’s temporary release from Tihar Jail due to Covid-19. The High Court unequivocally supported requiring an oath of loyalty as a condition for releasing a 76-year-old diabetic detenu who is on surviving one kidney during a pandemic which has placed him under high risk.
A preventive detention order against political dissidents is not new for India, and certainly not new for Jammu and Kashmir. It is telling that one of the last judgments of the Federal Court, passed six days before the Constitution came into force, was one which upheld the preventive detention of Machindar Shivaji Mahar, mainly because he was a member of the Communist Party which advocated for armed revolution. Then as now, judges held that actively supporting violent ideologies can make it likely that the person will act in a manner prejudicial to public order.
The cynic would argue, then, that we never left the place which the Jammu & Kashmir High Court shows us in Qayoom’s appeal. The cynic is mistaken, because in between we gave to ourselves a Constitution, which ensured persons like Machindar Shivaji had a fairer process governing preventive detentions than what might have been granted under the erstwhile laws (processes which now apply to the Union Territory of Jammu & Kashmir). On top of this, the Indian Supreme Court has tried to enhance the fairness of these procedures over seventy years.
Even if the record of the Supreme Court on preventive detention is largely regrettable on the whole, there are times when one gets a glimpse of what justice looks like in a system where executive discretion is strongly tested by vigilant courts on the anvil of fundamental rights. It was one such moment in 1979 which saw the Supreme Court quash the detention orders of Mohd. Yousuf [(1979) 4 SCC 370], passed by the then State Government of J&K. A detention order passed against this “Die Hard Naxalite” was methodically taken apart by the bench and shown for what it was: An executive act based on vague and irrelevant grounds that could not deprive any person of her constitutionally reified right to personal liberty.
Mian Abdool Qayoom’s continued detention by virtue of the J&K High Court judgment is, I would argue, antithetical to the kind of justice shown in Mohd. Yousuf, where a court adopted a critical lens to executive determination without substituting its own judgment. Here, illegal grounds in Qayoom’s detention order are justified as being “clumsy”, and then the Court jumps in to fill the gaps despite proclaiming an inability to step into the shoes of the district magistrate authorising detention.
This is nowhere more apparent than the remarkable excursus about the relevance of ideology while considering preventive detention. The High Court goes much beyond a simple argument of allowing the police to consider a prior record to justify need for urgent preventive actions. It also goes beyond Machindar Shivaji and permits reference to activities of one’s political party as a basis to consider risks to public order. Instead, it suggests the authorities have legitimate grounds to detain persons for years without trial, based on their “ideology”.
48. Having considered the matter, we may say that an ideology of the nature reflected in the FIRs and alleged against the detenue herein is like a live volcano. The ideology has always an inclination, a natural tendency to behave in a particular way; It is often associated with an intense, natural inclination and preference of the person to behave in the way his ideology drives him to achieve his latent and expressed objectives and when he happens to head or leading a group, as the allegations contained in the FIRs suggest, his single point agenda remains that his ideology is imbued in all those whom he leads. … Generally, when a criminal act takes place, its impact may be felt within a small circle or its repercussions may be of bigger consequence, but with the passage of time the impact and the consequences generally subside or vanish. When it comes to propensity of an ideology of the nature reflected in the FIRs supported by the intelligence reports we have gone through, we are convinced that it subserves the latent motive to thrive on public disorder. In that context, we feel that most of the judgments of the Apex Court do not fit the facts and the given situation.
Therefore, we are left with no option but to say that an ideology that has the effect and potential of nurturing a tendency of disturbance in public order, such as is reflected in the FIRs registered against the detenue in the instant case, and of which the detaining authority is reasonably satisfied, can be said to be different from a criminal act or acts done sometime in the past and, therefore, would always continue to be proximate in their impact and consequence and, therefore, would not attract the judgments cited at the Bar on the point. … Furthermore, we are also of the view that such an ideology alleged against a person, if mentioned in the earlier grounds of detention, because of its nature of subsistence and propensity, would not lose its proximity and, therefore, can be taken into account and used for detaining such person subsequently if the detaining authority is satisfied that such an ideology of the person has the potential to goad or instigate disturbance in public order, in a susceptible given situation, like the one it was at the relevant point of time. … (emphasis mine)”
Let us take a moment to understand the significance of this rhetoric. Preventive detention powers are conferred upon executive officers to prevent certain kinds of danger by detaining a person without trial. While courts cannot review the officers’ subjective satisfaction of the facts requiring detention, there are some judicial checks in place. To ensure that this discretionary power is not beholden to an officer’s arbitrary prejudices and remains justiciable, the law requires that each detention order be backed by reasonable, relevant, and germane grounds which explain why detention was urgently necessary, which must be expressed clearly to enable a detenu to make an effective representation against the orders.
