Tag Archives: Business Standard

A tighrope walk for Sebi

If news reports are right, the Securities and Exchange Board of India (Sebi) is coming full circle with (CIS) and is seeking to “relinquish” the statutory mandate to regulate such schemes.

 

It was only in 1995 that the term found its way into the Act through an amendment to the list of intermediaries that ought to be registered with to be able to carry on business in India. Then, too, had been a reluctant regulator. Schemes promising returns on the basis of plantations, animal farming, chain-marketing and the like mushroomed in the 1990s. The term “collective investment scheme” was not even defined in the Act. Therefore, despite the amendment to the Act, did not want to hold the baby.

 

Public interest litigation, a plethora of complaints and a lot of angst later, the term got defined for the first time through an amendment in the Act in 1999. also made regulations in 1999, which, if reduced to one sentence, would have read: “No one shall operate a collective investment scheme”. The terms on which one could legitimately register and operate a was akin to Christian states in the US stipulating norms for abortion agencies — keep the standards so rigid and tough that they pose an entry barrier and cannot be complied with. Not surprisingly, right since 1999, there has been only one reported registered in the history of

 

The problem with such an approach to regulation is fundamental — pretending that making it illegal to carry out an activity would put an end to it. The activity continued, the monies raised grew even faster, some of which are even feared to be from non-existent investors — read: money laundering schemes. An even more bizarre amendment sailed into the Act in 2013. The 1999 amendment had set out four ingredients to be met for any scheme or arrangement of affairs to be regarded as a — essentially, schemes entailing a contribution of funds for earning of profits, management of the funds pooled by someone on behalf of the contributors and the contributors not having day-to-day control over managing the pool. Now, in 2013, the law was amended to say that even if these ingredients were absent, if the corpus of any arrangement of affairs was of Rs 100 crore or more, it would be “deemed to be” a

 

This set the cat among the pigeons. Any and every pooling of funds that would have a corpus value of Rs 100 crore would be a CIS, which meant that a registration with would be necessary for the activity to be legitimate. A pooling of resources by neighbours owning apartments in an expensive city like Mumbai to rebuild and redevelop their building would arguably be a The provision of holiday schemes where the contribution by guests would give them the right to use a property from the pool of properties built or rented with the contributions would arguably be a Provision of valuables such as gold coins with contributions in instalments would arguably be a

 

None of these would involve issuing securities and therefore, none of these can ever comply with the regulations governing that had made in 1999. Therefore, all of it would be illegal. Those who cared for the law, shut down such activity or moulded them. Those who did not care, kept at it — eroding the majesty of the law even further by reason of formulation of law not properly thought through.
Meanwhile, with public furore over some that failed led to some judicial comments about sleeping on its job, which got reported in the media and then led to crack down by ordering that monies collected be refunded within a few weeks or months. Now, this would spur asset-liability mismatches further and lead to either a run on the schemes that could not be met, or worse, led to operators starting newer schemes underground to fund repayment of schemes ordered to be closed. In a nutshell, a royal mess is on the regulator’s hands.
It is in this context that reports of wanting to relinquish this statutory role is interesting. Around the time piloted legislative amendments to treat any corpus of Rs 100 crore or more as a CIS, it had a muscular tone about how anyone speaking about the need for a predictable framework for running a compliant could only have been aligned with the bad guys. Now, it seems, is conscious that pushing an entire industry underground is actually counterproductive and brings about worse outcomes. Whether it would at all be politically possible to amend the Act yet again to remove of this kind from Sebi’s ambit is doubtful. But one must assume that it the mind is set on an outcome, the government will find ways to get that done — whether through a Presidential Ordinance, a or blanket provisions in the Finance Act.
If pulls off this one, the would have come full circle back to the 1990s. Who then, would bell the cat?
This column was first published as Without Contempt in all editions of Business Standard edition dated May 5, 2017

What if Kashmir’s AFSPA was applied to India Inc

The folks in corporate India have strong views about their own perceptions of ‘ground realities’

Almost everyone in the Indian corporate world has a view on the ongoing tragedy in Kashmir. A view informed by the ruthlessness in punishing dissent, that is the norm in corporate politics. A war is being waged on social media, infected with the virus of videos extolling the virtues of uniformed Indian military men slapping and poking bleeding Kashmiri boys, forcing them to chant slogans against Pakistan, with greater threats leading to louder forced abusive slogans. “Ideal treatment for stone pelters,” said a friend in a WhatsApp group. A bunch of others chimed in, in agreement.

