.

"Universities" under the Constitution

2010-04-01T00:35:00.000-07:00

Tomlin’s law dictionary defines University a “a place where all kinds of literature are taught”. University is a corporation aggregate – Aggregation of corporations – The corporations are usually schools or colleges. It is a body incorporated for the purpose of learning, with various endowments and principles. Such bodies were anciently founded by Papal Bull or Charter, later by Royal charter. Oxford dictionary defines university as a “High level educational institutions, in which students study for research and academic research is done”. The word is a derivative from the Latin word, ‘Universite’ – meaning “the whole”. According to Ramanatha Iyer Law Lexican, it is “A corporation of teachers or assembly of learned men or colleges for teaching higher branches of learning; and having power to confer degrees”. A university differs from a college in that it is usually larger, has a broader curriculum and offers graduate and professional degrees in addition to undergraduate degrees.

2. In India, though many universities were established even 2500 years earlier like Nalanda, they were not similar to the modern day universities. The earliest Western institution that can be called a university was a famous medical school that arose at Salerno, Italy, in the 9th century and drew students from all over Europe. The first true university was founded at Bologna late in the 11th century. University of Paris was founded between 1150 and 1170.

3. The first modern university was that of Halle, founded by Lutherans in 1694. These early universities were corporations of students and masters, and they received their Charters from Popes, Emperors and Kings. The modern universities were established in India in the year 1857. Three universities were established in the three metropolitan cities, Calcutta, Bombay and Madras. All the universities were established by a specific law made by the legislatures.

4. In a unitary country, the legislative body will have the power to make any law on any subject. In most of the unitary countries, the constitution does not regulate or restrict the power of law making on any subject. In a federal country like India, where the law making power is distributed between the component units like provinces or State and the federal or Central governments, the field of legislation is demarcated by the constitution. Certain subjects are allotted exclusively to federal government and some subjects are allotted to the component units. Over some of the subjects, both federal as well as provincial state legislatures will have the power to make laws. This is to ensure separation of powers between the provinces and the federal government. It is also to prevent conflict of laws. Therefore. the constitution specifically defines and demarcates the powers of the legislative bodies. All the federal constitutions like Canada, Australia, India and other nations do ensure the system of separation of powers through the constitution.

5. The Indian constitution ensures the separation of power in Part XI Chapter I (Art.245 to 255). The VII schedule contains the subject matters allotted to central government in List I, to state government in List II and the subject matters over which both the centre and state can make law is specified in List III, which are respectively called as Union List, State List and Concurrent list. Thus, the Parliament and state legislatures can make law on the subject matters specified by the Constitution in the entries specified in the VII schedule. If the power is not relatable to any of the entries therein, the legislative bodies cannot make law on the subject. If such a law is made, it will be ultra vires the constitution and therefore, will be void and ‘non-est’ in law.

6. Inspite of such definite demarcation of powers, at times, dispute arises due to conflict of laws made by the State legislatures and Parliament. As early as 1951 [State of Bombay vs. Balsara (AIR 1951 SC 318)], such a dispute went up to Supreme Court. In that case, the Supreme Court held categorically that while determining the competency of the legislatures, the entries of different lists in the 7th schedule should be read together without giving a narrow meaning to any of them. The Supreme Court reiterated in 1963 in Ramakrishna Rai vs. State of Bihar (AIR 1963 SC 1667) when the argument was advanced that certain entries must be given wider interpretation vis-a-vis other entries, the Supreme Court rejecting that contention. held that there can be no reason to give a broader interpretation to one power than the other. Further, in State of Bombay vs. Narottom Das Getha Bhai (IR 1951 SC 69), the Supreme Court held that when one item is general and another is specific, the latter will exclude the former. In another case, APSWI Society vs. Labour court AIR 1987 SC 182, the Supreme Court held that in case of conflict between entries in List I and List II, the question is not of repugnancy but of competence. From the above axiomatic principles laid down by the Supreme Court, it can be safely concluded that all the entries found in the 3 lists in 7th schedule are to be given the widest meaning. Entry in List I cannot be given a wider meaning than an entry in List II or vice versa. Similarly, an entry in List III cannot be interpreted to widen its power when there are specific restrictions found in List I or List II. Therefore, only that legislative body, which has been conferred with the power to make law on a subject by the constitution, can make law on the subject matter. Otherwise, the law made by any legislative body would be void and untra vires the constitution.

7. In the Constitution of India, the word University is found in the following three entries :
Entry 44 – List I – Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities.
Entry 32 – List II – Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literacy, scientific, religious and other societies and associations, co-operative societies.
Entry 25 – List III – Education, including technical education, medical education and universities, subject to the provisions of entires 63, 64, 65 and 66 of List I; vocational and technical training of labour.

8. Entry 25 was brought into List III only by 42nd amendment in the year 1976 during emergency. The 42nd Amendment was passed without any discussion in Parliament. Few persons know the contents of the 42nd Amendment. Prior to that, “Education” was found in Entry 11 of List II. That is, all matters relating to education, (subject to Entries 63, 64, 65 and 66 of List I) were within the legislative competency of the States.
9. Entry 44 in List I means that power to make law relating to “incorporation, regulation, winding up of corporations” are conferred on the Parliament. This entry specifically excludes “universities”. That is, incorporation, regulation and winding up of universities are not included in this entry. The Entry 32 in List II relates to “incorporation, regulation and winding up of corporations (other than those specified in List I) and universities. That is “incorporation, regulation and winding up” of universities are within the competence of state legislatures. Therefore, in so far as universities are concerned, power of incorporation, regulation and winding up is conferred only on state legislatures. Reading entry 44 (list I) and entry 32 (list II) together, makes it clear that incorporation, regulation and winding up of universities are conferred only on the State and that power has been specifically excluded from the union or central government. That is, central government and Parliament have no power to make law on matters relating to incorporation, regulation and winding up of universities. This power has been specifically conferred only on the state legislatures. That is, Parliament cannot make law incorporating or regulating or winding up any university.

10. The effect of transferring the subject of education from List II to III by 42nd amendment would mean that both the state and Parliament will have power to make law relating to education including technical education, medical education and universities. But the power of the state legislatures on this subject is subjected to the entries 63, 64, 65 and 66 of List I. Here, the word “education including universities” does not include the power to make law relating to “incorporation, regulation or winding up” of universities. Since these aspects have been specifically covered under entry 44, List I and entry 32, List II, these aspects are excluded from entry 25 List III. Therefore, central government have no power to incorporate, regulate or winding up of universities as per the scheme of distribution of legislative powers.

11. Incorporation : The University Grants Commission Act, 1956 in Section 3 provides that the Government of India can, on the recommendation of UGC, declare any institution as “Deemed to be a University”. That is because central government has no power to incorporate any university. Incorporation means an act of forming or creating, it is nothing but establishment. Therefore, it is more probable that the central government was aware of the fact that it cannot establish an university and therefore, by section 3 of UGC Act, it conferred the status of “Deemed to be a University” on certain institutions like IIT.
Regulation : The word regulation means ‘a rule or order for management’ – ‘a rule or directive made and maintained by an authority’. To regulate means to control or supervise by means of rules and regulations. Management means administration, control, supervision, guidance etc.
Winding up means ‘closing’ any institution or organization.
Therefore, as per the provisions of the constitution, the federal or union government has no power to make law on the above said aspects.

12. The National Commission for Higher Education and Research Bill, 2010

There is a proposal to introduce the above Bill in Parliament, which contains, inter-alia, the following provisions :
(1) Section 2 makes the Act applicable to all higher educational institutions (other than agricultural and medical institutions).
(2) Section 3(g) defines “Central University” as a university promoted and established under a Central Act.
(3) Section 3(u) provides that higher educational institutions includes universities etc.
Section 3(ai) defines State university as one established under a State Act.
Section 3(aj) defines university as university established by a central Act or State Act including deemed to be a University.
(4) Section 4 provides that a National Commission for Higher Education and Research shall be established.
(5) Under Section 17, a ‘collegium’ is to be established with wide powers.
(6) Section 20 relates to the preparation of National Registry of persons eligible and qualified for appointment as Vice Chancellors or head of institution of National importance.
(7) Section 24 specifies the powers and functions of the Commission, which includes, inter-alia, prescribing norms for transparent, efficient and accountable governance of any university; prescribing minimum eligibility conditions for appointment of Vice-Chancellor of any university; prescribing norms and principles for allocation of grants for a State University.
(8) Section 26 empowers the Commission to recommend, a panel of five names from National Registry maintained under this Act, for appointment to the post of Vice Chancellor of a State University.
(9) Section 26(4) - No persons shall be eligible for appointment as Vice Chancellor of any University unless his name is included in the National Registry for appointment as Vice-chancellor.
(10) As per Section 32, no university, empowered by law to award any degree or diploma established after this act has come into force, shall commence its first academic operation unless it is authorized in accordance with such norms specified by regulations.
(11) Under Section 36, The commission can revoke the authorization for failure to comply with the regulations.
(12) Under Section 41, the right to confer degrees or diplomas shall be exercised only by an institution or university authorized under this Act.

13. The Act applies to all institutions including State Universities and Deemed universities (except institutions of ‘agricultural and medical education’), which confers degrees or diplomas. The power of appointment of VCs is taken away from the States/Governors; The Appointing Authority has no power to choose the VC. The State government can only select one from the “five names” given by the commission. Even a State University, e.g. Madras University, can be wound up. No person shall be appointed as VC of any State university unless his name was found in the list of names furnished by the Registry. That has the effect of shifting the entry of “Education” from List III to List I without actually amending the Constitution. This is contrary to the principle of State Autonomy. It has effect of making India as a Unitary State.

14. The above provisions definitely falls within the meaning of incorporation, regulation and winding up of the universities. It is difficult to comprehend how the Bill can be introduced in Parliament and made as a law. The provisions contained in the Bill militates against the express provisions of the constitution and the concept of separation of powers and the doctrine of immunity of instrumentality. The Bill lacks legislative competency. The Bill, if made as law, will not get the approval from the Hon’ble Supreme Court and the entire Act may even be struck down by the Supreme Court.

Chennai, the 10th March, 2010

Multilingualism in Indian Administration

2009-04-13T04:27:00.000-07:00

1.1 Administration :
Administration means communication and interaction for governmental functions. It includes all such acts between the Government and its people and people inter se. The language used for this purpose is the official language of that State. Most of the States are language based nation - states, a single language spoken by its people is used as its official language. In States, where more than one language is spoken by the inhabitants more than one language is used for official purposes. This depends upon various factors.
1.2 Language:
The language is, apart from being the means of communication also relates to the history, culture, identity and many other aspects of those people speaking the language. One will naturally have an affinity and love towards his language; will feel proud about his language, culture, identity etc. Under those circumstances every linguistic society wishes to communicate with the Government in its own language. That necessitates adoption of more than one official language by such States.
Switzerland
1.3 In some States, even a language not spoken by the people generally is used as an official language due to certain reasons. For example, in Switzerland, 72.5% of the people speak German, 21% speak French, 4.3% speak Italian and Romanash, 0.6%. But all the four languages are official languages of Switzerland. But all federal legislations need not be translated into Romanash. It ensures linguistic freedom. Of late, there is a proposal to adopt English as their common language. In that country, merely because German is spoken by 72.5% of the people, it is not made the sole official language. Even a language spoken by less than 1% of the people is also made as an official language. That is for the reason that a State with culturally diverse population will remain united only if its communities consider the State as their own.
European Union
1.4 Europe consists of number of languages based nation-States, some of them are very small like Luxemburg, Austria, Netherland, Belgium etc. whereas some States are very large like Spain, Germany, France, England etc. Recently, all the European countries have formed a confederation called European Union. They adopt a single currency but not a single official language. The European Union has 23 official languages; United Nations Organization, have five official languages. The above examples show that a multi-lingual State needs to have more number as official languages.
1.5 India:
In India more than400 languages are spoken. The number of languages included in the VIII Schedule of the Constitution has now become 22 from the original 14 .Tamil is one of those languages. It is also to be noted that
“ Tamil Nadu is the world`s last surviving Classical Civilization. One that is 2000 years old like ancient Greece or Roman. Tamil is the last living classical Indian language. ……..Tamil is older than any modern European language.”
[The Hindu March 8th 2009, Magazine section.]

India – not a language based nation-State
2.1 India was never a nation State prior to British Rule. More than 50 nation-states were brought under one rule. India is a continent or sub-continent by itself. Even during British period, there were number of independent States. During the freedom struggle, a thought was spread that there should be common local (or native) language, other than English as official language when India becomes free. Two languages – Urdu and Hindi, were proposed by two powerful sections. Since Urdu was identified with Islamic religion, Hindi was identified with Hindu religion, a battle line was drawn between Urdu and Hindi.
Hindustani:
2.2 Gandhiji proposed a compromise formula, he said that “Hindustani” shall be a official language, which was to adopt more words from Urdu. Script may either be Arabic or Devanagri. Once partition of India and Pakistan was decided upon, the proposal for Hindustani vanished and Hindi had taken its place. The Constituent Assembly, which was elected already, began framing a Constitution for India. When the circumstances were surcharged with emotions, many decisions were taken emotionally rather than based on reason. Further, most of the decisions were taken in Congress Working Committee and the Constituent Assembly ratified. During that period, there was hatred towards English and hence people of North India were not ready to accept English as the official language of free India. The appeal to reason made by representatives from southern India fell on deaf ears. They could succeed only to a limited extent of continuing English as official language for a period of 15 years. The final decision was left to be taken by the posterity.
No State Religion:
2.3 The argument that a State shall have only one official language spoken by majority, is fallacious for the reason that because 85% of people in India followed Hindu religion, Hinduism cannot be declared as State religion. Further, Hindi is the most recent language, which has a history of just 700 years. South Indian languages (like Tamil, Kannada, Telugu and Marathi), are more ancient and richer in literature. It is also to be noted that the rulers of India, before the English rule, had in fact, used all the languages for official communication. No linguistic group had a feeling that their language was neglected or was not given due respect. Therefore, they had a sense of belonging to the nation-State.
2.4 It was argued by many Members in the Constituent Assembly itself that if Hindi is made as the only official language, the people of south India will loose their sense of belonging to the nation and that will be detrimental to the unity of India. But the North Indian Members in the Constituent Assembly, had their way because of their number, This decision to have Hindi as official language was taken hurriedly out of passion .
Not spoken by majority of people :
2.5 An argument that was advanced was that Hindi was spoken by more than 40% of the population. But, even according to 1960 census, Hindi speaking population was only 30%. Even this 40% is concentrated only in a particular region, the North India. It is not wide spread through out India. Further, when the Constitution came into force, only 14 languages were mentioned in the 8th Schedule. At present, there are 22 languages. While framing the Constitution, Punjabi, Rajasthani and few other languages were also counted as Hindi to arrive at the figure of 42%. Therefore, the argument that it was spoken by majority of people appear to be factually incorrect.

