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India Legal 15 April 2019

An analysis of whether the nation’s key environmental watchdog is losing its teeth to violators who flout its rulings with apparent impunity

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India Legal 15 April 2019

  1. 1. NDIA EGALL STORIES THAT COUNT ` 100 I April 15, 2019 Ananalysisofwhetherthenation’skeyenvironmentalwatchdogislosingitsteethto violatorswhofloutitsrulingswithapparentimpunity A l f h h h ’ k l hd HASITBECOMEA PAPERTIGER? NATIONALGREENTRIBUNAL GST: Evasion Crackdown Strip mining in Jharkhand Prof Upendra Baxi responds to Prof NR Madhava Menon on Constitutional Morality
  2. 2. Catch Us Every Saturday at 8 pm and Sunday at 2 pm
  3. 3. rarely read party election manifestos. Not because I don’t want to, but because after the first two paras they put you to sleep. They are repetitive, non-specific, boring, prolix and lack verisimilitude. Hence, y-a-w-n. But the Congress party election 2019 manifesto titled “Congress Will Deliver” actually woke me up. Mainly because it is rooted in current reality and presents a road map from which all political groupings in this country could benefit. Forget whether or not the Congress will return to power and implement its promises. What is important is that its think tank has produced a blueprint for constitutional, economic, political, administrative and social reform as I have never seen before. It was as if India’s Founding Fathers, having watched the country evolve since 1947, had gathered once again in a Constituent Assembly, and made experience-based recommendations for changes to keep pace with emerging needs and fix past errors of omission and commission commit- ted against the idea of India by all previous gov- ernments which ruled from Delhi. It is a transformative document which does a remarkable balancing act of promoting greater State involvement in alleviating poverty, providing jobs and education, and enhancing welfare schemes while simultaneously encouraging more decentralisation, individual liberties, transparen- cy, federalism and freedom from government meddling in private lives and entrepreneurship. Encompassing all aspects of Indian life, it has brought the national debate back to the grassroots business of fixing your country rather than fixing your enemies. It has provoked fierce condemnation from Congress’s political rivals who have called it “a pack of lies”, “dangerously subversive” and even a blueprint for the “Balkanisation of India”. It has, nonetheless, given the Congress a new liberal identity of its own after a long period of waffling and soul-searching. The document neither pulls punches, nor does it equivocate. Significantly, on economic matters, it makes a compelling break with the past in advocating a special budget aimed at the agricultural sector much in the way that the Railways has a budget of their own. Some of the most eye-catching promises that make this a manifesto with a difference include: “Congress will guarantee artistic freedom. Artists and craftsmen will enjoy the freedom to express their views in any form without fear of censorship or retribution. Attempts by vigilante groups to censor or intimidate artists will be viewed seriously and action against them will be taken according to the law.” “Appointments to the Lokpal will be made in accordance with the Lokpal and Lokayuktas Act, 2013. The Leader of the Opposition in the Lok Sabha and, in the absence of such a leader, the leader of the largest Opposition Party will be a full-fledged member of the selection committee.” “Congress promises to take strong action with respect to crimes against women, Scheduled Castes, Scheduled Tribes and minorities. The law will be applied on the perpetrators without fear or favour. They will not be allowed to walk on the streets with a sense of impunity.” “Congress has stood witness to the develop- ments in Jammu & Kashmir since the Instrument of Accession was signed on 26 October 1947. Congress affirms that the whole of Jammu & Kashmir is part of India. We also acknowledge the unique history of the State and the unique cir- cumstances under which the State acceded to India that led to the inclusion of Article 370 in the Constitution of India. Nothing will be done or allowed to change the Constitutional position.” See what I mean? For readers of our magazine, I will quote from sections concerning reforms in the judiciary as well as the legal and law and order machinery: Congress promises that the independence and integrity of the judiciary will be maintained and protected at all costs. Congress will introduce a Bill to amend the Constitution to make the FINALLY, A NEW IDENTITY Inderjit Badhwar Letter from the Editor I TheCongress’s thinktankinits 55-pagemanifesto hasproduceda blueprintfor constitutional,eco- nomic,political, administrativeand socialreformasI haveneverseen before.Itisatrans- formativedocument encompassingall aspectsofIndian life.Ithasbrought thenationaldebate backtothe grassrootsbusiness offixingyour countryratherthan fixingyourenemies. 4 April 15, 2019