This column is not going to be about how those pelting stones are civilians in unrest, who could in fact turn to pelting grenades. Nor will this column purport to explain why atrocities on the Pundits inflicted in the 1990s cannot justify atrocities on kids in Kashmir today. For now, I am not even getting into the issue of some popular singer whose claim to fame is singing on television, abusing retired Indian military men who have actually served in war, for speaking up against military brutality on civilians.  

Since the folks in corporate India have strong views about their own perceptions of “ground realities” in Kashmir (it matters not if social media warriors had even considered volunteering for basic National Cadet Corps service as students), this column will simply seek to translate what living in Kashmir can feel like if the legal framework applicable there were to be made applicable to an Indian corporate.

Let’s take the simplest and the most obvious cause of state high-handedness in areas like Kashmir (as indeed large parts of the North East) and see how it would feel to work in corporate India if the same cause were replicated. Essentially, let’s adapt the law applicable in Kashmir to the law governing running business in corporate India. This is necessary since most people with the strongest views on Article 370, which reflects the contract by which Kashmir joined the Indian Union, have never read the Armed Forces (Jammu & Kashmir) Special Power Act, 1990 (the dreaded “AFSPA”), which governs life on the street in Kashmir.  

It is easy to read, however uneasy the reading can be for the reader. It has barely eight effective provisions. In a nutshell, any government officer can do anything with your life and property, and never be called to account. Forget having checks and balances in the form of tribunals such as the National Company Law Tribunal or the Securities Appellate Tribunal. Forget bringing errant public servants to book through anti-corruption measures in courts of law. Read on for what would govern life under AFSPA in the corporate or industrial world:

  
1. If the government is of the opinion that any industry poses danger that use of severe measures is necessary to prevent violations of law, the government may declare the whole or any part of such industry to be a “disturbed industry”.

2. Any government officer may, if he is of the opinion that it is necessary, fire upon or otherwise use force, even to the causing of death, against any person, who is acting in contravention of any law or order, do so in a disturbed industry.

3. Any government officer may, in a disturbed industry, destroy any place from which violation of law is likely to be made or attempted to be made.

4. Any government officer may arrest without warrant any person against whom a reasonable suspicion exists that he is about to commit an offence and may use such force as may be necessary to arrest.

5. Any government officer may enter and search, without warrant, any premises to effect such arrest or to recover any person believed to be wrongfully restrained or confined or any property reasonably suspected to be stolen property, and may for that purpose use such force as may be necessary, and seize any such property.

6. Any government officer may stop, search and seize any vehicle reasonably suspected to be carrying any person against whom a reasonable suspicion exists that he has committed or is about to commit an offence, and may, for that purpose, use such force as may be necessary to effect such stoppage, search or seizure.

7. Every person making a search under this Act shall have the power to break open the lock of any door, almirah, safe, box, cupboard, drawer, package or other thing, if the key is withheld.

8. Without approval of the government, no person who has used or claims to have used powers under this law can be prosecuted or sued.

Not too long ago, the Securities and Exchange Board of India Act was sought to be amended to permit search and seizures without the need for even a warrant. In fact, a Presidential Ordinance contained such provisions. A Parliamentary Standing Committee met various stakeholders and representatives of industry and rightly killed the provision although it was believed that “war like” powers were necessary to combat securities market abuse.  

The Finance Act, 2017, has indeed brought in a provision protecting the tax department from having to explain how it had “reason to believe” or “reason to suspect” that led to a search and seizure operation. When such powers begin to get mildly used, fellow Indians living in the corporate bubble will get a faint whiff of what life can be like when you run a grocery store in the streets of Kashmir or the North East. Until then, there will be no let up in the enthusiasm to wage war on social media against civilians being punished for protesting against excesses encouraged by incentives embedded in the legal policy governing these regions.