Linguistic States:
3.1 After independence, India was divided into linguistic States. Each State has its own official language. Now, a demand is being made by many States that the State official languages should also be used in Govt.of India offices within the states. This is resisted on the ground that it will not be conducive for administration and it will create more problems. But it is a fact that a small State like Pondicherry has five official languages. Many States also have an associated official language. At this point of time, where technology has advanced, getting simultaneous translation may not be that difficult as it was considered during 1940s. Therefore, using all the languages as official languages of India may not be difficult.
Consequence of imposing a single language:
3.2 In a vast country like India, it is difficult to accept that only a single language can be used as official language. In USSR, when Russian was declared as official language of all parts of Soviet Union, USSR broke into several States. The Srilankan problem is due to the fact that introduction of Singhalese as the sole official language of Srilanka. East Pakistan became Bangladesh because Bengali was not given due place in the administration. “History makes men wiser” said Francis Bacon. History repeats itself. This cannot be lost sight of by Indian politicians.
Different Holidays in Central Govt. offices:
3.3 It is a fact that a uniform rule cannot be and is not adopted while declaring Central Government holidays. The capital of India has different holidays.. But the regions are given liberty to adopt different set of holidays for Central Government offices located in the region. For example, Pongal, Shivaratri and Dussehra are not holidays for Central Govt. offices at New Delhi where as they are holidays in Tamil Nadu. Holi, Sriram Navami and Janmashtami are Central Government holidays for most of the regions in North India. They are not holidays in Tamil Nadu. This shows that even under the Central Government administration, different yardsticks are used for different purposes. On the same analogy, different official languages can be used at different parts.
Single official language will be detrimental:
3.4 The desire of the Hindi extremists to convert India into a single language speaking nation on the ground that it is essential to preserve the unity of the nation will only be counter-productive. Further, the argument that English is a foreign language does not hold good because what is foreign is a relative term and even Hindi is a foreign language for any South Indian. Former Chief Minister of Tamil Nadu, Anna has stated “Multi-lingualism is the price that has to be paid for keeping India as one and united”.
Rule in People’s language:
3.5 In 1965, former Prime Minister, Shri A.B. Vajpayee declared that “People rule go on in the people’s language”. That is, the Central Government offices can use Tamil in Tamil Nadu, Kannada in Karnataka, Bengali in West Bengal and so on. The Chief Minister of Tamil Nadu, Dr. Kalaignar Karunanidhi, in 1974 has stated that Central Government offices in different States should function in the respective State’s official languages.
Realistic language policy :
3.6 It is necessary at this point of time in history to adopt a realistic language policy in non-hindi speaking areas. That is – use of regional languages in addition to English and Hindi. Justice Dr.P.V. Rajamannar, former Chief Justice of Madras High Court had said that it is necessary that all communications by and between Central Government offices in a State and the Government of the State and its offices should be in the official language of that State. It follows that members of Central services employed in a State should be conversant with the official language of the State. Justice Sarkaria has also said that the work of the Government, both union and State, which involves or affects the local people must be carried on in the local language. This is even more important in a welfare state. It is necessary that all forms, applications, letters, bills, notices etc. are available in the local languages as well as the official language. There is nothing wrong for the Central Govt. to use more than one language or a particular language in any part of the country, where the substantial portion of the population of that part demands the use of that particular language in the offices of the Central Government of that part of the country. A recent survey conducted in various departments like Income Tax, Postal, Banking, Insurance, Broadcasting, Telecommunications reveal that more than 85-90% of the work relates to or settled within the local area. Only 10-15% are communicated between the local offices and the New Delhi. It is not only permissible but necessary to use the State official languages in Central Government offices for any communication with the local citizens. Such a move will create a bondage or develop a sense of belonging to the nation as a whole. Everyone will feel that they are part of the nation. That will go a long way in maintaining unity and integrity of India. There is no use in making communications in Hindi and English in the local flights between Madurai and Chennai or Chennai and Coimbatore. Even in international flights that emanates or terminates from Chennai, announcement are made in Tamil where as the domestic flights even within Tamil Nadu, Tamil is not used. But in railway stations, Tamil is used. English has a larger window which enables global communication.

Language in High Courts:

4.1 The official languages Act, 1963 permits the use of State official language as the language in the High Courts of those States. Under this Act, Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan were permitted to use the official languages of those States as the language of the High Court. When a similar request was made by West Bengal for the use of Bengali, it was rejected. A request by Tamil Nadu for the use of Tamil in High Court in Tamil Nadu is yet to be permitted. This different treatment may create an apprehension that the people of other languages are treated as second class citizens within India.

Conclusion:

5.1 It is high time that a rational decision, uninfluenced by linguistic fundamentalism, is taken on the language issue. There is an urgent need to create the sense of belonging among all linguistic groups in Indian Union. Lest the unity and integrity of India is likely to be jeopardized. Adopting multi-lingualism in the Central Government administration will go a long way in imparting such sense of belonging and dispel the feeling that the non-Hindi speaking people are treated as second or third grade citizens. The first step towards that is transaction of business in the State official languages, in Central Govt. offices within the States.

(In a lecture delivered in the National Seminar held at the University of Madras, Department of History [ Institute of Distant Education ] on 11th March, 2009

Is Trust Vote Necessary?

2008-07-28T00:34:00.000-07:00

CONFIDENCE VOTE - NOT A CONSTITUTIONAL REQUIREMENT

The Constitution of India provides under Article 74/(163) that there shall be a Council of Ministers with the Prime Minister/(the Chief Minister) to aid and advise the President/(Governor) in exercise of his executive functions. The doubt that the Constitution of India provides for a Presidential form of Government [as in USA] was cleared by Pandit Jawaharlal Nehru, who clarified that it is only the cabinet system or parliamentary democracy of representative Government as in U.K. is envisaged by the Constitution. That was endorsed by the Supreme Court in U.N.R. Rao vs. Indira Gandhi (1971) that the Constitution provides for Cabinet system of Government and not a presidential form of Government.
2. Though cabinet system of Government was established by the Constitution, the word ‘Party’ much less ‘Political Party’, did not find a place anywhere in the Constitution [till the present X Schedule was introduced]. Still Political Parties were in existence by sufferance and Governments were formed by Political Parties.
3. Under Art.74 , the Prime Minister shall be appointed by the President and the Council of Ministers shall be appointed, on the advice of the Prime Minister, by the President and the Council of Ministers shall be collectively responsible for the House of the People (similar provisions are found in Art.163, relating to Chief Minister, Governor and Legislative Assembly). Nowhere in the constitution, it is stated that the President /(the Governor) shall appoint the Prime Minister/(Chief Minister) only if he commands the support of the majority members of the House of the People/(State Legislative Assembly). Normally, the President/(the Governor) appoints only a persons who can command a majority support in the House. But it may not always be possible for a single political party to have an absolute majority [though it was possible at times]. Of late, it has become a political necessity to seek the support of some other parties since very often no single political party gets majority of seats in the House. Such a house is popularly referred as “Hung House” or “Hung Assembly”. Under those circumstances, a few political parties may join together and form a majority group in the House.
4. If, no political party get a majority support from the members elected to the House, the House need not be dissolved. Voters need not be approached for repeated elections, till one single party gets a majority. Such a procedure is not warranted by the Constitution. A hung House can also exist and govern the country with the existing laws. Once the President appoints a Prime Minister (or Governor appoints the Chief Minister), thereafter, the President/(the Governor) is bound to exercise his executive functions only in accordance with the advice given by Council of Ministers. The President/(the Governor) cannot exercise the functions without the aid and advice of the Council of Ministers headed by the Prime Minster/(the Chief Minister). Art.74 was amended by 42nd amendment, which cleared all doubts. A few words were introduced in Art.74 making it emphatic that the President “shall in the exercise of his functions act in accordance with such advice”. Therefore, always there shall be a Prime Minister and the Council of Ministers to aid and advice the President.
5. The system underwent a change when President Sanjeeva Reddy appointed Charan Singh as Prime Minister ( in 1979 ) and simultaneously directed the Prime Minister to prove his majority in the House within three months. That was neither in accordance with any of the constitutional provisions, nor a Convention followed in England. There was no constitutional basis for that direction.
6. Subsequently, there were hung Houses when V.P. Singh was appointed as Prime Minister by President R. Venkataraman and when President Shankar Dayal Sharma appointed P.V. Narasimha Rao as Prime Minister. Similarly, when Deve Gowda and I.K. Gujral were appointed as Prime Ministers, they too were not the leader of a single party which commanded majority in the House. Even a “minority” Government can rule the country, as long as any of the decision taken by the government was not rejected by Parliament/(State Legislative Assembly). That is, the minority Government has all the powers to run the administration. The Minority Government can aid and advice the President /(the Governor) and run the administration. Only when a new law, is to be made, the support of other members are necessary.
7. When no single party gets the majority of the seats in a House, the support of some other political parties are sought to constitute a majority in the House. President / Governor need to arrive at a subjective satisfaction that the person whom he invites to form the government would be able to run the government. Only at that point of time, the President has the discretion to take a decision, without the aid and advice of the Council of Ministers. Once the Prime Minister is appointed, the President is bound to act only on the advice given by that Prime Minister. Only if the Speaker communicates to the President that the Prime Minister had lost the confidence of the House when a Bill was defeated.or a “No confidence Motion” was passed, the President is not bound to act in accordance with the advice of the Prime Minister. That is, the President cannot, after appointing the Prime Minister, question or doubt whether the Prime Minister command majority in the House.
8. Of late, it has become a practice, for some members of the Parliament / Assembly or some political party, to give a letter to the President / Governor, stating that they withdraw the support to the Prime Minister /(the Chief Minister) and also to demand the Prime Minister / Chief Minister to prove his / her majority in the House lest to resign as Prime Minister/Chief Minister. On such occasions, the President / (Governor) also direct the Prime Minister /(Chief Minister) to prove his majority in the House. No Prime Minister / (Chief Minister) had ever challenged such a direction though such a direction is not in accordance with the Constitution.
9. At present, Prime Minister Manmohan Singh, is running the Central Government. He had the support of a number of political parties. Now, a few political parties have given a letter to the President, stating that they withdrew the support to the Prime Minister. Not stopping there, they also requested the President to direct the Prime Minister to prove that he enjoys the majority in the House. Whether the President should accede to such a request or whether the President has got the right to so direct the Prime Minister is the point of current debate in the media and in the minds of the people.
10. The Times of India on 10.7.2008 has published a report that a constitutional lawyer Harish Salve had expressed the view that the President should call a “special session” of the Parliament at the earliest to clear all doubts. He also adds that conventions and precedents are important. Another constitutional expert, Shanti Bhusan has expressed the view that it would be “improper” for the President to ask the Prime Minister to seek trust vote in Parliament. According to him the President cannot tell the Government to seek a vote of confidence of the House; the President instead, should ask the opposition to bring a “No Confidence Motion” against the existing Government. He also stated that the direction of President K.R.Narayanan issued to Prime Minister Atal Bihari Vajpayee, to seek the trust vote in 1999, was wrong. These two views reflect the two divergent views among the people.
11. The constitutional scheme, as stated above, is that the President is bound to act only on the “aid and advice” given by the Council of Ministers headed by the Prime Minister. There is no alternative at all. The constitution does not confer any power on the President to issue any direction to the Prime Minister after appointing the Prime Minister. Only if the House of the People passes a ‘No Confidence Motion’ against the Prime Minister and that is communicated by the Speaker (of the House of the People), the President can think of not accepting the advice of the Prime Minister. The President/(the Governor) has not been conferred with any such power by the Constitution, to direct the Prime Minister/(Chief Minister) to seek a vote of confidence.
12. It is to be noted that, so far, the President has not directed the Prime Minister to seek a vote of confidence. That is only because there is no constitutional compulsion for the Prime Minister to seek vote of confidence. The Prime Minister need not seek the vote of confidence, i.e., he need not prove his majority in the House voluntarily, under any circumstance.
13. The convention referred above by Harish Salve does not have the support of the Constitution; but it is contrary to the express provisions. Therefore the convention created by Sanjeeva Reddy and followed by a few other Presidents need not be followed. Such a convention means that there can never be a minority Government. But, a democracy which follow cabinet system of Government, is bound to have minority Government, at some point of time. In England, instances of minority Government ruling the country are not rare. Similarly, even in India, minority Governments did exist in the past
14. Minority Government is a constitutional compulsion; it is the only option in a hung House. It is not a constitutional mandate that the Prime Minister must always have the support of the majority members of the House. Any demand or direction to prove the majority has no constitutional sanction; and seeking Confidence Vote voluntarily is not a constitutional necessity or obligation.
Conclusion
15. Therefore, the Prime Minister need not prove his majority in the House, seeking a Confidence Vote, because some political parties had withdrawn their support The political parties which had withdrawn the support cannot demand the Prime Minister to prove his majority in the House. That is seeking a confidence vote is not a constitutional requirement.