Requiring clear, germane, and proximate reasons meant that executive officers had to cite some instances of illegal / suspicious conduct as overt manifestations of any ideology which they considered prejudicial to public order — i.e., to flesh out an inherently vague notion. What the J&K High Court has done is taken this close connexion between objective real-world anchors for a subjective concept like ideology, and treated it to serious social distancing. Into the resulting gap falls judicial review of preventive detention. Ideology now becomes a blank cheque to be encashed by the executive whenever the circumstances suggest that its “volcano-like” qualities can prove detrimental to the public order; no matter that the most recent overt display of this purported ideology dates back several years. By no longer requiring the executive officer’s subjective satisfaction to have a proximate real-world anchor, judicial review is nearly reduced to its pre-1970s avatar of only checking if procedures are complied with.
The J&K High Court has, seemingly unwittingly, shown us a system that runs on punishing thoughts and beliefs. Only, here, we have no punishment with a trial and courts, but prevention, with the executive serving as judge, jury, and executioner. The only conduct “legally rightful” and sufficiently redemptive to erase the marks of a dissident ideology is an oath of loyalty, and its perpetual performance, subject to the satisfaction of the same authorities.
This time, too, shall pass.
Guest Post: Attachment of Property, Freezing Orders, and PMLA Investigations: The Need for Reasonable Exclusions
May 28, 2020 ~ Gautam Bhatia	~ Leave a comment
[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”].
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.
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:
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;
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.
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.
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.
May 25, 2020 ~ Gautam Bhatia	~ 1 Comment
[This is a Guest Post by Harshil Watson.]
Recently, the Finance Minister, while declaring the final tranche of the Covid-19 economic package, acceded to the request of the States, and raised their borrowing limit to 5 per cent of Gross State Domestic Product (“GSDP”), up from 3 per cent before, fixed by the Union Government (hereinafter referred to as “Center”) under the Fiscal Responsibility and Budget Management Act, 2005. In itself, this is a welcome move. Allowing States to borrow an additional Rs 4.28 lakh crore this year will provide them with the resources to fight COVID-19 and perhaps, help them maintain their budgeted expenditure allocations. However, this increment comes with certain attached conditions.
As per the announcement, the first tranche of additional borrowings from the Center amounting to 0.5 per cent of GSDP will be unconditional. However, the next 1 per cent of borrowing will be allowed in four tranches, linked to reforms in the areas of ease of doing business, implementation of the Center’s ‘one nation one ration card’ scheme, implementation of power sector reforms to be brought in through Electricity Amendment Act, 2020, and working towards increasing revenues of urban local bodies. States will be allowed to borrow the final tranche of an additional 0.5 per cent only if they ‘completely’ achieve the targets in three of the four reform areas.
The two types of conditions imposed, out of which one is tied to specific purposes and the other is an implementation-based performance condition, form the subject matter of this post.
Concept of Borrowing under the Constitution
293. Borrowing by States
(4) A consent under clause ( 3 ) may be granted subject to such conditions, if any, as the Government of India may think fit to impose.”
While States have the authority to borrow under Article 293 (1) of the Constitution, the Center exercises control through Article 293 (3), which requires state governments that are indebted to the Centre to seek its consent before borrowing. While giving such consent, the centre may impose conditions as it may deem fit under Article 293(4). As all the States owe money to the Centre, in effect, today no State can raise loan without the Centre’s consent. The States are also debarred from raising any loan out of India. Foreign loans can be raised exclusively by the Centre.
The imposition of the above-mentioned performance conditions through Article 293(4) by the Government is unprecedented. On a perusal of previous reports of the Finance Commissions (e.g. here and here), one may note that the Finance Commissions, while deciding the quantum of the loans to be granted to the States, have always taken under consideration only financial factors like debt-GSDP ratio, debt to revenue ratio, fiscal deficit etc. Thus, it is only the first time that the Government, without any such recommendation of the Finance Commission, has decided to impose implementation-based performance goals.