This column was published Without Contempt in the editions of Business Standard published on April 20, 2017  

It’s a tug-of-war out there

By Somasekhar Sundaresan
It is by far the boldest move in executive governments pushing the envelope in breaking the law with the very process of law-making. The current government has piloted the Finance Act, 2017, through to get substantial legal provisions passed without the scrutiny of the

 

Many appellate tribunals that hear appeals against orders by regulatory authorities have been wound up for being merged with other tribunals —essentially, changes in institutions that were set up in the first place, with the approval of both the and the Constitutional courts may be visited with challenges to the abuse.  But not much may happen there. The has an inbuilt check and balance in the office of the Speaker of the She has the last word on whether or not a proposed law is a Money Bill, that is, a law that deals with matters of finance and tax, as set out in the

 

The approach of the government is legally wrong. However, every wrong is not justiciable. If the set much store by the judgement of an occupant of high office, it was arguably intended that the occupant of that office must be trusted. If that trust is belied, it would only follow that we have a loophole in the that can only be corrected by a constitutional amendment.

 

It is equally true that courts have not always steered clear of every wrong that is not justiciable. Constitutional courts have happily legislated. Either entire legislation (for example, environmental charge for entry of vehicles into Delhi) including de facto contents of the (for example, the judges’ collegium for judicial appointments) have been created in the past by judge-made law. When facts are provocative enough, intervention may indeed follow.

 

In a challenge to the replacement of governors of states as political decisions, courts have ruled that no decision of the government, including a decision to replace a governor can be arbitrary, yet ruling that the decision cannot be interfered with. It is likely that the pending litigation over whether legislation that are nowhere near Money Bills can be passed by as if they were Money Bills, would meet the same fate.

This contrivance aimed at simply circumventing the has been resorted to in the past. The Foreign Exchange Management Act, 1999, had been passed by both Houses of as a non-criminal law to replace the dreaded criminal law contained in the Foreign Exchange Regulation Act, 1974. That was not a That had been a major milestone in India’s legislative and economic policy history. Two years ago, provisions criminalising exchange controls were brought into through a No consent of the was taken.

These infractions of law were not challenged since they were not politically correct for challenge. Now that a bigger gauntlet has been thrown, it is possible that some may challenge it.  The history of constitutional challenges to the creation of tribunals has itself had a chequered history at the hands of courts. The National Tax Tribunal could not be set up due to such a challenge.  The National Company Law Tribunal could indeed be set up although in its new form it is in conflict with earlier rulings of the Supreme Court rendered when dealing with earlier attempts to set up the Tribunal. There are as many views on interpreting the as there can be benches of the Supreme Court and of multiple high courts.

All of this is not to say that all the changes sought to be brought in are bad. There are some laudatory amendments — one is the retirement age of the presiding officer has been extended to 70 years. Some changes are horrible.  The tribunals listed in the Finance Act, 2017, are not the only ones whose has been disturbed. A provision entitling government to similarly merge other tribunals not named for now, by a simple executive fiat has also been passed as a part of the

 

The Finance Act, 2017, is a quiet power-grab in the conflict between arms of the state.  If the judiciary wrested control back by striking down the National Judicial Appointments Commission, the executive has sought to strike back by giving itself powers over vast areas of quasi-judicial territory.

This is the most vulnerable part of the Finance Act, 2017, since it could be struck down as being arbitrary as it is a matter of “excessive delegation” of powers by the legislature to the executive. A constitutional challenge to such delegation is not about whether it is a Even if it were to be regarded as a provision in a Money Bill, it would be liable to be attacked as an arbitrary delegation of power to the government.
A version of this post was published as my Without Contempt column in the Business Standard in its editions dated April 6, 2017

Good Politics is not the same Good Policy

Outcomes of elections cannot be a barometer of the wisdom of economic policy

By Somasekhar Sundaresan

An election result is upon   India’s most populous state and her neighbour have emphatically voted the party in power at the Centre into government. Two tiny states have returned fractured verdicts and coalition governments led by the party in power at the Centre have been installed.  The single-largest winner in these two states is having to sit in the   Another state elected the principal party to power.