  4. 4. | INDIA LEGAL | April 15, 2019 5 Supreme Court a Constitutional Court that will hear and decide cases involving the interpretation of the Constitution and other cases of legal signifi- cance or national importance. Congress will introduce a Bill to amend the Constitution to establish a Court of Appeal bet- ween the High Courts and the Supreme Court, to hear appeals from judgments and orders of High Courts. The Court of Appeal will sit in multiple Benches of 3 judges each in 6 locations. Enhance representation at all levels of the judici- ary for women, SC, ST, OBC, minorities and other under-represented sections of society. We will allo- cate sufficient funds annually to provide the neces- sary infrastructure for the judiciary. Congress promises to fix the retirement age of judges of High Courts and the Supreme Court at 65 years. The retirement age for judicial members in Commissions and Tribunals shall also be 65 years. This will prevent post-retirement assign- ments for serving judges and allow more opportu- nities for qualified persons to serve as judges or judicial members. Congress will work with the judiciary to improve the administration of courts by introducing mod- ern technology and appointing professionals for court and roster management. We will encourage the judiciary at all levels to adopt technological tools to track cases and expe- dite the hearing and decisions on cases. Learned, independent and upright judges are the core of the judiciary. Congress promises to estab- lish a National Judicial Commission (NJC) that will be responsible for selection of judges for app- ointment to High Courts and the Supreme Court. The NJC will be comprised of judges, jurists and parliamentarians and will be serviced by a secre- tariat. Names of suitable candidates will be placed in the public domain and the reasons for selection will be published to ensure that the entire process is transparent. Once the new system is in place, we will endeavour to fill every vacancy in the High Courts or Supreme Court within 2 months. Congress will establish, by law, an independent Judicial Complaints Commission to investigate complaints of misconduct against judges and rec- ommend suitable action to Parliament. Freedom is the hallmark of our open and demo- cratic Republic. The purpose of law is regulation in order to strengthen freedom. Laws must be just and reasonable and reflect our Constitutional val- ues. Congress believes that we are an over-legislat- ed and over-regulated country. Laws, rules and regulations have proliferated and restricted free- doms. Consequently, there are severe restrictions on innovation, enterprise and experimentation, and economic growth has suffered. Congress will initiate a total and comprehensive review of all laws, rules and regulations to: a. Repeal instruments that are outdated or unjust A NEW IDENTITY Congress President Rahul Gandhi with UPA Chairperson Sonia Gandhi, former Prime Minister Manmohan Singh and other senior party leaders releasing the manifesto for the Lok Sabha polls 2019 at the AICC headquarters in New Delhi Photos: UNI
  5. 5. 6 April 15, 2019 or unreasonably restrict the freedoms of the people; b. Amend instruments to bring them in accord with the constitutional values of a democ- racy; and c. Codify and reduce the number of instruments that must be complied with by a citizen. Specifically, Congress promises to: a. Decrimi- nalise laws that are essentially directed against civil violations and can be subjected to civil penal- ties; b. Omit Section 499 of the Indian Penal Code and make “defamation” a civil offence; c.. Omit Section 124A of the Indian Penal Code (that defines the offence of “sedition”) that has been misused and, in any event, has become redundant because of subsequent laws; d. Amend the laws that allow for detention without trial in order to bring them in accord with the spirit, and not just the letter, of the Constitution as well as Interna- tional Human Rights Conventions; e. Pass a law titled the Prevention of Torture Act to prohibit the use of third-degree methods during custody or interrogation and punish cases of torture, brutali- ty or other police excesses. Amend the Armed Forces (Special Powers) Act, 1958 in order to strike a balance between the powers of security forces and the human rights of citizens and to remove immunity for enforced dis- appearance, sexual violence and torture. Amend the laws to declare that every investiga- tion agency that has the power to search, seize, attach, summon, interrogate and arrest will be subject to the restrictions imposed on the police by the Constitution, the Code of Criminal Procedure and the Indian Evidence Act. Amend the Code of Criminal Procedure and related laws to affirm the principle that “bail is the rule and jail is the exception”. At the administrative level, Congress promises to: a. Release immediately all remand and under trial prisoners facing charges punishable with imprisonment of 3 years or less who have spent 3 months in prison; b. Release immediately all remand and under trial prisoners facing charges punishable with imprisonment