Therefore, the unprecedented use of Article 293(4), clubbed with its widely worded language, poses various Constitutional concerns such as:
By directing the States to implement Central schemes, whether the Center has confused its financial power under Art. 293, with its administrative power of control under Art. 256?
By tying the borrowed funds of the State to specific purposes, whether the Center has encroached upon the financial autonomy of the States, and in effect disturbed the Federal character of the Constitution?
By coercing States into implementing Central schemes, whether the Center has violated the inherent limitation of ‘consent’ and ‘cooperation’ in Art. 293?
Colourable Exercise of Power under Article 293(4)
With respect to the first question, I argue that power under 293(4) to impose conditions is purely a financial power of the Center, which exists by virtue of it being an existing lender, and this financial power must not be confused with its general power of control over the States under Art. 256.
The underlying premise of the power under Art. 293(4) is the outstanding debts of the State. This suggests that a possible purpose of this provision is to protect the rights of the Centre in its capacity as a creditor. Apart from this, a broader purpose of creating a mechanism to facilitate macroeconomic stability may also be discernible, as State indebtedness negatively affects general government debt, i.e. the fiscal health of the nation as a whole. Since clause (4) enables the Central Government to impose conditions only when granting consent under clause (3), reading these two clauses together suggests that such conditions should also be limited to questions of State indebtedness and macroeconomic stability. In other words, conditions which do not pertain to State indebtedness and which have no fiscal stabilising effect would be beyond the ambit of clause (4).
Article 256: Obligation of States and the Union
If we were to also assume power under Art. 293(4) to mean an administrative power of control, it couldn’t have been the intention of the makers of the Constitution to restrict this power only to States with outstanding loans. This would lead to an absurd conclusion that only the States with outstanding loans are to implement the central schemes and not the others who have no pending debts. There exists no rational connection between outstanding debts and implementation of central schemes. It is only because all the States today are indebted to the Union, that the Centre has misunderstood this limited power of a lender with its administrative power of control under Art. 256.
Federalism and Financial Autonomy of the States
By now, it has been held by numerous judgements that the Courts should not adopt an approach which has the effect of or tends to have the effect of whittling down the powers reserved to the States. In light of this, it may be possible to argue that conditions imposed under clause (4) of Article 293 should not impinge on the federal character of the Constitution, beyond what is strictly required for the purposes of this provision.
I argue that the Center, by directing state spending towards specific central projects, has encroached upon the financial autonomy of the States and has used this power to get a backdoor entry into domains exclusively reserved for the States. Under Art. 266, money received through loans by Central Government, until it is repaid, forms part of the State Consolidated Fund and the States have the autonomy to determine their spending priority. Along with loans, Central assistance also flows to the States through grants under Art. 282.
Art. 282: Expenditure defrayable by the Union or a State out of its revenues The Union or a State may make any grants for any public purpose, notwithstanding that the purpose is not one with respect to which Parliament or the Legislature of the State, as the case may be, may make laws
As these are ‘grants’ by the centre to the States, the States are under no obligation to return these sums. Therefore, essentially being the Center’s money, these are also linked to specific purposes and often used to incentivize States to implement central schemes. However, this is not the case with loans under Art. 293. Because it is borrowed based on State’s needs and because it forms part of the State Consolidated Fund, States have significant autonomy over its spending and any law/exercise of any executive power of the Center, which takes away this autonomy of the State, is antithetical to the principle of Federalism.
For instance, one of the conditions imposed in the current scenario is the reforms to be undertaken in the domain of ease of doing business. Ease of doing business is an ideological condition – what if Kerala, as a communist-run State, does not want to prioritise business? Can the centre essentially impose an economic model under the guise of Article 293? Indeed, the Kerala government may have different priorities for allocating resources. Such conditions, then, conflict with the principle that States have the freedom to determine their spending priorities.
Demarche from Cooperative Federalism to Coercive Federalism
While the Center has, through its powers under Art. 293(4), encroached upon the domain exclusively reserved for the States, the fact that the Center has chosen to practically coerce States in implementing the Central schemes is a greater problem in the Indian Federal landscape. ‘Cooperative Federalism’ may not be a Constitutionally enforceable obligation, but is certainly a principle inherent in the Federal idea and also fundamental to the successful operation of the federation in practice, particularly where the vertical fiscal imbalance is such a dominating feature of that landscape.