The polls were seen as a referendum on whether demonetisation, announced in November, met with approval by the people of India. Shortcoming in psephology skills is now equated with shortcoming in appreciation of public policy. The outcome of the polls, it is widely believed — even among critics of now mired in serious self-doubt — underlines that was for the larger good and the common man could see what policy wonks failed to see.

Outcomes of elections cannot be a of the wisdom of economic policy. The merits of public policy choices are quite different from the merits of assessing the capacity to sell evidently unpopular choices at the hustings. The latter is reflective of political acumen. The former requires the capacity to take hard decisions for the right reasons. The inability to gauge the intensity of anger of the man on the street is not the same as the inability to think clearly about what is good policy.

inflicted serious hardship on the common man. The costs it imposed evidently outweigh the benefits — mind you, computation costs and benefits can itself be quite controversial. The courts had refrained from restraining the government although judges are said to have expressed fear of riots on the streets.  There were no serious riots despite acute hardship. The reasons that were said to have motivated the measure appear to have been belied — stashes of slush money in crisp newly printed Rs 2,000 notes are already being unearthed; in crisp Rs 2,000 notes are being apprehended; and most of the corrupt rich seem to have tided over the crisis with some bearable cost being borne.

did not hurt the electoral prospects to the extent it would rationally have. Nor for that matter have laws that imposed a near-100 per cent tax on income. If winning elections were a relevant of what constitutes good public policy, and the Congress’ consistent wins for decades would place all their measures in a great position — it is another matter that today they are being pilloried.  Despite (or perhaps, thanks to) ridiculous tax rates, black money got built up.  The narrative of electoral wins making policy immune from critique was a well-honed model.  leaders saw her as Durga, commentators said she was “the only one wearing the pants in the Cabinet” and yet, India kept slipping in governance, and institutions kept getting weakened to stay “committed” to her approach to policy.

Perhaps, politics’ dependence on cash led to materially impacting the outcome. Count that among the benefits of if it evenly impacted all in the fray. Perhaps, the choice of chief minister after the win is a pointer to what issues really mattered at the polls. Perhaps, was an electoral side-issue — a reflection of the disconnect between commentators in the cities and the realities on the ground.

None of this can dilute the need for a clear-headed empirical approach to policymaking, with costs and benefits being weighed and a cogent case for a policy intervention being necessary. In the and the UK, policy thinking is currently on the lines of having to remove more than one past regulatory measure if a new regulatory measure is sought to be introduced. Akin to “carbon offsets” where reduction in emissions of carbon dioxide or in one process is necessary to enable initiating new emissions elsewhere, regulatory offsets are part of current policy-thinking in other parts of the world. Computing of costs and benefits to show that costs that would get imposed by a proposed regulatory measure is not only counterbalanced by the benefits from that measure but are also compensated for by the removal of costs imposed under past regulatory measures, is a controversial but integral part of governance.

Brushing all policy arguments about aside with a people-have-spoken argument is a reminder of Nani Palkhivala’s favourite quip about how majority decisions need not be the right decisions. His favourite examples: Christ’s crucifixion, and of course, the quality of elected governments during most of his lifetime.

This column was published Without Contempt in the March 23, 2017 edition of Business Standard at: http://www.business-standard.com/article/opinion/don-t-mistake-good-psephology-for-good-policy-117032201432_1.html

 

No aadhar to impose Aadhar for kids meals

Corruption in the scheme may have nothing to do with fake children being shown to siphon out money

A new storm is brewing. After demonetisation, it is the backdoor enforcement of identification for children to qualify for midday meals. The move is threatening to take the shape of the next direct conflict between academic policy implementation and the practical problem of unintended consequences on the ground. Added to the mix is the evident violation of the Supreme Court’s orders that cannot be made a mandatory requirement for government welfare schemes.