Reservation in Private Sector

2008-06-12T02:00:00.000-07:00

Reservations in Private Sectors – No legal impediment

Meaning of Private Sector : By the word “private sector”, it is normally meant an organization, which is neither a government body nor a body under the control of Government. Such organizations are companies (including foreign companies), governed by Indian Companies Act, Societies registered under the Societies Registration Act, partnerships registered under the Partnership Act and sole proprietorships. All these entities are run only using the funds received either directly from the public or indirectly through some other public organization. When a company issue shares and raise funds from the public or when it gets financial assistance through the banks or gets concessions from the Government, it is run using the fund of the public. Similarly, partnership and ownership firms are also run using such public funds. Therefore, any organization, when it uses the bank loan and other facilities for raising loans, raise most of their funds only from the people, i.e., public. Therefore, no establishment or organization such as Corporation, Public Limited Company or Private Limited Company is purely a private entity or private establishment. All that is meant by the words ‘Private Sector’ is that Government do not involve in the day to day affairs of such entities.

Public - meaning: A restaurant, bar, hotel, resort etc. which is open to general public, though not owned or controlled by govt. is a “public” restaurant, bar etc. Even a temple built by an individual or group of individuals, when general public are allowed to worship is a “public temple”. The canteen run by a company exclusively for its employees and not open to general public, is also a public canteen. A thing may be said to be public, when owned by the public; also when its users are public in general or a section of the public. Even though some entities are generally referred as private sector or private establishments or non-governmental organizations, in fact, every such organization is, in a way, a public organization because of the users are public. The element of “public” is found in every organization.

Power of the State to make laws : It is indisputable fact that the State has the power to make laws on any aspect. The power to legislate is derived from and controlled by the Constitution . Therefore, the only requirement is that there should be legislative competency, and that the law should not violate the fundamental rights.

Constitutional Provisions: The relevant Constitutional provisions are as follows:-
Art.15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.—
(1) The State shall not discriminate against any citizen on grounds only of religion,
race, caste, sex, place of birth or any of them.
(2) No citizen shall, on grounds only of religion, race, caste, sex, place of birth or any
of them, be subject to any disability, liability, restriction or condition with regard to-
(a) access to shops, public restaurants, hotels and places of public entertainment; or
(b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained
wholly or partly out of State funds or dedicated to the use of the general public.
(3) Nothing in this article shall prevent the State from making any special provision
for women and children.
(4) Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes.
(5)Nothing in this article or in sub-clause(g)of clause (1) of Article 19 shall prevent the State from making any special provision, by law, for the advancement of any socially and educationally backward classes of citizens or for Scheduled Castes or the Scheduled Tribes in so far as such special provisions relate to their admission to educational institutions including private educational institutions, whether aided or unaided by the State, other than the minority educational institutions referred to in clause (1) of Article 30.

The Constitution, under Art.15(4) empowers the State to make “any special provision for the advancement” of socially and educationally backward classes of citizens and SC & ST. The phrase “any special provision for the advancement” has very wide meaning/concept. The ambit of this phrase cannot be restricted to mean only reservation of seats in educational institutions. It cannot be said that it does not apply to matters relating to “employment”. There is no reference at all to educational institutions, further it is not restricted to any specific matter or matters. The only limitation is that it should be for the “advancement” of the classes of people referred therein.

Article 16 : reads as follows :
Art.16. Equality of opportunity in matters of public employment.—(1) There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.
(2) No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of, any employment or office under the State.
(3) Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of employment or appointment to an office under the Government of, or any local or other authority within, a State or Union territory, any requirement as to residence within that State or Union territory prior to such employment or appointment.
(4) Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State.
(4A) ……………..
(4B) ………………..

Reservation in employment :-

It is a popular view that Art.16 covers the whole aspect of reservation in employment and Art.15 relates to all aspects of reservation in educational institutions and therefore, reservation in employment can be made only under Art. 16(4) and since clause (4) does not provide for reservation other than employment under the State, no such reservations can be made in any non-governmental entities. A careful reading of Art.16 would reveal that Art.16(4) relates only to employment or appointment to any office under the State. Though the marginal note of Art.16 reads “matters of public employment”, in fact, it deals only with matters relating to employment under the State, (that is Govt. employments).
Construction of marginal note: It is a cardinal principle of interpretation that the ‘sub-heading’ or ‘marginal note’ does not control, or cannot be relied upon to construe the substantive provision found in the section. [Such an interpretation given in Golaknath case was held, not good law, in Kesavananda Bharathy case]. Further, the chapter heading to Arts. 29 and 30 is “Cultural and educational rights”. But rights on minorities are conferred only in this chapter. Therefore, the scope of the substantive or operative portion of any provision has to be construed as per the provisions found in the body of the section, uncontrolled by the marginal note to the section. Hence, it could be seen that the provisions of Art. 16(4) do not deal with or relate to any employment other than Govt. employment (employment under the State). That is, any public employment “not under the State” (not a Govt. employment) is not covered or governed by Art.16(4).

“Special Provision for the advancement” :- The phrase “special provision for the advancement” cannot be interpreted in a restricted sense as if it relates only to matters ‘other than employment’, merely because some aspect of public employment is dealt with in Art.16. The special provision also takes within its ambit such of those aspects of employment, other than the employment under the State, not covered under Art.16. That is, employment other than employment “under the State” also falls within the words “any special provision”. The special provision under Art.15(4) includes reservation in admission to educational institutions whether they are governmental, non-governmental, aided or unaided, minority under Art.30(1) or by majority community. In so far as employments are concerned, all employment other than the employment under the State are included.

Classification of Employment: Employment can be classified as Government employment and non-Government employment, which is ordinarily referred as “private employment” or employment in private sectors. Reservation in employment under the Government is dealt with in Art.16. Reservation in employment, such as staff and teachers in non-governmental organizations, including the minority institutions, whether they receive aid from the State or not can be made as “special provision” for the advancement of such of those communities, as the State deem fit.

Reservation in admission to Educational Institutions : As regards the educational institutions, there are educational institutions run by the Government and the institutions run by the non-Governmental organizations. Those institutions not run by the Government can be further classified as institutions receiving aid from the Govt. and those not receiving any aid from the Govt. and yet another classification is those run by the minorities, within the meaning of Art.30(1) and the institutions run by the majority communities.

Art. 15(5) imposes Restriction on the power :-

Though Art.15(4) encompass all educational institutions, whether they are governmental, non-governmental, aided or unaided, minority or majority institutions, yet the Parliament thought it fit to introduce clause (5) in Art.15 by the Constitution 93rd amendment, as follows: -
“(5) Nothing in this article or in sub-clause(g) of clause (1) of Article 19 shall prevent the State from making any special provision, by law, for the advancement of any socially and educationally backward classes of citizens or for Scheduled Castes or the Scheduled Tribes in so far as such special provisions relate to their admission to educational institutions including private educational institutions, whether aided or unaided by the State, other than the minority educational institutions referred to in clause (1) of Article 30.”

By this, the power of the State conferred under clause(4) has been restricted. In so far as it relates to reservation of seats in minority educational institutions, the words “other than minority educational institutions referred to in clause (1) of Art.30” takes away the power conferred under clause (4) of Art.15 to reserve seats in minority institutions. As per the present Art.15(5), reservations can not be made in admissions in the minority-educational institutions even if they are receiving “State aid”. The real intention of introducing clause (5) appears to be to make reservation in the educational institutions run by self-financing (unaided), non-governmental bodies. And in order to overcome an anticipated assault on the basis of Art.19(1)(g) that it imposes a restriction on their freedom to carry on any trade or business, clause (5) appears to have been introduced. Reference to Art.19(1) in this clause is also superfluous in view of the specific mention in clause(5) of Art.19 that reasonable restrictions can be imposed “in the interest of general public” on the rights conferred under Art.19(1)(g). Therefore, Art. 15(5) was not only unnecessary but goes against the intention with which the amendment was made. It, in fact, imposes restrictions on the powers already conferred on the State by clause (4) of Art.15. In view of present Art.15(5), the reservation in admissions to the educational institutions run by minorities, even if they receive aid from the State, cannot be made because minority institutions referred in Art.30(1) includes aided institutions also. Therefore, unless the words “other than the minority institutions referred to in clause (1) of Art.30” are repealed, or the word “including” is substituted for the words “other than” , reservations cannot be made in the aided minority institutions as well as self-financial minority institutions.

Foreign Companies: The policy of reservations in employment would apply even to the foreign companies functioning in India. It is to be noted that foreign companies do not have the rights conferred under Art.19, as those rights are conferred only on citizens of India. A foreign company, by no stretch of imagination can be considered a citizen of India. An Indian company is also considered as non-citizens. But the Supreme Court, in R.C.Cooper’s case (Bank Nationalisation case) held that citizens of India, when they form a company can not be said to have lost the rights conferred under Art.19. So the Indian companies were allowed to enforce the rights under Art.19 through their share holders, who are citizens though the company itself was not a citizen. This was by extension of doctrine of “Lifting the Corporate Veil”. But the same may not be the case for the foreign companies. Further, reasonable restrictions can be imposed by the State “in the interest of general public” on the rights conferred under Art .19(1)(g). Therefore, all companies including foreign companies, are not exempted from any law passed by the State (as defined under Art.12 of the Constitution) in case reservations are made in employment. Therefore, reservations are permissible in employment in non-governmental organizations including foreign companies, Indian companies, societies, partnership firms, proprietorship, and the educational institutions run by majority community as well as minority community, irrespective of the fact whether or not they receive aid from the State.

Conclusion : The mere fact that so far no such law was made by any State providing reservations on employment in the non-governmental organizations does not mean that there is no such power. In view of the powers conferred by Art.15(4), nothing prevents the State from making any special provision, deem fit and appropriate by the State, if it is for the purpose of advancement of the Socially and Educationally Backward Classes and the SC and ST. That is, reservations can be made with respect to employment in the “private sector” also. It need not be the same as made in the Govt. employment – a different percentage may be prescribed for them. In Art.15(5) “including” shall be substituted for the words “other than” in the phrase “other than the minority institutions referred to in clause (1) of Art.30”

What is the kind or nature of steps that are to be taken (provisions are to be made) for the advancement of such communities is a matter of policy of either Central or State Governments.
(Dr. Justice A.K. Rajan)

CRZ or CMZ ?

2008-05-16T01:53:00.000-07:00

Coastal Regulation Zone or Coastal Management Zone ?
(Dr. Justice A.K. Rajan)