The idea of ‘cooperative federalism’ is something which has also now been acknowledged by the Indian Courts in various judgements. (See Jindal Stainless). More so, the Court in the State of Rajasthan, notes the observation of Granville Austin wherein he is of the view that “the Constitution of India was perhaps the first constituent body to embrace from the start what A.H. Birch and others have called “cooperative federalism”.
‘Cooperative Federalism’, as the Constituent Assembly debates suggest, becomes more important particularly in the context of Art. 293. Article 293 was picked up from Section 163 of the Government of India Act, 1935. Interestingly, that section under the Act had a protective clause, which went as:
(4) A consent required by the last preceding subsection shall not be unreasonably withheld, nor shall the Federation refuse, if sufficient cause is shown, to make a loan to, or to give a guarantee in respect of a loan raised by, a Province, or seek to impose in respect of any of the matters aforesaid any condition which is unreasonable.
While the whole section was picked as it is, this particular subsection was dropped. The only reason that could be gathered on a reading of the Constituent Assembly Debates on Draft Article 269, is, that the adoption of a Constitution brought with itself a paradigm shift from coercive Federalism to cooperative Federalism. On one will notice a sense of security amongst the members and a great trust in the concept of cooperative Federalism. M. Ananthasayanam Ayyangar, in regards to draft Article 268 and 269 remarked:
In the present Government of India Act, there is a clause that this consent ought not to be delayed or unreasonably delayed. There is no such provision in this article, because it is thought such a provision is not necessary. Under the Government of India Act, it was thought there will be a different agency who will not be, a national of this country, in charge of the administration. But now with national governments in the provinces and a national government at the Centre, it is felt that such a provision is not necessary. I hope articles 268 and 269 will meet the situation.
Similarly, Granville Austin in his book “Constitution of India – Cornerstone of a Nation” (9th ed. 2005 at p.233), has stated thus: —
When this Article was under consideration, seven out of the nine provinces had outstanding loans. Yet, the provincial governments evidently did not believe that this put them unduly in the grip of the Union and did not oppose either the Article or the proviso. Nor, it seems, has the working of this Article during the last decades been detrimental to the interests of the States.
A structuralist reading of the Article suggests that the decision of the members to not include a saving provision like S. 163(4) in the present-day Article 293, on the basis of the coming into being of a cooperative federalist structure, must be taken into account while interpreting the provisions of this Article. The fact that the States were denied foreign borrowing, making the Center their only resort, was accompanied by an inherent expectation that such a dominant position of the Center will not be used to coerce States into implementing Central reforms.
In light of this historical trajectory, the inherent limitation of cooperative federalism must be taken into account in reaching the conclusion that the Center cannot legally compel the States into prioritising their spending to Central reforms, as this would amount to practical coercion.
Unlike Art. 275, wherein the Central Government shall make grants-in-aid to States as per Finance Commission’s recommendations, there is no statutory duty under Art. 293 to consult any specialized body before granting loans or imposing conditions. Conventionally, on the discretion of the Union, the quantum of borrowing and the conditions to be imposed forms part of the Terms of Reference (ToR) to the Finance Commission. However, as this happens only on the discretion of the Union, in the present case, the conditions imposed are without any recommendations from the Finance Commission. Thus, this must pave way for establishment of something on lines of Loan Council, like in foreign jurisdictions.
In this regard, Australia’s efforts in adopting a cooperative fiscal mechanism by establishing an Australian Loan Council are worth noting. The Council meets once a year and consists of the Prime Ministers of the Centre and the States. Each State has one vote, but the Centre has two and a casting vote. All loans are arranged by the Centre and then distributed among the various governments in accordance with an agreed formula. This arrangement has reduced competition among the governments for funds and thus loans can now be arranged on more advantageous terms than was possible before
Hence, based on the above arguments, reading of Article 293 suggests that the conditions imposed by the Centre will not fit into the limited ambit of Article 293(4).
Whether or not the Supreme Court ever gets an opportunity to visit the interpretation of powers under Article 293(4) is yet to be seen. In the event that it does, there may be cause to speculate that the Court may uphold the older regime of strong financial intergovernmental relations between the Center and the States in the light of the robust federal structure – we claim to possess.
May 24, 2020 ~ Gautam Bhatia	~ 3 Comments
May 23, 2020 May 23, 2020 ~ Gautam Bhatia	~ 4 Comments
May 23, 2020 ~ Gautam Bhatia	~ Leave a comment
May 22, 2020 ~ Gautam Bhatia	~ 1 Comment