While midday meals are the most emotive of the schemes to which the unique identification under has been made mandatory, this paper has reported that 14 similar notifications have been made under 11 schemes, including schemes involving access to primary and secondary education.  Interestingly, the news was broken not in the “mainstream” print media but by online paper Scroll.in.

Effective July 1, 2017, a without the ID would not be fed the given free in school.  “Individuals desirous of availing the benefits under the (midday meal) scheme offered at the schools are required to furnish proof of possession of number or undergo authentication,” reads the gazette notification. “An individual desirous of availing the benefit under the scheme offered at the schools, who does not possess an number or has not yet enrolled for shall have to apply for enrolment by 30th June, 2017.”

This is a disastrous approach.  Indeed, there will be arguments for it.  Some of the usual ones are about leakage of government welfare — small doles to the poor somehow make bigger news that large-scale subsidies and tax concessions that get routinely abused.  According to reports, at least 100.3 million elementary students from the first to eighth standards, studying in 1.15 million schools benefit from the scheme. The scheme also provides part-time employment to an estimated 2.53 million workers for implementation of the scheme.

Midday meals are provided to school children under the food security law, substantially using central government funds granted to state governments and then down to local municipal governments that run schools. The costs are shared broadly in a 60:40 ratio in most states and in the north-eastern states and in Himachal Pradesh, and in a 90:10 ratio. Central government funding in the last Budget for this is a mere Rs 10,000 crore, with a marginal increase of Rs 300 crore since the last Budget. The idea of a is to ensure basic nutrition to schoolchildren since it is under-nourishment that essentially leads to lack of absorption of education in formative years.

There is no credible and rigorous evidence of any material leakage under the scheme. Every scheme, public or private, will be gamed to see if benefits can be wrongly extracted. If the response to any leakage, real or potential, material or immaterial, is to indulge in carpet-bombing by threatening the very scheme, we will soon have another demonetisation-type problem on our hands. Crooks will find a way to get around the solution and many genuine and sincere beneficiaries could be put to avoidable hardship — akin to burning down a house to kill a few insects that have entered it. Also, akin to US President Donald Trump’s ban on entries from seven Islamic nations, which would have kept even US nationals and residents out of the US if they happened to be outside the country when the ban was sought to be imposed.

Worse, the has clearly prohibited the mandatory usage of the for government incentives except for specific schemes that the court permitted. In short, in this case, there is already a restraining order from the judiciary on such usage of   Yet, the government has brazened it out.  The ball will now be literally in the Last heard, lawyers appearing in the challenge to such use of have been pushing for an early hearing of the privacy concerns arising out of the implementation and the court has been struggling with bench strength issues to constitute a bench to hear the matter. However, the introduction of new mandatory requirements to quote could lead to contempt proceedings, too.

Indeed, there could emerge problems with implementing the schemes. For example, as some experts point out, corruption in the scheme may have nothing to do with fake children being shown to siphon out money. In fact, the leakage would be in terms of substandard food being given, or companies that make and sell pre-packed and processed food seeking to get their products approved as substitutes for midday meals (there have already been reported attempts of the government nearly approving biscuits in place of midday meals). Insisting on can never fix such leakages and corruption. Therefore, before doing something drastic such as asking children to go hungry if they do not have an card, there has to be an empirical basis to demonstrate that the proposed solution is necessary for a clearly-perceived and real problem.  Without a problem statement being defined, enforcing a good-to-have-and-feel-good “solution” would come quite close to declaring that 85 per cent of live currency stock would cease to be legal tender.