1.1 Government of India, by the notification dated 19th February, 1991, declared the land between the Low Tide Line (LTL) and High Tide Line (HTL) and the coastal stretches of seas, bays, rivers, creeks, estuaries etc., which are influenced by tidal action (in the landward side) up to 500 meters from the High Tide Line (HTL), as the Coastal Regulation Zone (CRZ). The distance from the HTL shall not be less than 100 meters or the width of the creek etc., whichever is less on either side of rivers, creeks etc.
1.2 The notification prohibited the activities stated in clause 2 of the Notification in the CRZ. Some of the prohibited activities are – establishment or expansion of Industries; manufacturing and storing of hazardous materials; discharge of Effluents from industries, cities etc.; filling up or reclamation of the sea; mining of sand – rocks etc.; drawal of Ground water except manually; construction activities – in ecologically sensitive areas. The Notification also specified the permissible activities such as activities which require waterfront and foreshore facility and certain construction activities after clearance from authorities.
1.3 For the purpose of Regulation of the CRZ, four categories of classifications were made.
v In the first category, the ecologically sensitive and important areas (like reserve forest etc.) and area between LTL and HTL, no new construction was permitted.
v The second category is the areas already developed or substantially built up or where roads are existing. In those areas, no construction is permissible towards the seaward side.
v The third category is the relatively undisturbed rural areas. In that, the area from HTL up to 200 metres are no development zone and in the distance between 200 – 500 metres, some restrictions were imposed on the development.
v Category four relates to Andaman and Nicobar and Lakshdeep islands. In that, upto 200 metres, no new construction is permitted. Between 200-500 metres, not more than 2 floors can be constructed.
1.4 Notification also contained certain Guidelines for developing Beach, resorts Hotels etc. The CRZ Notification was amended at least 19 times between 1994 – 2003 diluting the original notification. Many prohibited acts were relaxed in the CRZ-I. In CRZ II, Buildings were permitted on the landward side of the existing roads or authorized structures. In CRZ III (rural areas), list of permissible activities were amended. Schools, dispensaries for local inhabitants and for panchayats were also permitted, where no other area is available. Demolition or reconstruction of buildings of archeological or historical importance, heritage building and buildings under public use like for purposes of worship, education, medical care and cultural activities were permitted. Constructions for ports, harbours and light houses and jetties, wharves, quays, slip ways, pipelines and conveying system including transmission lines, etc. were also permitted provided the environmental clearance is obtained. In CRZ III, projects relating to atomic energy has also been made permissible.
Dr. M.S. Swaminathan committee:
2.1 In 2004, the expert committee headed by Dr.M.S. Swaminathan was constituted, to review the reports of various committees and to recommend the methodology for conservation and protection of coastal and marine resources and also to revisit the 1991 CRZ notification and to recommend necessary amendments to that.
2.2 The expert committee suggested for integrated coastal zone management instead of the Regulations. The recommendations of the committee are based on 12 basic guiding principles, such as :
(i) Ecological Security and cultural livelihood should be the corner stones of Integrated Coastal Area Management (ICAM).
(ii) Territorial waters, the seabed and superjacent waters should also be included.
(iii) Participatory coastal strategy has to be adopted by regulation, education and sufficient mobilization of Panchayat Raj Institution.
(iv) Heritage sites should be given particular care; precautionary approach should be adopted where there is potential threat of irreversible damage.
(v) Irreversible risks should not be taken.
(vi) UNCLOS and Bio-diversity Act should be followed.
(vii) Regeneration of Bio-shields like Mangroves, coral leaves etc. should be carried on. Short term commercial interest should not be allowed to influence the decisions.
(vii) “Public Trust Doctrine” should be the guiding principle in framing the Regulation.
2.3 According to the Committee, the coastal zone must be :
(i) The internal and the territorial waters including the sea bed;
(ii) the inland water bodies influenced by tidal action including its bed and the adjacent land;
(iii) the entire notified area / biological boundary;
(iv) Ecologically sensitive areas are to be mapped by Central Government from the list in Annexure II (some of the areas mentioned are within the seabed and the superjacent waters.
2.4 In so far as, landward areas are concerned, it includes mangroves, sand dunes, estuaries lakes, mudflats, sanctuaries, coastal forests, salt marshes, turtle nesting grounds, crab habitats and nesting grounds of migratory birds.
2.5 Nesting grounds of migratory birds may be situated even inland, far away from the coast. Turtle nesting grounds may not be more than 100 mts from the sea; that too only in certain areas. According to these recommendations, coastal management areas may not exceed 100 mts from the sea on the landward side except in inland tidal water bodies, like estuaries, creeks etc.
2.6 It appears that the committee is not in favour of a uniform distance as a coastal zone. It wants to replace the CRZ with four kinds of Coastal Management Plan, namely –
1. Ecologically sensitive area ---- CMZ-I;
2. Area of Particular concern ---- CMZ-II;
3. Other open areas ---- CMZ-III; and
4. Andaman & Nicobar and Lakshadweep Islands ---- CMZ-IV.
For CMZ-I, management plan shall be prepared by the Central Government.
For CMZ-II, management plan to be prepared by the local bodies, which includes municipalities and panchayats, following the guidelines including vulnerability status found in Annexure I.
Management of CMZ-III is to be done by Central Government and State Governments, following the method stated in Annexure V.
2.7 Coastal Management Zone (CMZ) II and III should be based on the vulnerability of the coast to the natural and man made hazards depending upon elevation, geology, geomorphology, sea level trends, horizontal shoreline displacement, tidal ranges, wave heights etc. All these components are capable of different interpretations.
2.8 The Committee also suggested that the Government must ensure responsibility and accountability of different departments. All aquacultural projects should be reviewed and ensured that they do not destroy the natural bio-shields. Environmental as well as social impact assessment should be a compulsory part of the procedures in the approval process. Provisions for a public review should be mandatory. Defence related projects should also be subjected to the assessment process. The balance must be maintained between the development and conservation. Ground water must be declared as Social resources and limits for exploitation need to be imposed.
2.9 On the existing CRZ Notifications, the committee observed that:
(i) a holistic and transparent approach towards management of the coastal zone are lacking.
(ii) The Commercial activities allowed by amendments are extremely harmful to the ecological and livelihood security.
(iii) Several amendments have distracted from the original objectives and the sprit.
2.10 The Committee recommended that -
(i) There shall be absolute liability to compensate on those who engage in hazardous and dangerous activities.
(ii) There shall be an All India Coordinated Research project for coastal zone management.
(iii) There is need to identify areas such as sensitive areas, hot spots, potential land based and sea based mariculture sites.
(iv) Strict penal measures shall be initiated, responsibility should also be fixed on officials and elected representatives, based on the principle of “Public Trust Doctrine”.
(v) All aqua cultures project should be reviewed so that these projects are not destroying the bio-shields and ground water.
(vi) No construction activities or reclamation should be permitted in ecologically sensitive areas.
(vii) The role of costal zone management authorities should be expanded and encouraged for sustainable management.
2.11 Thus, it could be seen that the most important recommendations given by the expert committee are:
(i) Ecologically sensitive areas should be identified and protected applying the “vulnerability test”.
(ii) Internal and Territorial sea, the sea bed and superjacent waters should also be covered under CZM.
(iii) All the coastal corporations, Municipalities and Panchayats should be classified as Area of Particular Concern.
(iv) All aquaculture should be reviewed and ensured that they do not cause ecological imbalances.
Reflections on the Recommendations:
3.1 The Committee has implicitly recommended to withdraw the CRZ Notification and to have Coastal Management Plan. Based on the principles of vulnerability, CMZ-I and CMZ-II should be determined. If those principles are applied, the CRZ will not be uniform all over the coast. It will vary from place to place. It may be zero distance at some places and may extend to a few kilometers in some other areas.
3.2 The 1991 notification, fixing 500 metres as CRZ, is unjustly termed as arbitrary, lacking transparency and a holistic approach. Removing the definite distance of 500 metres and replacing it with a flexible and variable principles would only result in chaos and confusion. The “vulnerability test” (based on natural and man-made hazards) can not be a definite component on any day. What would be vulnerable for one, may not be so for another. It is not advisable to remove a definite extent by indefinite components. Certain amount of arbitrariness is bound to exist in any decision. (e.g.,) Fixing the age limit for marriage at 21 years for all communities, but for Muslims, it is the age of puberty. Minimum age for contesting in various elections (25, 30 and 35 years) are all in a way arbitrary; Fixing of pass mark in educational system (like 40% or 50%) can also be termed as arbitrary.
Ground water, a Social Resource
3.3 One of the important recommendations given by the Committee is that Ground water shall be declared as Social resources. The farmer cultivating the land has the right to use the ground water; the ground water when drawn and irrigated, percolates and recharges the ground water. Hence they have absolute right to draw the ground water. But there is no right for the farmer who draws the ground water to transport it to other places. That is, the farmer or any other land owner has no right to sell the ground water. It is undoubtedly a social resource which cannot be appropriated by an individual. The ground water belongs to the State. Therefore, only the State alone can, if at all, sell the ground water. Therefore, when ground water is sold as such or after converting it as beverages, the State can levy seigniorage fee or royalty. No farmer or any owner of the land can sell the ground water. Actually, in certain areas, some people purchase a small piece of land, only to draw the ground water for the purpose of selling. This in fact deprive the surrounding land owners / farmers of their right to use for agricultural purposes. State has a right as well as a duty to prevent such misuse of the ground water.
Existing violations of CRZ Regulations
4.1 In a country which strictly follows “rule of law”, there are no options over the violations. By the strict enforcement of the rules, every one must be made to abide by the Rules and Regulations. While enforcing the CRZ Notification, amendments subsequently made to CRZ Notification must also be taken into account and only the amended Regulations can be enforced. Even if there had been some violations when the acts were done, they may cease to be violations by virtue of subsequent amendments. Under those circumstances, no action can be taken. Some of the acts which may amount to violation of the CRZ Notification as on today, are not actionable since those acts were done, prior to the date of CRZ Notification. In case the CRZ notification is to be withdrawn as recommended by the expert committee, no action would lie for any violation of the Notification.
4.2 The Coastal Aquaculture Authority Act, 2005, exempts coastal aquaculture from the provisions specified in clause (2) of CRZ Notification, i.e., the prohibited activities mentioned in the CRZ Notification will not apply to aquaculture farms within the CRZ. The aquaculture farm may fall within the definition of industry, as per the decisions of the Supreme Court. But the prohibitions enumerated in the CRZ Notification are not actionable.
Rethinking necessary
4.3 The CRZ Notification was made prospectively. It does not contemplate any action on the then existing activities / structures. A rethinking is necessary, even with respect to such matters. Merely because some industry etc. were started prior to the CRZ notification, they cannot be allowed to continue to damage the coastal ecology. Those industries shall also be subjected to the CRZ regulations, in order to maintain the ecological balances.
Public Rights over the Beach
5.1 It is common knowledge that the owner of the property on the ocean line occupy the area from his land to the sea or ocean, they also prevent or prohibit the public access to sea over such lands. But the owner of a property on the sea coast does not have a right over the adjacent land and the abutting ocean. Such owners cannot have exclusive control over the land and prevent the public having access to the waters.
5.2 The common law doctrine of accretion, (i.e., right over the additions brought about by natural changes) are not applicable to the land abutting the sea. The sand dunes so accreted will be more sensitive to ecological changes. Further, public have a right of access to the beach (i.e., the dry sand and the sea waters). The owner adjoining the sea coast can not take control of the dry sand between his land and area in the sea. Such acts are not legal. They are infringement of public rights. In order that the public may have access to the sea from any point, the Guidelines issued under Coastal Aquaculture Authority Act provides that the aquaculture farms should be constructed in such a way that there shall be 20 meters gap at every 500 meters interval.
5.3 During the medieval ages, under the Common Law, the public had no right to simply stroll, sun bathe or otherwise engage in recreation unrelated to fishing, fowling or navigation. But the law has undergone changes over the ages. Presently, there are no private property rights over the water. As long as the public do not trespass into the privacy of the property owner, coastal land owners can not attempt to discourage the public from using the dry sand and the water’s edge to the fullest extent allowable by law.
Littoral Rights
5.4 Water front property owners possessed no special rights. Owning waterfront property makes easier to gain access to the water, but that access can be cut off by the State at any time without compensation. These are the original concept of 19th century American Jurisprudence.
5.5 In the 20th Century, California Supreme Court in Shepard’s Point Land Company cases, recognize the right to build the wear subject to State Regulations and it also recognize the right of accretion and the right to make reasonable use of water flowing past the land. But in the 21st Century, the position is different. According to the present view, the addition to the shore line would belong to the State and be a part of the State public lands. If the storm erodes 50 feet of a shore line, the area covered under water will not be the property of the erstwhile owner, i.e., seaward boundary of all property adjoining the ocean means the high water mark, regardless of the changes in the contours of the shoreline. The right of the public over the sand gathered due to accretion is not vested in the adjoining land owners. Such owner has no right to exclude the public from the dry sand beach lying between the private land and the mean HTL. Public has the right to use all the natural sand beaches and the sea or ocean.
Conclusion
6.1 It is desirable to have a minimum definite extent as CRZ along the entire coast line. Wherever necessary a greater extent may be declared as CRZ. The minimum distance may be different for metropolitan cities like Chennai, Mumbai and Kolkata, and other similar coastal cities or towns, in so far as the already developed areas. In other coasts, a definite minimum distance shall be maintained. Replacing the definite distance with a variable component and entrusting the Coastal Management to Municipalities and Panchayats may not help effective protection of the environment. Any polluting body shall be removed irrespective of its age. They can not be allowed to continue to pollute merely because they were in existence even prior to 1991. The CRZ Notification is required to be modified to regulate the pre-existing structures. The advantages gained from 1991 because of the CRZ Notification will be lost in toto if Coastal Management Plan as recommended by the Committee is implemented.

***

(Based on the lecture given at NALSAR on 20th April, 2007)

Creamy Layer Made Sediment

2008-05-14T00:36:00.000-07:00

Creamy Layer Made Sediment
( Dr. Justice A.K. Rajan )

1. The Government of India made reservation in employment as well as in educational institutions run by the Government of India only for the SC / STs from 1950 onwards. For the backward class, no such reservation was ever made. Only in the year 1990, the Government of India decided to make reservations for backward classes other than SC / STs. To that effect, the two Office Memoranda of 1990 and 1991 were issued by Government of India, which were challenged before the S.C. in Indra Sawhney vs Union of India, which is popularly known as Mandal case, as unconstitutional and hence unenforceable.

2. The Office Memorandum of 25th September 1991 specifically provided that :

“(i) within the 27%....reserved for SEBCs, preference shall be given to candidates belonging to the poorer section of the SEBCs. In case sufficient number of such candidates are not available, unfilled vacancies shall be filled by the other SEBC candidates”.

(ii) 10% of the ........the posts.........under the Government of India shall be reserved for other economically backward sections of the people who are not covered by any of the existing scheme of reservation”.

The Supreme Court in Mandal case, all the 9 Judges, except Justice Kuldip Singh, have held that no reservation can be made on the basis of economic criteria alone.

“Creamy Layer” :
3. Though the Supreme Court upheld the power of the Government to provide reservations for backward classes (27%), went further and said that the Office Memorandum will be valid only if the “creamy layer” from the backward classes (to be determined by State) are eliminated. According to the Supreme Court, inclusion of people from the creamy layers will not make backward classes a “homogenous entity”. Therefore, they must be removed for identifying the backward classes. No such plea was made by any of the organisations or by persons belonging to backward classes that their opportunities were cornered by persons from such creamy layers. The basis for the conclusion of the Supreme Court appears to be that people from the creamy layer in the Backward Classes corner the opportunities of persons from non-creamy layer. That is, the benefits of reservation are reaped by the advanced sections within the class depriving the other sections, which are yet to get opportunities.