of 3 to 7 years who have spent 6 months in prison; c. Institute com- prehensive prison reforms recognising the princi- ple that prisoners enjoy human and legal rights and that prisons are institutions of correction. Congress will initiate a comprehensive review of all laws, rules and regulations to repeal instru- ments that are outdated or unjust or unreasonably restrict the freedoms of the people. The greatest challenge to free and fair elections is the Election Commission’s inability to prevent the use of black money in election campaigns and the use of inducements to influence voters. We will take steps to curb and eliminate this menace. We will scrap the opaque Electoral Bond Scheme that was designed to favour the ruling party. Congress promises to set up a National Election Fund to which any person may make a contribu- tion. Funds will be allocated at the time of elec- tions to recognised political parties in accordance with criteria laid down by law. Congress will ensure that EVMs and VVPATs are tamper-proof. During counting, the count in at least 50 percent of the EVMs will be matched against the physical count of the voting slips in the corresponding VVPATs. We will allocate substantially more free airtime on All India Radio and Doordarshan at the time of elections to recognised political parties in FREE AND FAIR (Right) In its manifesto, the Congress has promised that EVMs and VVPATs will be tamper-proof; (below) amending the AFSPA is also one of its goals if voted to power Letter from the Editor
  6. 6. | INDIA LEGAL | April 15, 2019 7 TheCongress wantstomakethe SupremeCourta Constitutional Court,establisha CourtofAppeal, fixtheretirement ageofjudges, improvejudicial infrastructureand establisha NationalJudicial Commissionfor judges’ appointment. accordance with criteria laid down by law. “Police” and “Law & Order” are state subjects. Congress promises to consult state governments and reach a consensus on police reforms directed by the Supreme Court in the Prakash Singh case. Based on the consensus, Congress will pass a Model Police Act that states will be advised to adopt and enact in the state legislatures. The objectives of the Model Police Act will be to make the police forces modern, technology-ena- bled, people-friendly and upholders of human rights and legal rights. Provisions will be made in the Model Police Act to: a. Make the state police force accountable to an independent Police Accountability Commission as well as to give an annual report to the state legislature. Decentralise the police force in the state and involve the community in the oversight of the police force. Cause investigations into cases of communal riots, lynchings and gang rapes by a special wing of the state police under the direct command of the state headquarters of the police. Congress promises to work with state govern- ments to augment the size of their police forces, to fill current vacancies within 18 months and to lay down a schedule for annual recruitment, taking into account anticipated vacancies. We will work with state governments to ensure that their police forces reflect the diversity of the population of the state and gives greater represen- tation to under-represented sections. We will ensure that state police forces reserve 33 percent of all vacancies in direct recruitment and promotion for women constables and officers. In recent times, sections of the media have abused or surrendered their freedom. Never- theless, we believe that self-regulation is the best way to correct the abuse of media freedom. Congress promises to amend the Press Council of India Act, 1978 to strengthen the system of self- regulation, protect the freedom of journalists, uphold editorial independence and guard against government interference. Congress will amend the Press Council of India Act to empower the Council to deal with the men- ace of fake news and paid news. We will work with the Press Council of India and associations of newspapers and media to formulate and enforce a Code of Conduct on reporting in situations of nat- ural disaster, communal conflict, riots, terrorist attacks and war in order to ensure a balance between the need to inform, need for restraint, maintenance of law and order and interest of national security. Congress will pass a law to curb monopolies in the media, cross-ownership of different segments of the media and control of the media by other business organisations. Congress will refer cases of suspected monopolies to the Competition Commission of India. Congress promises to pass a law to preserve the freedom of the Internet and to prevent arbitrary and frequent shutdowns of the Internet. We will work with state governments to formulate rules to require the police to extend protection to journal- ists working in conflict areas or investigating mat- ters of public interest and to journalists whose lives are threatened or otherwise in danger. Congress promises to amend the Cinematograph Act, 1927 to restrict censorship of films on grounds of national security and obscenity. We will direct the Central Board of Film Certification to certify films according to transparent and reason- able criteria. All in all, a breath of fresh air. A 55-page document, aesthetically designed and presented. Worth a read, if only to know what’s wrong with the country. Twitter: @indialegalmedia Website: Contact: Bhavana Gaur