This column was published Without Contempt in the March 9, 2017 edition of Business Standard.

http://www.business-standard.com/article/opinion/is-there-a-case-for-linking-aadhaar-with-midday-meal-117030801232_1.html

 

Immediate challenges for new Sebi chairman

Within Sebi, the chairman should hold an umbrella for both young and old employees

By Somasekhar Sundaresan


Very soon, will take charge at the Securities and Exchange Board of India (Sebi) as the new chairman. The task requires calm reflection on the problems on hand, and a mind open to fresh ideas and innovative thinking. The capital markets regulator is at a crossroads.  Never in the regulator’s history has this role been more complex than it is now. Here is a brief heads-up with pointers to what needs immediate attention.
First, is in crying need of a peacetime general. The very assumption of this office can make some incumbents believe that they are now at war with the big bad world of securities markets. As an institution, there is excessive focus on regulation of market conduct and lesser emphasis on prudential regulation. (The is diametrically opposite in approach. Both need adjustment).
Never have Sebi’s statutory enforcement powers been more extreme.  Contrary to popular belief, is armed with far greater power to inflict serious economic injury than counterparts in the and the UK. needs to convince no judge before imposing serious restraints on economic activity. Routinely, this is done based on suspicion, leaving it to those affected to shoulder the burden of disproving the suspicion — somewhat like preventive detention. The check and balance is appellate review after has drawn blood. The onus is then on the person challenging Sebi’s conduct to show that it was wrong in taking action.
Sebi’s legislative powers, too, are near absolute. The Act grants wide discretion to to make subordinate legislation. Prior consultation with the market, a reasonable articulation of the link between the proposed solution and a problem statement, and a system of review of regulations to see if they have met the articulated purpose are substantially missing. There is indeed some form of selective public consultation but neither a statement of what problems are being sought to be solved nor a timely review of whether the solutions have indeed worked is mandated either by law or by a policy approach.
As a result, the fear of the regulator is widespread. With serious powers at hand, it takes maturity to structure the role into one of maintaining peace rather than of being ever ready to declare war. This is an attitudinal change that is necessary. Hundreds of inputs about the market being full of crooks necessitating a crackdown and severe intervention would be received. It would be easy to get carried away. Headlines screaming about the absence of powers or being toothless despite having powers would further an urge to lash out without thought. Eschewing a carpet-bombing approach and sifting the grain from the chaff are what the job at the top entails.
Second, the primary market regulation needs deep review and research as to what can be done better. The size of funds that get raised can never be a barometer of success for how this segment of the market regulation is performing. Securities offering documents are extraordinarily bulky, barely tell a story in clear terms and have substantially been reduced to bulky formal compliance rather than resulting in substantive disclosures of high quality. Cleaning up the policy space in this area of the market is a critical immediate objective to which the new chairman must apply himself.
Third, a review is overdue in the M&A space. It has been nearly six years since the “new” takeover regulations came into effect. Today, India is a unique jurisdiction where one body of law (takeover regulations) forces an acquirer to potentially cross the maximum limit of substantial shareholding permitted in a listed company while another body of law (listing conditions) forces the shareholding back down to compliance and a third body of law (delisting regulations) would need to be complied with if the intent was always to maximise shareholding and delist the company. Transaction costs mount, transaction timelines prolong unreasonably, defeating the very objective of mandating an exit opportunity by making an open offer for public shareholders to tender their shares.
Finally, Tyagi must give special attention to human resources and matters within the organisation. Too many junior officers have been tempted to be indecisive or to take wrong but safe decisions thanks to vigilance probes and hounding of honest bona fide decisions.   is now well over 25 years old, and a full cadre of loyal employees is available at hand, despite the organisation having been the poaching ground for the private sector. Enthusing smart bright talent inside and leading them from the front to shield them from unfair targeting in criminal anti-corruption probes have to become a priority. Alignment and fitment of senior employees upon merger of the Forward Markets Commission into remains an open area of work. To begin with, Tyagi must ignore his own HR problem — his tenure was shrunk from five years to three even before he could take charge. As a seasoned bureaucrat, he would know that this the way of the government systems; there is nothing personal in it. But many in the organisation may not be seasoned in the ways of the government but would be highly talented in handling their regulatory work.  Holding an umbrella for them and bringing in respect for punctuality and professionalism and rewarding them for it would help him create a legacy during his tenure.
This was published as my column titled Without Contempt in the Business Standard edition dated February 23, 2017

No Relief without Interim Relief

By Somasekhar Sundaresan

It is raining interventions from constitutional courts across nations. A court in the United States passed a temporary restraint order against newly elected President Donald Trump’s executive order to abruptly stop the entry of individuals from seven Muslim-majority nations from entering the country. The of the United Kingdom has ruled that parliament cannot abdicate its role in handling through just a referendum. A high court in Kenya has intervened to strike down laws that provide for criminal action against defamation.