Process of becoming “Creamy Layer” :
4. The study of the societies’ development reveals that for a class of society to make advancement, it takes decades of consistent efforts. It also reveals that when a person enters in service as a Constable he could go up to the level of Sub-Inspector of Police before retirement. His son will not aspire to become a Constable but he will compete for direct recruitment as Sub-Inspector of Police, and he may reach the level of Superintendent of Police before retirement. The SP’s son will not be interested either in becoming a Constable or becoming a direct recruit Sub-Inspector of Police, he would be interested to become directly an IPS Officer. Such a person alone can reach the top position in the hierarchy, namely Director General of Police. But at the same time, a person coming from a family, from where none of their family members were in those positions, normally cannot and will not aspire to become an IPS Officer directly. Even if he aspires, he will not have the required wherewithal. Similarly, the son of a Judge of the Supreme Court or High Court will not compete for the post of Civil Judge Junior Division or Senior Division, not even for the post of the District Judge. He will try, if at all, to become a Judge of the High Court. Children of Class I or even Class II officers in the Government will not aspire for the post of Junior Assistant in the Government service. He will try to become directly an IAS or Class I officer. The competition for those posts of Junior Assistants, etc., would be only among the candidates from the so called non-creamy layer. Therefore, the argument that their opportunities are cornered by the creamy layer is unfounded and unacceptable.

“Creamy Layer” become “Sediment” :
5. Only from a family which has attained some economic advancement can think of competing for IPS or IAS, as it requires some amount of economic affluence as well as educational advancement. If all these persons, capable of competing for such positions, are eliminated in the name of creamy layer, then there would be dearth of persons to compete for those positions. Of course, it is possible even for a person from a non-creamy layer to aspire for and get into IPS or IAS and the like, but they would only be exceptional cases. Ordinarily, it would be an impossible task for them to achieve even if they desire. Under such a situation, if the so called creamy layer is excluded from the SEBC, there will not be sufficient persons from that class to fill up those posts reserved for the SEBCs. The son of a person, who by promotion became Class II or Class I officer cannot and will not immediately attain the ability to compete with the advanced section of the people in the open category. It will result in the so called creamy layer of the BC becoming “sediment” in the category of advanced classes. That will nullify the scheme of reservation for SEBC and will be detrimental to the advancement of Backward Classes.

Backlog of 28,000 OBC vacancies :
6. The evidence is already available. The Times of India (Bangalore edition) dated February 14, 2008 has published that there is a proposal to launch a special recruitment drive to fill up the huge backlog of “28,671 vacancies against positions reserved for OBCs in 70 Central Government Ministries, Departments and PSUs”. That shows that these vacancies could not be filled up due to non-availability of suitable persons from the non-creamy layer of the OBC; and that resulted in the huge “backlog” vacancies. The above fact conclusively proves that when the “creamy layer” is excluded, there will not be enough candidates to fill up the 27% of the posts reserved for OBCs. This should be more than sufficient even for the unwilling minds to realise the consequences of excluding the creamy layer from OBCs. This also proves, beyond any doubt, that all the eligible OBC candidates had been excluded as “creamy layer”. That means exclusion of the so called creamy layer would result in ‘de-facto’ elimination of the entire OBCs from the system or getting the benefit of Reservation. The creamy layer of Backward Classes had become “sediment” in the open competition or in the advanced category.

Creamy layer in other classes :
7. The same argument, that the person from creamy layer cannot be compared as equals to a person from non-creamy layer within backward class and therefore they must be excluded, in order that less fortune members may get admission or employment, applies equally to the open competition and SC & ST categories. That should also be done if really equality is to be perfect. In the open competition also, preference shall be given to the people from non-creamy layer, among that class, on the ground of equality, to make the competition fair. But it is not done either in the case of open competition or in the case of Scheduled caste / Scheduled tribe communities.

8. If the creamy layer within the advanced category is meted out with the same disadvantage, by giving preference to non-creamy layer in that category, the cream of open competition (the economically affluent section of the advanced community) will never get admission or employment. The creamy layer of OBCs, when excluded from the category of OBCs, need to compete in the Open Competition and since they may not be able to compete with the candidates in the OC because of the backwardness of the class from which they emerge, they will become “sediment” in the advanced category.

SEBC & BC shall be defined in the Constitution :
9. While discussing the concept of creamy layer in Backward Classes, the Hon’ble Supreme Court in Mandal case has said that “This discussion is confined to Other Backward Classes only and has no relevance in the case of Scheduled Tribes or Scheduled Castes”. It has not stated any other reason. That is, probably, because of the fact that Scheduled Castes and Scheduled Tribes are defined in Article 366 of the Constitution. Since there is no such definition for “Socially and educationally backward classes of persons” or “Backward classes”, these arguments are advanced; these opinions are expressed and such decisions are rendered. In order to protect such reservations for OBCs, it is necessary and imperative that the Constitution must be amended and the SEBC and BC shall also be defined.

Determination of Creamy Layer :
10. The creamy layer is determined mainly on the basis of income of the parents. The Hon’ble Supreme Court in State of U.P. vs Pradip Tandon, following earlier decisions of the S.C., has categorically held that “poverty alone cannot be the basis for determining or identifying the SEBC. Reservation u / Arts 15 and 16 are not poverty alleviations programme. They were mainly directed towards removal of social and educational backwardness”. If economic criteria cannot be the deciding factor to determine or identify SEBC, equally, it cannot be the sole basis for identifying or excluding the so called creamy layer. Therefore, economic advancement alone does not ensure elimination of social and educational backwardness. The transformation from the Backward Class to the advanced class cannot happen in a single day or by a stroke of pen.

11. In Mandal case, the Supreme Court by a majority of 8-1 has held that economic criteria alone cannot be the basis to determine backwardness of a class. The corollary is that economic criteria alone cannot be the basis for identifying or excluding individuals from that class, as creamy layer.

12. Further, the Supreme Court, right from Balaji’s case has consistently held that in order to identify SEBC, the class must both be socially, and, educationally backward. Mere educational backwardness is not enough if the class is not also socially backward and vice versa.

13. In the recent judgment of the Supreme Court in 2008, Justice K.G. Balakrishnan, Chief Justice of India, has held that :

(i) When SEBC are determined on the basis of caste.......”it cannot be forgotten that segment of that caste is economically advanced and they do not require the protection of reservation.

(ii) “If the creamy layer principle is not applied, it could easily be said that all the castes that have been included among the SEBC have been included exclusively on the basis of caste”.

(iii) “by excluding those who have been already attained the economic well-being or educational advancement, the special benefits cannot be further extended to them and if done so, it would be unreasonable, discriminatory or arbitrary resulting in reverse discrimination”.

(iv) “OBC should be deemed to mean SEBC after exclusion of creamy layer”.

Justice R.V. Raveendran agreeing with CJ has held :
“Failure to exclude creamy layer would render the quota law unconstitutional. The Act is valid if definition of OBC is clarified”.

Arijit Pasayat & Thakkur JJ have held that
“If any seat remains vacant after adopting such norms, they shall be filled up by candidates from general categories”, whereas CJI has held such posts can be filled up by the creamy layer of the SEBCs.

Bandari J :
“......once a candidate graduates from a University, he must be considered educationally forward”

14. Thus, from the above, it is seen that in the present case, the emphasis appears to be on the economic advancement. Once a person is economically advanced, he does not require the protection of reservation. This proposition appears to be in conflict with earlier decisions of the Supreme Court. The effect of that needs deeper study.

15. There is also an observation that, for identifying the creamy layer, the order issued by the Central Government on 8/9/93 for that purpose may be adopted for excluding creamy layer. As per that order, the following persons, apart from others, are also to be excluded as creamy layer.

(i) Professionals such as Doctors, Lawyers, Chartered Accountants, I.T. Consultants, Dental Surgeons, Engineers, Architects, Computer Specialists, Film Artistes and other Film Professionals and other Playwriters, Sports persons, Sports Professionals, Media Professionals or any other vocation of like status, and

(ii) Income / wealth criteria shall apply even to persons engaged in Trade, Business and Industry.

16. If that is adopted, as soon as a person from OBC becomes a Lawyer, Doctor or Engineer, he is eliminated as creamy layer and therefore, the seats reserved for any post-graduation course in their respective fields, like M.L., M.D., M.S., M.E., etc., cannot be reserved. Similarly, no reservation will be useful in selection of judicial offices like Civil Judge, Junior Division or Senior Division; District Judge, Professors in Medical or Engineering Colleges, etc. The words ‘Film Artists’ and ‘Film Professionals’ include even the junior artists, light boys, etc. Media professionals are even the Press Reporters, spot boys, etc. Sports persons from district and sub-district levels will also be included in that category of Sports persons. If all these persons are eliminated, no one, except the manual labourers, will remain in the OBC, who will not be competing for any of the posts or seats in educational or professional institutions. That means, the purpose of reservation will be nullified by elimination of all the eligible candidates as creamy layers. That is, what is given by one hand is snatched away by the other hand, without the recipient knowing that it is being snatched away.

17. Therefore, in order to protect the reservation for OBCs, Constitution needs to be amended. In the absence of definitions of the two terms OBC and SEBC in the Constitution, the Hon’ble Supreme Court has defined OBC to mean SEBC after exclusion of creamy layer in the 2008 case. In Mandal case also, the term ‘Backward class’ was interpreted to mean only backward castes minus creamy layer. Hence, definitions of Backward Classes and SEBC must be included under Art. 366 of the Constitution as in the case of SCs and STs.

Conclusion :
18. To conclude, the exclusion of creamy layer will effectively nullify the Scheme or system of Reservation for OBCs. To make the Reservation for OBCs a reality, Constitutional amendment defining “SEBC” and ”Backward Classes” is the immediate necessity. Unless such amendments are made, the Reservation for OBCs will only be a pious wish and an unfulfilled dream.

Dr. Justice A.K. Rajan
20.4.2008

Constitution

2008-05-14T00:30:00.000-07:00

NEED FOR A CONCISE CONSTITUTION

(Dr. Justice A.K. Rajan)

Constitution – “A Social Contract” & “Public Law”:
01.01 Constitution is the basic law of a Nation. It consists of doctrines and practices that from the organizing principle of the Nation. The modern idea of constitution propounded by Thomas Hobbes, John Locke and Jean-Jacques Rousseau is that the constitution of a nation is a sort of social contract. People of a nation agree among themselves to give up a portion of their absolute freedom in favour of the State, in return, for the security that the Government can provide.
01.02 The other view is that the Constitution is based on the principles of “public law”. That is the body of law governing relations between a state and its citizens, and dealing with the structure and operation of the government. The French Constitution and the Constitution of Federal Republic of Germany, after 1949, are based on principles of public law.
01.03 The constitution of United States of America and the Charter of United Nations Organisation (UNO) are based on the principle of Social Contract. Hence, they begin with the preamble “We, the people of” U.S.A. and U.N.O. respectively. The Indian Constitution is also based on the same principle. Therefore, the preamble of Indian Constitution begins with “We, the people of India……. …….. give this Constitution to ourselves”.
01.04 In the broadest sense, the Constitution is a body of rules governing the affairs of an organized nation. It is composed of the principles determining the agencies on which the task of governing the community is entrusted and their respective powers. It must contain provisions for stability and adaptability to social, economical and other inevitable changes. It must specify the distinct branches of Government and their powers. That is the distribution/division of powers among such agencies/organs. The inalienable rights of the individual (which were not created by Governments and hence cannot be taken away), must also find a place in the constitution.
01.05 Therefore, the Constitution, the comprehensive basic document of a Nation must guide the various institutions of the Government in the discharge of their functions. It is not possible to compress all the aspects of governance in a single document. It may need to be supplemented by Statutes, Conventions, customs, judicial interpretations etc.
Living Document:
02.01 The Constitution of a Nation is a living document, it needs to fulfill the ambitions, expectations and aspirations of all its citizens for all times to come. The words used in the constitution mean and include every aspect that can be expressed by that word. They must, therefore, be interpreted to cover any aspect depending upon the necessity or occasion. For example, “Commerce Powers” in Australia and “Due Process” clause in US Constitution do not mean the same as they did when they were enacted. The interpretation of the provisions of the constitution inevitably involves adaptation of the letter of the law to the evolving needs and expectations of the community. The provisions of the Constitution needs to be changed or amended according to the needs of the people and the changing circumstances. It cannot remain static, ignoring the needs or the changes in the society. Therefore, one generation cannot thrust its views on the succeeding generations. At the same time, there must be a reasonable certainty that it will not change frequently. Therefore, whenever the existing words or provisions are not sufficient to meet the needs of the people, the Constitution has to be amended.
Constitution is not a Statute :
03.01 Constitution defines and delimits the powers of the legislatures, executive, judiciary and other instrumentalities of the State. A “statute” is an Act enacted by the legislature exercising the powers conferred on it by the Constitution. That is, statutes are enacted or made by the legislatures, which were created by the Constitution. Therefore, Constitution is not a “Statute”. The Statute must be in conformity with the Constitution. If it over reaches the power conferred on the legislature, the Statute will become invalid and unenforceable and become void, as propounded by the U.S. Supreme Court in the land mark case, Marburry vs. Madison in 1801.
03.02 In a statute, certain provisions may have predominance over other provisions. But in a Constitution of a Nation, one provision cannot over ride another provision. All the provisions have the same weightage or importance. That is, no provision in a constitution can be considered superior or more important to another provision. Therefore, in a statute, provisions starting with “notwithstanding any other provision”, which has the effect of over-riding other provisions; or “provided that”, which culls out certain exceptions to the main provision, are normally found. But such clauses have no place in a constitution.
Words have the widest meaning in Constitution:
04.01 Further, every word found in a constitution must be interpreted widely so as to include all possible, permissible, perceivable aspects of the word. But the words used in Statutes must be given the meaning assigned to that word in the Statute itself by way of definition; certain aspect of the words may even be excluded specifically. That is, Statutes are made with a limited object and for certain specific purposes. A statute can be changed or modified by the legislature following the legislative (law-making) procedure. To amend the constitution, it requires an extra-ordinary procedure, something more than the normal law making procedure and power.
Definitions and Transitory Provisions:
05.01 Definitions (of certain words) are normally found in statutes. They normally restricts the meaning of the words used; at times may connote a different meaning. But such things (the method of defining the words used) have no place in a Constitution. The meaning of the words used cannot be restricted. But, certain constitutions, framed after the Indian Constitution, do contain a few definitions. Transitory provisions and temporary provisions (or provisions made for the time being), can be found in statutes. But they have no place in the Constitution.
Constitution of India:
06.01 Indian Constitution has so far been amended 94 times, within a span of 60 years. But this startling number does not mean that the Constitution was amended or changed substantially every time. Important changes were made in the constitution only by a few amendments, which could be about 20-25. All the other amendments are insignificant; It is a misnomer to call such of them as amendments of the Constitution. The 42nd and 44th amendments are wholesale amendments. All the provisions, which were amended by these two Amendment Acts could not have been followed even by serious students of Indian Constitution (42nd Amendment Act contains 59 sections and the 44th Amendment Act contains 45 sections). Those two Amendment Acts can even be termed as ‘revision’ of the Constitution.
Indian Constitution is similar to a Statute :
07.01 Indian Constitution contains number of provisions starting with the phrases ‘notwithstanding’, ‘without prejudice’ and ‘provided that’. By the use of these phrases, some of the provisions are made superior to some other provisions; in some cases certain exceptions are made to the expressed provision. Inasmuch as such of these words could normally be found only in a statute, in contra distinction to a constitution, some of the reputed and leading newspapers in India always refer to the Indian Constitution as a “Statute” and the “Constitutional amendments” are referred as “Statute changes”.
Biggest Constitution:
08.01 The Indian Constitution has the distinction of being the biggest constitution in the world. A number of provisions that need not find a place in the constitution and the inclusion of many unimportant provisions contribute for its size.
08.02 The Constitution must contain all the important principles and the inter-relation between the institutions created by the Constitution. Ordinary matters that can be provided by statutes should not be included in the constitution. Therefore, any provision which cannot be considered as a basic policy of the governance, should not be included in the Constitution. All derivative provisions (based on the principles specified) should be made only by a statute. Such things need not be part of the constitution.
08.03 A new reader of Indian Constitution will find it difficult to understand why many of the provisions are found in the Constitution. This article is an attempt to identify such of those provisions, which can be and should be removed without serious consequences. If such of those unnecessary provisions are deleted and removed from the constitution, it would make the Indian Constitution a handy and concise document.
Provisions need to be removed:
09.01 Transitory Provisions :
(i) Citizenship : Almost the entire chapter on “Citizenship” (found in Part II) are transitory in nature and hence unnecessary. It only specifies who are all the citizens of India “at the commencement of the Constitution”. This is only a temporary measure that has no place in a permanent constitution. It is sufficient to provide in the Constitution that the Parliament shall have the power to make law on citizenship. That may read as follows :
“Parliament may by law specify who are its citizens and shall have the power to make any law providing for the acquisition and termination of citizenship and all other matters relating to citizenship”.

