Subversion of law in law-making

The abuse of law in the very making of law may sound deeply ironical. Yet, it is surprisingly common

Subversion of the law in legislation is common. Parliamentary processes are subverted by lawmakers in Parliament, occupants of high office subvert the faith reposed in them by the Constitution, Parliament is subverted by governments, and law made by Parliament is subverted by government departments and regulators while writing subordinate law. This is also correspondingly true of law-making in the states.

Let’s start at the bottom. Regulators are routinely given powers by the legislature to write regulations to “carry out the provisions of” the main law. Since excessive delegation could be struck down as being arbitrary and unconstitutional, the laws also set out some process requirements for writing subordinate law. For example, the Securities Contracts (Regulation) Act imposes a statutory obligation to conduct public consultation on draft amendments to a stock exchange’s bye-laws followed by the formal amendments taking effect when notified in the official gazette. However, routinely, substantive amendments to the bye-laws have been systematically implemented by the capital market regulator through “circulars”, an instrument not even recognised under the law. For form’s sake, every such circular ends with an instruction to stock exchanges to amend their bye-laws but the substantive content is given immediate effect. Often, even the formality of the actual amendment to the bye-law is not implemented but the “law” created through the circulars gets enforced.

Government agencies are notoriously unmindful of the law under which they write rules. They also issue “advisories” and “guidelines”. Unless the rules, advisories or guidelines are challenged through a writ petition and the challenge is upheld, these instruments, however illegal, would operate as “law” and govern the lives of society. Usually such subversions are not challenged unless they cause material hurt. Typically, one would chicken out before the State unless a fight is inevitable. A simple recent example is the successful challenge to the Food Safety and Standards Authority of India’s advisory imposing an obligation to get food products approved before launch.

Moving up the food chain, the subversions played out in Parliament and State Legislatures are of a higher order. Members of the Rajya Sabha have been known to abuse the conduct of proceedings to stall the government’s attempts to pass legislation. To beat this abuse, the government has been merrily labelling all sorts of draft law as “money bills” (draft law governing taxation measures), which need approval of just the Lok Sabha. The principle is that the people directly vote MPs to the Lok Sabha, delegating to them the power to deal with their money. All other laws need approval of both Houses of Parliament. As a check and balance, the Constitution relies on an occupant of high office, the Speaker of the Lok Sabha, to conclusively certify the draft law as a “money bill”. The Aadhaar Act, which is nothing but legislation that gives statutory status to the Unique Identification Authority of India (just like any law that would set up any other government agency like say, the insurance regulator or the Competition Commission of India) was classified by the government as a “money bill” and happily endorsed by the Speaker, enabling circumvention of the Rajya Sabha.

An abuse to beat an abuse is the order of the day. While this may sound fair to some, it exonerates the first abuse that began the trading of abusive conduct, in the eyes of others. The effects can be disastrous. The Foreign Exchange Management Act, brought in with the specific objective to de-criminalise violation of exchange controls, has been made a criminal law again with an amendment that was not even taken to the Rajya Sabha since the amendment was tucked into a money bill. In other words, a law passed by both Houses of Parliament can get amended solely by the Lok Sabha.

Whether the Speaker’s certification of a money bill can be called into question in the teeth of an explicit bar in the Constitution is now under litigation in the Supreme Court. Truly ironical, since the Supreme Court was party to judicial imposition of the “environment compensation charge”, a fiscal measure that ought to have been done through only a money bill. The charge, applicable on entry of vehicles into Delhi, is nothing but an “entry tax” and if not, a “cess” — something the Constitution reserves for members of law-making bodies directly elected by the people. The courts first imposed the tax and the Delhi government legislated later. Deepening the irony is the fact that a nine-judge bench heard detailed arguments on a constitutional challenge to imposition of entry tax by various states on the ground that such tax violated the constitutionally guaranteed freedom of trade, commerce and intercourse within India.

An abuse to beat an abuse in law-making has a rich history. Prior to the newly elected National Democratic Alliance (NDA) government, the United Progressive Alliance government had felt cornered by the parliamentary standing committee, which was simply sitting on its review of amendments proposed to the Sebi Act. The government used, for the third time in a row, its power to promulgate a presidential ordinance. Since it would fall foul of the analysis in a celebrated Supreme Court judgment on the use of ordinances, the government simply tucked in a single new provision in the third version, to be able to claim that the third ordinance was not a third promulgation of the same ordinance. The NDA government took the cue. Amendments to the land acquisition law were effected thrice through an ordinance.

With Lokayukta (ombudsman) laws, some state legislatures have been cleverer than tax-structuring practitioners who are criticised. Where the law requires a due process to appoint or sack the ombudsman, they would repeal the law itself with a simple majority, or worse, through an ordinance. The office of the ombudsman or the provisions that govern appointments would vanish. New legislation would follow under which an incumbent of the government’s choice could get appointed.

When law-making institutions violate law when making law, they set the tone for the kind of conduct that is acceptable from society. The devil does quote the scripture.

This piece was published in the column titled Without Contempt in the Business Standard edition dated October 25, 2016

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s