  7. 7. ContentsVOLUME XII ISSUE22 APRIL15,2019 OWNED BY E. N. COMMUNICATIONS PVT. LTD. A -9, Sector-68, Gautam Buddh Nagar, NOIDA (U.P.) - 201309 Phone: +9 1-0120-2471400- 6127900 ; Fax: + 91- 0120-2471411 e-mail: website: MUMBAI: Arshie Complex, B-3 & B4, Yari Road, Versova, Andheri, Mumbai-400058 RANCHI: House No. 130/C, Vidyalaya Marg, Ashoknagar, Ranchi-834002. LUCKNOW: First floor, 21/32, A, West View, Tilak Marg, Hazratganj, Lucknow-226001. PATNA: Sukh Vihar Apartment, West Boring Canal Road, New Punaichak, Opposite Lalita Hotel, Patna-800023. ALLAHABAD: Leader Press, 9-A, Edmonston Road, Civil Lines, Allahabad-211 001. Editor Inderjit Badhwar Senior Managing Editor Dilip Bobb Deputy Managing Editor Shobha John Executive Editor Ashok Damodaran Contributing Editor Ramesh Menon Deputy Editor Prabir Biswas Senior Writer Vrinda Agarwal Art Director Anthony Lawrence Deputy Art Editor Amitava Sen Senior Visualiser Rajender Kumar Photographers Anil Shakya, Bhavana Gaur Photo Researcher/ Kh Manglembi Devi News Coordinator Production Pawan Kumar CFO Anand Raj Singh Sales & Marketing Tim Vaughan, K L Satish Rao, James Richard, Nimish Bhattacharya, Misa Adagini Circulation Team Mobile No: 8377009652, Landline No: 0120-612-7900 email: PublishedbyProfBaldevRajGuptaonbehalfofENCommunicationsPvtLtd andprintedatAcmeTradexIndiaPvt.Ltd.(UnitPrintingPress),B-70,Sector-80, PhaseII,Noida-201305(U.P.). Allrightsreserved.Reproductionortranslationinany languageinwholeorinpartwithoutpermissionisprohibited.Requestsfor permissionshouldbedirectedtoENCommunicationsPvtLtd.Opinionsof writersinthemagazinearenotnecessarilyendorsedby ENCommunicationsPvtLtd.ThePublisherassumesnoresponsibilityforthe returnofunsolicitedmaterialorformateriallostordamagedintransit. AllcorrespondenceshouldbeaddressedtoENCommunicationsPvtLtd. Senior Content Writer Punit Mishra (Web) 8 April 15, 2019 14A Paper Tiger? Though the National Green Tribunal has shown the way in environmental jurisprudence, it has lost its teeth as its rulings are either overruled by the apex court or flouted by hardened violators LEAD 19Nothing Legal About It A cultural event organised by the Supreme Court Bar Association on the court premises gave a chance to hardworking lawyers to showcase their other talents SUPREMECOURT 20No Parity Here Two leaders from Gujarat who sought relief from the Supreme Court regarding their disqualification from contesting the Lok Sabha polls were left with different results
  8. 8. Regulatory Capture The NDA government’s move to bring the Chief Information Commissioner and Information Commissioners directly under the disciplinary con- trol of babus is a serious attack on the independ- ence of the Commission 28 | INDIA LEGAL | April 15, 2019 9 Benevolent Sharia REGULARS Followuson Twitter:@indialegalmedia Cover Design: ANTHONY LAWRENCE Cover Photo: UNI Ringside .........................10 Courts.............................11 Is That Legal...................12 Media Watch ..................43 Satire ..............................50 40 Brunei’s decision to implement strict penalties like amputation of limbs for theft and stoning to death for adultery and homosexuality has raised hackles around the world MYSPACE Plugging the Loopholes 37 To check tax evasion, several changes have been made in the E-Way bill system ranging from auto-calculation of distance for goods movement to barring generation of multiple bills based on one invoice 48 Drowning in Trouble The Supreme Court has pulled up the Kerala State Tourism Development Corporation for deficiency of services leading to the death of a guest in a hotel in Kovalam 13 years ago “No Entry” in Adjudication? Prof NR Madhava Menon’s article gave currency to the idea that constitutional morality as a ground for invalidation is almost new. But that is not so as it is embedded in the Preamble and is different from public morality and even judicial morality, says Prof Upendra Baxi 24 The Flying Coffin Syndrome Innumerable crashes of IAF jets are a testimony to India’s poor indigenisation, precarious spare parts record and lack of political will 32 Get a Pie in Commercial Space In a major step towards financial reform, India’s first Real Estate Investment Trust will enable investors to own a share in realty projects and bring transparency and liquidity to the sector 34 ECONOMY COLUMN GST Cast It Aside In a welcome step, the Punjab and Haryana High Court has directed governments in the two states and Chandigarh to refrain from mentioning the caste in police and judicial proceedings 22 COURTS GLOBALTRENDS Give Them a Chance 44 Following a petition in the Delhi High Court, the Medical Council of India has said that those with over 80 percent disability wouldn’t be barred from PG courses HEALTH Vitriol in the Valley 46 NC Vice-president Omar Abdullah’s statement that his party would strive to restore the terms of accession of J&K has led to sharp reactions STATES