Even such a provision would be unnecessary in view of the Entry 17 List I of the VII Schedule to the Constitution, which confers power on the Parliament to make law on “Citizenship Naturalisation and aliens”. Exercising this power, a law has been made; it also provides for acquisition and relinquishment of Indian citizenship.
(ii) Federal Court : Art.135 confers power of the Federal Court on the Supreme Court “until Parliament by law otherwise provide”. This provision is also a transitory provision and there is no need for that any more. Further, Entry 77 List I confers power on the Parliament to make law on “Constituion, Organisation, Jurisdiction and powers of the Supreme Court…………”.
(iii) Language of the Supreme Court, High Court etc.: Art.348 specifies the language to be used in the Supreme Court, High Court and for Acts and Bills to be introduced in the Constitution or State Legislatures. As per clause (1) of Art.348, all proceedings in the Supreme Court and in the High Courts and the authoritative texts of the Bills to be introduced and Acts passed, in the Parliament and State Legislatures, shall be in English, until Parliament by law, otherwise provides. That is till such time, Parliament makes law on this subject, English shall be the language for all the purposes specified above. Therefore, this is a transitory provision, which will be in force till such time Parliament makes a law on the subject. Once Parliament has made a law on this subject, exercising this power, thereafter only that law made by Parliament will be in force and this above constitutional provision cease to exist.
Art.349 provides that no such law [as contemplated under Art.348(1)] shall be introduced in Parliament during the period of 15 years from the commencement of the Constitution. Therefore, Art. 349 was valid only for 15 years from 1950; This provision has no effect after 15 years. Therefore, Art.349 has already become obsolete.
In so far as Art.348 is concerned, in 1965, Official Languages Act was passed by Parliament. Therefore, from the date on which the Official Languages Act has come into force, Art.348 has also become obsolete. Therefore as on today, Arts. 348 and 349 cannot be considered as part of the Constitution. Therefore, these two Arts. 348 and 349 needs to be deleted.
(iv) Temporary & Transitional Provisions : Part XXI of the Constitution reads “Temporary, Transitional and Special Provisions”. Art.369 conferred power on the Parliament temporarily for a period of five years to make law on certain matters. That period is already over. Therefore, this provision is redundant. Similarly, the provisions found in Arts. 372A (power of the President to adapt laws); 373 (power conferred for one year from the date of commencement of the Constitution); 374 (enabling the judges of the Federal Court to become judges of the Supreme Court); 375(enabling the courts and the officers to continue to function); 376 (enabling the Judges in the provinces to function as judges of High Court); and 392 (power conferred on the President to remove any difficulty till the first meeting of the Parliament) have all become redundant and hence needs to be deleted.
(v) Short Title and Commencement : Short title, Commencement……and Repeals, have no place in a “Constitution of a Nation”. Such provisions can be found only in a Statute made by a legislature. Further, as per the Preamble to the Constitution, which is also a part of the Constitution, the people of India had already , in the Constituent Assembly on twenty sixth day of November 1949 Adopted, Enacted and gave to themselves this Constitution. That means the entire Constitution had come into force on 26th November, 1949. The word ‘adopt’ means to select and take, and the word ‘enact’ means creating or establishing a new law. As per Preamble, the entire Constitution was enacted and taken on 26th November, 1949. When that be so, the provisions of Art.394 stating different dates for commencement of different Articles cannot have any effect as that would be contradictory to the Preamble. Even otherwise, this provision is also not necessary any more. Hence Chapter XXII Short Title, Commencement….. Repeals and Art.393 and 394 may to be deleted without any consequences.
09.02 Oath : The text of the Oath of affirmation to be taken by President & Governor, Vice President, Speaker, Judges of Supreme Court, Judges of High Court, Prime Minister, Chief Ministers, Members of Parliament and State Legislators etc. are all stated in Articles 60, 69, 75(4), 99, 124(6), 148(2), 159, 164(3), 188 & 219 and the 2nd Schedule. All these provisions need not be part of the Constitution. That can be provided for under the Oaths Act. Specifying them in the Constitution only helps to increase the size of the Constitution and it serves no other purpose. Therefore, the entire 2nd and 3rd Schedule to the Constitution specifying the form of oaths are unnecessary and hence should be deleted.
09.03 Salaries (Articles 97, 106, 125, 186, 195, 221): Since salary is bound to vary from time to time, that should be made as a permanent in the Constitution. Now, whenever it is increased, it needs to be done by Constitutional Amendment. Therefore, all the provisions relating to salary to all the constitutional authorities must be deleted
09.04 Secretariat: The provisions relating to Secretariat of Parliament and State Legislatures (Art.98 and 187 respectively) need not be found in the Constitution. The power to impose penalty for sitting and voting before making oath of affirmation etc. specified under Art. 104 and 193 respectively are part of the privileges Parliament and State Legislatures and they are covered under Arts.105 and 195 respectively and therefore they are unnecessary provisions in the Constitution. On the same ground, the provisions with respect to procedure for introducing the Bills etc. could be made by the Rules. All that can be provided in the Rules, should not be found in the Constitution.
09.05 Definitions (Articles 12, 36, 152, 366, 367) : ‘Definition’ means explanation or Statement of the precise meaning of that concept that is ‘defined’ or how it should be understood; the precise statement of essential nature of a thing. When a word is defined in a law, then that meaning alone must be given to that word. It can be in the form of an expansion or restriction. This needs to be given in any Statute or law made by legislative bodies. But in the Constitution, the words take the entire aspect of the word. It cannot be expanded or restricted. Definitions need not be included in the Constitution since the words in the Constitution shall have the natural and widest possible meaning; that cannot be confined or limited to certain aspects alone.
09.06 Panchayat and Municipalities: The chapters on Panchayats and Municipalities under Part IX and IXA, which were included by 73rd Amendment Act relates to local bodies. Under Art. 246, the legislative powers are distributed between the Parliament and State legislatures as provided in the VII Schedule. In the List II (State List), Entry 5 reads as follows:
“Local Government, that is to say the Constitution and powers of Municipal Corporations… … … … District Boards….. ….. ….. and other local authorities for the purpose of local self government or village administration”.

Therefore, as per the scheme of the Constitution, the State Legislatures are conferred exclusively the power to make laws relating to constitution and powers of Municipal Corporations and Panchayats. This provision is not deleted while introducing Part IX and IXA. Since Parliament cannot make a law on the subject included in List II, the Constitution itself was amended. This exercise militates against the very principle of Federalism and the concept of immunity of instrumentalities; that is distribution of powers and separation of powers. Constitution of a Nation normally do not contain provisions relatable to local bodies, which are to function under the control of the component States. The local bodies are not legislative bodies and therefore, they cannot make laws. They are only administrative bodies. Since these provisions militate against the very scheme of the Constitution, they do not have a place in the Constitution. Therefore, the entire Chapters IX and IXA relating to Panchayats and Municipalities should be deleted.
09.07 Public Service Commission and Services: The entire Part XIV “Services under the Union and the States” including Public Service Commissions (Art.308 to 323) should be deleted. The provisions relating to services under the Union as well as the State could be regulated by Statutes made by the respective law making bodies. The rights of Civil Servants could be effectively protected, defined and regulated by Acts and Rules.
09.08 The right of Government servants need not be Constitutional Rights. Necessary protection can be given by Statutory law made by the Parliament and State legislatures. The reason for the present day malady of lack of discipline, lack of effective supervision etc. are all due to elevated constitutional protection given to the Government servants in the service rules, especially under Art. 309 to 311 of the Constitution.
09.09 Similarly, the provisions relating to Union and State Service Commissions, which are recruitment agencies, need not find a place in the Constitution. They are bound to cater to the needs of the Government. But the Government is made to obey their directions. Therefore, Arts. 308 to 323 should be deleted. The list is not exhaustive. All such unnecessary provisions are fit to be deleted. If and when so done, the size of the Constitution would be reduced to a great extent.
09.10 The provision relating to appointment of ad-hoc judges and retired judges of High Court and Supreme Court need to be deleted as this has not been put to use in the past 50 years except in one or two cases and there is no paucity of members for appointment as judges of Supreme Court and High Court. Therefore Art. 127 and 128 and Art. 224 and 224A relating to High Court judges need to be deleted.
09.11 Art.222 relating to transfer of judges from one High Court to another High Court needs to be deleted. It affects the independence of judges and independence of judiciary as a whole. The threat of transfer may indirectly affect the independence of judges.
Unnecessary Provisions:
10.01 Clause (5) of Art.15 introduced by 93rd amendment with a view to enlarge the powers of the State, in fact restricts the powers already possessed. Art.15(4) actually encompasses provisions contained in clause (5) also. Safeguard against Art.19(1)(g) is also unnecessary in view of Art.19(5) that the right conferred u/Art. 19(1)(g) can be restricted in the interest of general public. But when introducing clause (5), the minority institutions as defined in Art.30(1) has been excluded. Therefore, in order that State has the widest power, Art.15(5) should be deleted.
10.02 Art.18, which abolishes the conferment of titles by the State needs to be deleted in view of the fact that number of awards are being conferred every year by the President. It is difficult to accept or conceive that the Padma Awards etc. are not titles.
10.03 In Art.22, clause (4) was amended by 44th amendment in 1979. But so far that has not been brought into force. Similarly, Art. 21A was included by 86th amendment in the year 2002. This has also not been brought into force. Orders are yet to be passed by Government of India to bring it into force. But as per Art.368, once the amendment procedures are completed and the President appends his signature, “the Constitution shall stand amended”. The provisions contrary to that (as found in 44th Amendment) cannot be valid. The result is that a provision / law made by 2/3 members of the Parliament even after assented to by the President can be ignored or rejected by the executive. That is not only against the scheme of the Constitution; it also militates against the basic principle of Constitutional Law (though the Supreme Court has held that was permissible).
Provisions needed modification:
11.01 In Art.29 and 30, which confers rights on the minorities need to be amended. Definition of minority, should be given the meaning as was given in Government of India Act, 1935, which meant ethnic minority. The restricted concept of minorities based on religion and language need to be modified.
11.02 With respect to holding elections, for the office of the President and the Vice President, it shall be held with definite periodicity, viz., once in five years. Even if a vacancy arises, election to fill up such vacancy should be only for the remaining period of the term of the President or Vice President (as in the case of members elected to the Council of States (Rajya Sabha) and the President of USA). At present, whenever elections are held for these posts of President or Vice President, he holds the post for a period of five years from the date of such election. The provisions of the Constitution needs to be changed to that effect. Hence, Art. 63 to 67 needs to be amended.
11.03 In the US Constitution, in Art.14 (the 14th Amendment), the word “State” refers to the various States that constitute United States. In Indian Constitution, “State” include Government and Parliament of India as well as each of the State, local bodies etc. as defined under Art.12. Under Art.14 of the Indian Constitution, the equality and equal protection of laws are guaranteed only against State action. A non-governmental body, a private corporation, company etc. need not follow equality clause. But under US Constitution, no law denying equal protection can be enforced.
11.04 The words “socially and educationally backward classes of citizens” used in Art.15(4) is not a definite term and that has created unnecessary confusion. Hence, that that shall be deleted and in its place, “backward classes/castes of citizens” shall be inserted so that it connotes a definite group of persons (just as SC.STs).
11.05 In Art.19(1), the sub-clause (f) (the fundamental right to property) deleted by 44th Amendment must be reintroduced. Because the rights conferred under the sub-clauses (a) to (d) and (g) of Art.19(1) cannot be exercised without right to hold property. All these rights mentioned in clause (a) to (g) of Art. 19 are interlinked with each other. Converting the fundamental right under Art.19(1)(f) as a non-fundamental but constitutional right under Art.300A does not in any way alters the nature of the right. The only difference between a fundamental right and a constitutional right is that in case of violation of fundamental right, the Supreme Court can be moved directly under Art.32. Earlier, u/Art.19(1)(f), the right to hold property was conferred on the citizens of India, whereas u/Art.300A, such a right is conferred on all persons, whether citizen of India or not.
11.06 The provisions relating to special procedure adopted in respect of money bills, definition of money bills need to be deleted. All these fall within the ambit of procedures of Parliament or Legislature of the State. Therefore, Art. 109 and 110 and Art. 197, 198 and 199 can be deleted.
11.07 In Part XVII, provisions relating to languages to be used in Parliament need to be amended in view of the experience of past 60 years. All languages found in the schedule may be permitted to be used in the deliberations and communications.
11.08 Art. 136 relating to special leave by Supreme Court need to be modified to exclude criminal cases must reach the finality at the High Court level.
11.09 The provisions relating to duration of House of the people (Lok Sabha) and the State Legislative Assemblies needs to be modified to the effect that when the House of the people or Assembly dissolved, the term of newly elected Member of House or the Assembly shall only be the unexpired portion of the original five years. That is, the election to the Parliament and the assembly shall be held once in five years with the regular periodicity. Therefore, the provisions in Art. 83 and 172 relating to the State Legislatures must be modified or amended.
11.10 Art. 262 regarding adjudication of disputes relating to waters of inter-state rivers and river valleys needs to be modified empowering the Central Government to consider and suggest the terms of settlements.
11.11 Art. 350B must be modified if changes are made in the concept of minorities in Art. 29 and 30.
Conclusion:
12.01 As seen above, in the Constitution of India, there are numerous provisions required or deserve to be deleted; many provisions have become redundant. By removing such redundant and the unnecessary provisions and adopting the necessary modifications, the Constitution of India will become a concise document. The people of India will be easily able to understand provisions of the Constitution and can be familiar with it, which will be good for the future generation. Instead of claiming that our Constitution is the biggest in the whole world and making it as a lawyers paradise, and keeping it beyond the reach of the common man, it can be made a concise Constitution covering only the essential features. When that is done, it may look like a new Constitution. Probably, also for these reasons, the Hon’ble Chief Minister of Tamil Nadu had some time back made a plea for a New Constitution.