Of course, we too have a robust and vigilant culture of constitutional review by the higher judiciary where executive actions are challenged. Not too long ago, the struck down of the Information Technology Act, which it found would curb free speech.

However, as a practical matter, the record can get patchy in terms of granting urgent temporary restraints on executive action or even legislative action. In other words, say, a new law has been passed by Parliament, and its constitutional validity is challenged. It would be a high expectation that the operation of the law would be restrained as an urgent, interim measure while the court considers full-blown proceedings on all aspects of its merits. Indeed, such stay orders do get issued. The point is that they can be really tough to get.

The state gets away with a lot — particularly in “heavy matters” where terms such as “national security”, “interests of investors”, “public interest”, “integrity of securities markets” can be invoked, and a law officer representing the government is willing to raise the decibel level about tragic outcomes if the judiciary were to stop a decision by the government. Eventually, the courts may rule on the constitutional validity of a law (it is tougher if the law has been in play for a while, as compared with a newly introduced amendment) and hold that the law is unconstitutional.  Likewise, without granting any temporary restraint, courts could eventually hold an executive decision to be unconstitutional. At times, this could lead to a situation of “operation successful; patient dead” (for example, Maneka Gandhi’s challenge to her passport being taken away).

Judge James Robart, the US District judge who stayed nationwide the enforcement of Trump’s executive order (incidentally, carrying a grandiose title: “Protecting the Nation from Foreign Terrorist Entry into the United States”), says it well in his concluding paragraph.  The entire portion is worthy of being reproduced:

Fundamental to the work of this court is a vigilant recognition that it is but one of the three equal branches of our federal government. The work of the court is not to create policy or judge the wisdom of any particular policy…  That is the work of the legislative and executive branches and of the citizens of this country who ultimately exercise democratic control over these branches.  The work of the judiciary, and this court, is limited to ensuring that the actions taken by the other two branches comport with our country’s laws, and more importantly, our Constitution. The narrow question the court is asked to consider today is whether it is appropriate to enter a (temporary restraining order) against certain actions taken by the executive in the context of this specific lawsuit. Although the question is narrow, the court is mindful of the considerable impact its order may have on the parties before it, the executive branch of our government, and the country’s citizens and residents. The court concludes that the circumstances brought before it today are such that it must intervene to fulfil its constitutional role in our tripart government.

The states of Washington and Minnesota had challenged Trump’s order. Trump had won an election on the promise of bringing in such restrictions on the entry of Muslims and also refugees. But if that popular measure is not in line with the Constitution, the court would intervene. Perhaps, another judge may have had a different view.  Indeed, one could argue that there are as many courts as there are benches of the court. So far, none has in the USA.

Shift to India. The law enabling the creation of the Aadhaar system was pushed through by labelling it a money bill to avoid a discussion on the floor of the Rajya Sabha. The Speaker of the Lok Sabha has certified it to be a money bill (the Rajya Sabha has next to no say in draft laws that are money bills). A constitutional challenge is pending in the and one of the issues to be considered is whether the “final” nature of a Speaker’s certification can at all be questioned. We will all know eventually, many years down the line, but Aadhaar would become a way of life by then.

Same is the story with Courts were indeed approached the morning after the government declared 85 per cent of the currency in circulation to be illegal — quite similar to an abrupt and arbitrary stoppage of people from select countries entering the US regardless of whether they were US residents. No court intervened with a stay order. If the executive branch were to say that the move is aimed at fighting terrorists using counterfeit money, there is not much left to expect. We would end up eventually with guidelines on how the government and the Reserve Bank of India must conduct themselves. And when that happens, courts would in fact be dispensing wisdom on executive action — exactly what Judge Robart warns against.

 

This piece was published as my column titled Without Contempt in the February 9, 2017 edition of Business Standard.