  9. 9. 10 April 15, 2019 “ RINGSIDE “In our conception of Indian nationalism, we have never regar- ded those who dis- agree with us politi- cally as anti-national. The party has been committed to free- dom of choice of every citizen....” —Veteran BJP leader LK Advani in his blog “If someone says that the Indian Army is Modi’s army, then he is not only wrong but also a traitor.... India’s Army belongs to the country, it does not belong to a political party.” —Union Minister of State General (retd) VK Singh on UP CM Yogi Adityanath's comment that the Indian Army is “Modiji ki Sena” “Maybe somewhere in the pursuit of win- ning we forget how much it means to be loved.... I want grateful for receiving your immense love and support. It soothed me in my process of healing....” —Bollywood actor Irrfan Khan, on returning to India after being treated for cancer, to his fans, on Twitter “I could have consid- ered Amritsar. But now it is gone. I was thinking of Chandi- garh...People in the villages in Chandi- garh used to tell me they had not seen any leader there. Had they given me the ticket, I would have won....” —Navjot Kaur, the wife of Navjot Singh Sidhu “Why question only Dalit leaders’ statues and not the ones erected by the Congress and the BJP using public money.” —BSP chief Mayawati in her affidavit before the SC on statues of BSP leaders and ele- phants erected during her tenure as UP CM “I know that the CPM and Congress have been locked in a fight in Kerala, and this fight will go on.... I understand that CPM has to fight me. But I am not going to say a word against the CPM. I am here to send the message of unity and the message that South India is important....” —Congress President Rahul Gandhi after filing his nomina- tion from Wayanad, Kerala, for the Lok Sabha polls 2019 “You worry about Delhi first and then turn your eyes on Bengal. I am not Modi, I don’t tell lies. The EC has said that no party can refer to our military while campaigning...How did the PM do it?... —West Bengal CM Mamata Banerjee on PM Modi referring to the Balakot air strike in his election rallies “People don’t want me to resign and I want to stay in the Aam Aadmi Party. But I...want to stay with respect by ensuring internal democracy of the party. Don’t insult those who have voted for me by...asking for resignation.” —Disgruntled Aam Aadmi Party (AAP) MLA Alka Lamba Anthony Lawrence
  10. 10. Courts | INDIA LEGAL | April 15, 2019 11 Twitter: @indialegalmedia Website: Contact: —Compiled by India Legal Team Madras HC pushes for ban on TikTok ASupreme Court bench of Justices RF Nariman and Vineet Saran struck down the Reserve Bank of India’s February 12, 2018, circular by which the central bank had promulgated a revised framework for resolution of stressed assets. The bench held the circular ultra vires of Section 35AA of the Banking Regulation Act, 1949, and accepted the contention that the RBI could direct initiation of insolvency under the Insolvency and Bankruptcy Code, 2016, only with the authorisation of the centre and also only in “specific cases of resolution of non- performing assets” and not generally across the board. It may be recalled that the February 12, 2018, circular directed banks to resolve debts over `2,000 crore on or after March 1, 2018, within 180 days, fail- ing which resolution proceedings should be initiated. It also mandated banks to disclose defaults even if interest repayment was overdue by one day. Attorney General KK Venugopal told a five- judge bench of the Supreme Court that information on the elevation and non-eleva- tion of judges should not be made public under the Right to Information (RTI) Act as it would “open a Pandora’s box” and do “great damage to the judiciary”. Venugopal added that if such informa- tion is made public, the judge under consideration would become the target of adverse remarks, his inde- pendence would be affected and the public would lose faith in him. He, however, argued in favour of requiring judges to disclose informa- tion about their assets. The case in question in- volved an appeal against a 2010 Delhi High Court judg- ment which held that the chief justice of India’s office is a “public authority” and thus falls under the ambit of the RTI Act. The apex court has reserved its judgment in the matter. While hearing a petition which sought a ban on popular Chin- ese video app TikTok, the Madras High Court asked the centre to pro- hibit downloading of the app and restrain media houses from tele- casting videos made using the app. The Court said the app was “enco- uraging pornography” and that chil- dren who were using it were vulner- able to sexual abuse. It also asked the centre to respond before April 16 on whether it would enact regu- lations such as the Children’s Online Privacy Protection Act in the US to prevent children from becoming online victims. Mayawati justifies statues before SC Former UP Chief Minister and BSP supremo Mayawati submitted in an affidavit filed before the Supreme Court that her life-size statues built