MLM Judgment

2008-05-13T23:36:00.000-07:00

IN THE HIGH COURT Of JUDICATURE AT MADRAS
DATED: 7.1.2005

C O R A M :

THE HONOURABLE MR. JUSTICE A.K.RAJAN

W.P.NO.22674 OF 2004
AND
W.P.M.P.NO.27411 OF 2004

1. M/s.Apple FMCG Marketing (Pvt) Limited, rep.by its
Chief Executive Officer
Mr.R.Eric, No.172, Arcot Road,
Vadapalani, Chennai -600 026.

2. Mr.R.Eric .. .. .. .. .. .. .. .. Petitioners

versus

1. The Union of India, rep. by its
Secretary to Government,
Ministry of Finance, New Delhi.

2. The State of Tamil Nadu,
rep. by its Chief Secretary,
Secretariat, Chennai-600 009.

3. The Director General of Police,
Kamarajar Salai, Mylapore,
Chennai-600 004. .. .. .. .. .. .. .. Respondents

Petition filed under Article 226 of the Constitution of India praying for a writ of declaration that selling products through the Network Marketing System is legal and not in contravention of the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 or any other law and consequently forbearing the respondents or their subordinates or agents or their men from in any manner interfering with the, lawful business activities of the petitioner company by either freezing their bank accounts or interfering in the conduct of the seminars and promotional meetings held for the distributors and prospective distributors and pass such further orders.

For petitioners : : Mr.P.V.S.Giridhar
For respondents : : Mr.R.Kanniappan, Government Advocate

O R D E R

The first petitioner is a company registered under the Companies Act. It is marketing various products including shampoo, tea, coffee powder, after-shave lotion etc. under the brand-name 'Joy Eternal' through "network marketing". This method of marketing differs from the conventional sale through a distributor and the retail network; any person could take up the marketing and sale, and make an earning; it is done by several reputed companies like Hindustan Lever and Indian Express. Several unemployed youth have taken up the marketing of these products and have earned satisfactory incomes depending on their talents and efforts.

(i) No complaints have been received from any consumer about the quality of the goods sold. Under the scheme of network marketing the company sells products to the customers and the consumers in turn can sell the products to their peers and earn commission out of the sale. In fact it avoids many middlemen, and cost of advertisement, etc. The marketing process is carried out directly by recruiting the customers themselves as distributors of the products and services; the company regularly organises business development meetings and seminars, distributors meetings, etc.,. The participants of the meetings are encouraged to take up the distributorship of the products and are suitably registered if they so desire. There is no service fee for registration as distributor. Any person who is interested is given a product for ,the price fixed. The distributors are encouraged to en-roll more distributors. The commissions are given only as per the volume of sales made by the individual distributor and his team. This system ensures that intermediate distributors are not like a chain leading to the customer and the company.

(ii) There are only two stages, viz. stockist and distributor. The distributor can introduce another person as a distributor and he will also get commission. The distributor has to put in his effort in selling the products and then only he will get the commission. The company also takes care of the risks involved in the trading activities; there is no deposit of money by the consumers and the products are given to the person who pays the money for the same. The distributors are paying the price for the products they purchase. Thus, the possibility of the principal company or its Directors making use of any funds of others is avoided. Except service charges, no charges or deposits are levied to enroll as a distributor. There is no risk of non-recovery of the funds due to the consumer since the products are given out only on receipt of payment. Thus, the process of network marketing is a foolproof and beneficial mechanism for the conduct of trade and commerce. The pricing of the products is always a contentious issue. The product is not exorbitantly priced. But, some others, who are inimical towards the company, are trying to overturn the trading activity of the company by resorting to various crooked means and methods. They maligned the name of the company by publishing reports in a magazine and consequently the company is faced with roving enquiries by the police and the company promotion seminars and meetings are also being disturbed by the police. Stockists and distributors of the company have also faced similar harassment. It is an infringement of the fundamental right conferred under Article 19(1)(a) of the Constitution. No complaint has been registered against the company in any of the police stations. The Union of India has also examined the issue of the network marketing and has come to the conclusion that there is no illegality in the said system. The Union of India has also stated that the system of network marketing will not come under the purview of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The labour of a person in selling goods is rewarded by payment of commission. Several companies have launched similar network marketing system. Therefore, it is quite annoying when the police go around the meeting venues and seek statements from them and ask several questions. Such invasive process causes considerable delays and difficulties and results in violation of the rights conferred under Art.19(1) (g) of the Constitution. The company understands that similar companies have been targeted in similar way and their accounts have been frozen by the respondents and the company apprehends that the respondents will take steps to freeze the accounts of the company and disrupt the business activities. There is no promise of easy or quick money held out to the distributors. The distribution of commission for selling is different from the prize chits. The system only results in advancing the socialist vision of the framers of the Constitution, and the wealth is evenly distributed without being concentrated in a group of persons. The people at large are given more opportunity to earn money depending on their skill and labour. The officials of the third respondent are harassing the petitioner and its distributors, and it resulted in decline of the trade activities. Hence the writ petition.

2. The first respondent has not chosen to file any counter in spite of the time granted repeatedly for enabling them to file a counter.

3. The second respondent has filed a counter stating that the second respondent has been impleaded unnecessarily in the writ petition. It is also stated that the third respondent would take action, in accordance with the provisions of the Act, if the petitioner commits any illegal act.

4. The third respondent in his counter has stated that the petitioner has explained how the marketing of certain goods through their network is carried, on; the petitioner has also stated that there is no FIR pending against their company and hence no investigation is taken up by the police. When that be so, the other facts that the seminars and meetings are all being disturbed by the police is absolutely false. Police would not interfere with any business conducted by any person in accordance with law. If specific complaints are received by the police against the petitioner firm, it is the duty of the police to take up investigation; such investigation can not be prevented. The facts and figures given by the petitioner are illusory and imaginary. The apprehension that their accounts would be freezed would come to the mind only if the business carried on by them is not legal. Under those circumstances, the writ petition filed only on apprehension and fear of intervention and hence it is to be dismissed.
5. After seeing the counter affidavit, the petitioner wanted to withdraw the petition. But in view of the importance of the issues raised in this writ petition, this Court refused to grant permission to withdraw the writ petition.

6. The learned counsel Mr.Giridhar appearing for the petitioner submitted that this system of 'network marketing' practised by the petitioner company does not fall within the provision of Prize Chits and Money Circulation 'Scheme (Banning) 1978 Act. He submitted that he has filed documents which shows how the net work marketing is carried on. He has filed the pamphlets issued in that regard.

7. (i) According to .the system, when a person purchases any product from the company, he has to make (form filed in the typed set) which contains the column for three user names (name of who registers with the company). It also contains a column to fill up the name and his placement. He has to sign a declaration that he has entered into this agreement as an independent distributor. In addition to the agreement, they are bound by the conditions the brochures (not filed in the typed set) and it is valid for one year from the date of joining.

(ii) The type set also contains Product price list for "Rs. 550 plan" (also there are "Rs. 1000 plan" and others). It contains products namely Nutrimalt, Coffee, Tea, Soap, and Pickles. The maximum retail price (MRP) and the distributor's price (OP) also are given. The sum of maximum retail price of all these six products comes to Rs.497/-. The total amount for which it is sold to the distributors is Rs.372/-.

(iii) Admittedly, for these products, the so called distributor. pays a sum of Rs.550/-, whereas the distributor's price is only Rs.372/-. Therefore, Rs.178 is charged extra from the distributors. This amount, the distributor pays to the company because he is made to believe that when he sells these goods to others. and enroll others in the scheme, he gets commission from the petitioner company. Such Commission depends upon the total volume of business that he generates by enrolling new distributors, it progresses like a chain; the amount of commission depends on the subsequent "distributors" who is made to join by the petitioner or a purchaser through him. The promise of the possible commission is the reason for one's enrolment. The form requires to be filled up with three "distributors" names through whom the new entrant get into the scheme and their placement.

(iv) One has to purchase one or more starter kit by paying the money as stated above; the starter kit are valued at Rs.550/-, Rs.1000/ - and so on; he must sell the product to two other persons and get their application form filled up and sent to the company; those two persons in turn have to purchase starter kits from the company and in turn they must sell and enrol two other persons each. Each new entrant shall purchase the starter kit from the company and in turn sell enroll two other persons. Like this, every new purchaser from whom the new entrant purchases shall enter the three names of his predecessors in the chain. Like this, the chain progresses. The three names filled up by each and every new distributor depending upon the rank or placement and volume of the business, everyone in the chain gets the commission. If a person gets started with five starter kits, he will sell it to ten persons and that ten will become twenty at the next stage and twenty will become forty and so on. When it goes up to ten stages in this manner, the person who sold first will get a commission.

8. As seen already, a starter kit which is sold at Rs.550/- for the goods which may be sold at Rs.372. Therefore, in one kit, an excess amount of Rs.178/- is collected. This amount is shared by the company and the so called distributors. When a person first purchases the starter kit, he pays Rs.178/- more as above. Thereafter, he sells the same at the lesser price (distributor's price) and he may sell it others and earn the profit. That is, each time a person purchases a starter kit, the petitioner gets a sum of Rs.178/- in excess.

9. The learned counsel for the petitioner further submitted that earlier 45% of the sale amount was distributed as commission but presently it is increased to 65% of the sale price. That means the goods which are worth only Rs.35/- are sold at Rs.l00/- and this Rs.35/- covers not only the price of the goods, but also expenditure involves for the administration of the company. Of course, the Court can not interfere with the fixation of the price. Anybody is free to fix any price and it is for the customers to accept or not. But, it is not an ordinary sale of goods. The persons are lured to become a 'distributor' only on the hope or expectation that he may get more money by way of commission if he sells the products similarly to others. Of course, many persons are earning lot of commission in this manner. This chain is likely to progress for some time. At one point of time the progress of the chain will stop. On that day persons who buy the product may not find any further distributor to purchase from them. By the time, the company would have earned enormous profit. But a very large number of persons would be left cheated.

10. (i) To be a distributor of such product, it requires registration under the TNGST Act, in case the value of turn over exceeds a particular limit. It is possible that a few of the distributors may exceeds that limit. - But, those persons are not registered under the TNGST Act and also would not be pay to the Government the sales tax.

(ii) That apart, this system is not an ordinary business transaction, it exploits the personal influence an individual has in the society. The 'distributors' are found to influence their subordinates or friends. Many of such distributors gets included because of such undue influence by their superiors. Many unwilling purchasers would be forced to purchase only to obey their superiors or satisfy their friends or at times under threat or coercion or inducement and so on. Therefore, the deemed agreement became void under the Indian Contract Act. Therefore, it is the duty of the law enforcing authorities to prevent such undue influence being exercised.

11. As rightly submitted by the learned counsel for the respondents only under promise or expectation of getting huge commission (easy or quick money), the public are lured to invest more money in such of the schemes. It is only an imaginary profit. Everyone cannot sell all the products (as stated already) to some others. If a person is unable to get purchasers or distributors at one point of time, very large number (may be in lakhs) of people would be left at that stage, unable to find a purchaser or distributor. At that stage, all such persons would be cheated.

12. From the averments, made in the counter affidavit, it is seen that the law enforcing authorities are keeping the surveillance against such meetings and record statement from the persons who attend the meetings. By that, the law enforcing authorities are doing their duty cast on them. It is indeed appreciable that at least now the law enforcing authorities are vigilant that people should not get cheated and ultimately come to them for redress.

13. But, there is also a prayer for declaration that the activities are not illegal and does not amount to violation of any of the laws. Therefore, this Court has to decide the aspect as to whether this multi level marketing is legal or not.

14. The main contentions of the petitioner are as follows:-

(i) So far no complaints have been received against them from any distributor. Therefore, this Multi-level Marketing hasnot caused any loss to any of the distributors.

(2) There is no 'service fee' for registration as distributor.

(3) Every distributor gets commission on the basis of the volume of business that is generated by him.

(4) No chain of customers in the process.

(5) The distributors and the purchasers pay the value of the product that is purchased, therefore, they are not paying any excess amount.

(7) They collect only nominal service charge for the service rendered.

(8) The surveillance by the respondents violates the petitioners' fundamental right provided under Articles 19(1) (a) and 19(1) (g) of the Constitution of India.

(9) Further the Union of India has also clarified that the "Multi-level Marketing" does not infringe the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (Hereinafter referred to as ‘The Act' )..

15. Mere fact that no complaints were received does not make an act legal, if it be otherwise illegal. It is true that no service fee is collected by the petitioner for registration. It is also true that the commission that is received by the distributor depends upon the volume of business generated by him. From the scheme of Multi-level Marketing, as reflected in the brochure issued by the petitioner, the commission is received only if the distributor sells the product, which he purchases, to two others and those two persons sell it to two other persons each and those four persons sell similarly to two persons each. In this manner, if more number of persons in the next stages come into this scheme, the person through whom those persons got enrolled gets commission.

16. The contention of the petitioner is that there is no chain of customers. This contention appears not acceptable. The scheme, as stated above, creates chain of customers and only when the chain, progresses without any break in any of the links, the 'principal distributor' gets more commission. If, for any reason, the chain is broken, at any stage, then, the principal distributor's commission would get reduced proportionally to that extent. Therefore, it is not correct to say that there is no chain of customers in the process.

17. The next contention is that the purchasers pay the value of the product as stated above and they do not pay the excess amount. It is seen that a 'starter kit' is purchased by the principal distributor for a sum of Rs.550/- as per the plan found in the brochure. The very same brochure contains the M.R.P. of the kit as Rs.497/-, which is rounded off. to Rs.500/- and a service charge of Rs.50/- is collected when a kit is sold. The contention that no service charge is collected also does not appear to be correct in view of the fact that every person who purchases a kit has to pay a service charge of Rs.50/- for each kit. Service charges are collected by governmental institutions like Electricity Board and Telephones as they are authorised by the Statutory Rules. No individual can collect any charge as service charges. The collection of service charge is therefore, not legal.

18. As submitted by the learned counsel for the petitioners, the petitioners-Company originally was giving 45% of sale price as commission and now that is increased to 65%. From the very fact that 65% is earmarked for paying as commission to the distributors, it is clear that the value of the product is only 35% of the sale price. That is, when the goods are sold at Rs.550/-, the actual value of the goods that are sold is only Rs.188/-(calculated at 35%). For the value of goods worth Rs.188/-, the purchaser pays Rs.550/-. But, selling the goods at higher price that is fixed by the seller, does not offend any law.. To get commission one has to purchase starter kits. If the distributor wants to get more commission through a member of 'sub-distributor' under him, he shall purchase more number of such starter kits. There is no authority to collect Rs.50/- as service charges for one kit. If it is purely a sale of goods, no service charges are permissible under any law.
19. The progress of the chain of customers, at some point of time, would get saturated and the distributor, who purchases the goods, will not find any purchaser/sub-distributor to sell or enroll afresh. At that time, due to the progress of the chain, in the manner stated above, such persons who would not find new members may be in lakhs or even millions. Therefore, lakhs or even millions of people are bound to lose their entire money of Rs.550/- (value of one starter kit). At the same time, major portion of 65% of the amount would be a gain to the petitioners-company since there would be no one share that money.

20. Section 2(c) of. the Prize Chits and Money Circulation Schemes (Banning) Act, defines 'Money Circulation Scheme', as follows:

"Money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration or a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions. "
The above definition makes it clear that any scheme by whatever name it is called whereby on a promise that one would receive or would make quick or easy money by enrolment as members into the scheme is 'money circulation scheme'. In this case, there is enrolment of members into the scheme; there is also a promise made that on such enrolment of large number of persons .into the scheme, one would make quick money or easy money. There cannot be any doubt that by enrolling new members and by the process of selling the goods to new distributors this chain progresses; the person who became such members earlier get commission without doing any work; getting such a commission is nothing but getting quick or easy money. Therefore, such schemes/the so called 'Multilevel Marketing', definitely falls within the definition of 'money circulation scheme'.

21. The learned counsel for the petitioner submitted that Union of India has made a clarification in an answer to a question in Parliament that Multi-level Marketing does not violate or offend the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act. It is suffice to say that it is not for Union of India or any Member of Parliament to interpret the provisions of any Member of Parliament. The Act has been passed by the Parliament, but the power to interpret the Act is only vested in Judiciary, and that power is not given to the Executive. The statement given by toe Union of India or its Officers that Multi-level Marketing does not attract the provisions of the Act cannot legalise an illegal act.

22. It is true that several companies including Multinational Companies carry on the business of the "Multilevel Marketing" and it is also true that the Executive and the law enforcing authorities keep a blind eye on such activities. This also does not make an illegal act legal. It is always a fact that the law enforcing authority would try to “close the stable only after the horse had escaped." That is, the law enforcing authority would realise that this scheme would ultimately leave a large number of persons cheated. Thereafter, after losing their money, they would approach the executive complaining that they were cheated. Till such time, the law enforcing authorities do not act. They do not take preventive action to enforce the provisions of the existing law.

23. The learned counsel for the petitioner placed reliance upon the judgment of the Supreme Court in RESERVE BANK OF INDIA v.. PEERLESS G.F. & I..Co.Ltd. [AIR 1987 SC 1023] to support his argument that there is no element of chance in the scheme adopted by the petitioner and hence the Act is not attracted. In the Peerless's case the Supreme Court had an occasion to interpret Sec.2(e) of the Act and held that the endowment scheme of the Peerless Company was not a prize chit on the ground that there was no element of chance in that scheme. It also held that Section 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme
of the Peerless Company was out side the, Prize Chits and Money Circulation Scheme (Banning) Act. In this case Section 2(c) has not been considered by the Supreme Court.

24. The learned counsel also referred to another judgment in STATE OF WEST BENGAL v.. SANCHAITA INVESTMENTS [AIR 1982 SC 949]. In this case Sec. 2(c) has been considered. The Supreme Court has held that -
" To be a money circulation scheme, a scheme must be for the making of quick or easy money on any event or contingency relative or applicable to the enrolment of the members into the scheme ".

In this case, the Supreme Court has held that when a firm indulging in high risk investments, it was not illegal. Further, payment of interest in excess of stipulated rate was not a scheme for making easy or quick money. The Supreme Court further held that a scheme has necessarily to be judged as a whole, both from the viewpoint of the promoters and also of the members. The Supreme Court in that case had considered only one aspect, namely, whether promise of giving more interest attracts money circulation scheme? While deciding that issue, the Supreme Court held that if such transactions are made openly and not in violation of any law, it would not amount to violations of the Act. In.that case, promise to give 48% of interest was not a promise of getting quick money since the promise was given openly. In that case, the materials placed before the Court went to show that though the rate of interest stipulated in the loan certificate was 12%, the firm used to pay altogether interest at 36% to 48% in all, which was held not a money circulation scheme. Further, the Supreme Court held that the materials did not indicate that the payment of interest to the depositors whether at the stipulated rate or at the enhanced rate is dependent on any element of chance.

25. Therefore, the two judgments relied upon by the learned counsel for the petitioners, are not on the point whether the so-called Multi-level Marketing would attract the provisions of the Prize Chits and Money Circulation (Banning) Act. Therefore, the argument of the learned counsel for the petitioner that the Prize Chits and Money Circulation Schemes (Banning) Act does not attract the scheme, is not correct. There is no decision by the Supreme Court on this issue.

26. As stated above, this scheme called Multi-level Marketing creates a chain of customers and the long and unbroken chain would ensure larger amount of quick or easy money. The shorter and missed links in the chain would result in earning lesser commission. Therefore, there should be unbroken chain or customers. Secondly, the person does not get the value of the money he pays; thirdly, the companies are collecting service charges as stated above in a sale of goods. No service charges can be collected while the goods are sold.

27. For all these reasons the scheme of so called Multi-level Marketing cannot be said not to violate the provisions of Sec.2(c) of the Act.

28. Apart from that this Multi-level Marketing results in exploitation of the personal influence of each and every distributor or his close relative. As stated already, a superior Officer or his ward when he involves in this Multi-level Marketing, the subordinates are forced to become members in the chain. Though it may not amount to violation of this Act, it would attract some other laws; it may result in undue influence, extraction, coercion, etc.

29. For the reasons stated above, the petitioners are not entitled for the declaration as prayed for. That apart, such a blanket and omnibus prayer that the scheme is not in contravention of the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 or any other law in force cannot be granted by any Court.

30. It is, indeed, appreciable that the Chief Secretary and the Director General of Police have stated that 'though there are no complaints received against the petitioners so far, if any complaints are received or if the activities of the company amounts to violation of any of the act, they would definitely take action against the petitioners'. That shows that they are alive .to the situation.

31. It is true that the petitioners are comparatively a small fish in the business of the so-called Multi-level Marketing. There are other comparatively bigger associations or institutions or companies which adopt similar schemes. It is for the Director General of police and other law enforcing authorities to have a watchful eye on all such activities and to take timely action as and when it is called for.

32. The grievance of the petitioners is that the petitioners are conducting conferences and lectures in order to propagate the scheme. But, they are under surveillance by the police. This intimidate people who come to attend their seminars and lectures; and this would amount to violation of the petitioner's fundamental rights under Articles 19(1) (a) and 19(1) (g) of the Constitution of India. This argument is not acceptable. It is true that they have the right to freedom of speech and expression and also to the freedom to carryon business. But, both the rights are subject to reasonable restrictions as contemplated and Articles 19(2) and 19(9). The right to freedom of speech is subject to reasonable restriction on the ground of 'public order' and the right to freedom to carryon business is subject to reasonable restriction in the interest of 'general public'. Therefore, when the police keeps watch over any seminars or lectures, it is in the interest of maintenance of public order and also it is with a view to protect the interest of general public. Therefore, such acts cannot be complained of by any person including the petitioners who conduct any seminar or lecture for promoting their business.

33. In this part of India, people are gullible and fall an easy prey to the tall promises made through the media. That was the reason why the lottery tickets were sold in large numbers in this State. Many companies want to exploit this attitude of people and float many schemes and lure the people to join the schemes. Only when they ultimately lose the money, they realise that they were misled; by that time it becomes too late. Thereafter, they approach the law enforcing authorities and question them how did they permit such schemes. That is the reason why the police keep a watch over such activities. The petitioner is not entitled for direction for prohibiting the authorities from keeping surveillance over any meeting. Sec.7 of the Act confers the right on the police officer to enter any premises, where he has got a reason to suspect that the premises are being used for purposes connected with the promotion or conduct of any prize chit or money circulation scheme in contravention of the provisions of the Act.
34. According to the Prize Chits and Money Circulation Schemes (Banning) Act, "Money Circulation Scheme" means -

any scheme, by whatever name called, -

(i) for making quick or easy money; or

(ii) for the receipt of any money or valuable thing as the consideration (or a promise to pay money), on any event or contingency relative to the enrolment of members into the scheme.

Thus the definition covers two aspects -

(i) A scheme for making quick or easy money;

(ii) for receipt or any money or a promise to pay money: on an event relative to the enrolment in the scheme.

It is applicable to both - the sponserer and the participants or subscribers.

35. In the present case, as seen from the materials placed, -

(i) The petitioner company gets an extra amount of Rs.3/- by rounding off [Rs.497 as Rs.500]. It also gets Rs.50/- as service charge, while selling the product. Thus, the company (petitioner) gets quick or easy money, as per the above definition. .

(ii) It enables the receipt of money (by way of commission) by the so-called distributor also on his enrolling new members.

36. The event is enrolment of new members; the commission received is relative to such enrolment of new members into the scheme. Therefore, the argument of the learned counsel for the petitioners that there is no promise of quick or easy money is not correct for the reasons stated above. Thus, the so-called Multi-.level Marketing, though called by a very attractive name, squarely falls within the definition of 'Money Circulation Scheme' under the Act. Hence, it is prohibited by the Act. It is for the law enforcing authorities to take appropriate action.

37. In the result, the writ petition is dismissed. No costs. Consequently, WPMP No.2741 of 2004 is dismissed.

7.1.2005