with crores of public money repre- sented the “will of the people”. The affidavit further stated that “whether the money should have been spent on education or hospitals is a debatable question and can't be decided by a court”. The apex court is hearing a 2009 petition against the statues of Mayawati, her mentor Kanshi Ram and elephants (her party symbol) built at parks in Lucknow and Noida with taxpayers’ money when she was chief minister between 2007 and 2012. In an affidavit submitted in the Supreme Court, the centre argued in favour of the electoral bonds scheme, saying it was a “pioneer step” to bring greater transparency and accountability in political funding. The move comes just a few days after the Election Commission of India (EC) red-flagged the scheme to the top court as detrimental to transparency in political funding. In its affidavit, the centre also said that the concerns raised by the EC lacked “legal or factual merit”. The electoral bonds scheme which was notified by the centre in January 2018 has been challenged in the top court through a clutch of petitions. A bench headed by Chief Justice of India Ranjan Gogoi will hear the matter from April 10. Centre takes a pro stand on electoral bonds Collegium should not come under RTI: A-G to SC SC junks RBI’s circular on bad loans
  11. 11. ISTHAT Does India have any law to deal with refugees? India does not have any refugee- specific legislation as such. It is also not a signatory to the UN Refugee Convention of 1951 or the 1967 Refugee Protocol. However, despite having no legal framework, India still grants asy- lum to a large number of foreign- ers from other countries. In India, laws like Registration of Foreigners Act, 1939, Foreigners Act, 1946, and the Passport Act, 1967, are generally invoked to deal with the issue of refugee crises. Efforts are being made to amend the Citizenship Act, 1955, to provide citizenship to migrants—religious minorities such as Hindus, Sikhs, Buddhists, Christians, Jains and Parsis—from Afghanistan and Bangladesh as well as Pakistan. Are there any laws in India that regulate the working hours of employees? According to the Factories Act, an adult employee shall not work for more than nine hours in a day. The Minimum Wages Act also mentions the working hours of employees. The laws clearly say that there should be a holiday in a week, maybe a Sunday. There is also a provision which states that the working hours should be structured in such a manner that it includes sufficient breaks. In the Minimum Wages Act and Factories Act, there are provi- sions saying that employees who work late must be compensated accordingly and ade- quately. Working journalists are covered by the Working Journalists And Other Newspaper Employees Act. Defined Rights Exist for Employees —Compiled by Sankalan Pal Nothing Special for Refugees Ignorance of law is no excuse. Here are answers to frequently asked queries regarding matters that affect us on a day to day basis Can offences under the Negotiable Instruments Act be compounded and complaints withdrawn? Section 147 of the Negotiable Instruments Act, 1881, says that every offence mentioned under the Act shall be compoundable. This can be done by invoking Section 257 of the CrPC, wherein the complainant can withdraw the complaint against the acc- used before the final order is passed, provided he is able to satisfy the magistrate regarding the grounds on which he is seek- ing the withdrawal. After hearing the complainant, the magistrate, if satisfied, may acquit the accused and allow the complainant to withdraw the said complaint. Accusedcanbelet offunderNIAct ? Twitter: @indialegalmedia Website: Contact: Can the governments acquire land from private owners? Land acquisition is a process by which the central government or state governments can acquire any private property for the purpose of development or commercialisation or setting up industries. In return, compensation is paid to landowners for resettlement. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (also Land Acquisition Act, 2013) governs the entire process. The Act applies to the whole of India, except the state of Jammu and Kashmir. Land can also be acquired by the govern- ment to transfer it to a private company which works for a public purpose. Apart from com- pensation, the Act also has various resettle- ment and rehabilitation schemes and facilities for original landowners. Judicious Land Acquisition is Not an Issue 12 April 15, 2019
  12. 12. Lead/ NGT Rulings 14 April 15, 2019 HE National Green Tribunal (NGT) has been trying to put its best foot forward for the cause of environment, ecology and climate through its rulings. In fact, India has been a pioneer in the developing work for establishing a “green court” to deal with environment- related cases. But over the years, the NGT has had limited impact due to plain indifference by the parties concerned or the apex court staying or even overruling its or- ders. The enforcement of the Tribunal’s rulings is not mandatory and therein lies the drawback. This is how some of its rulings have had limited impact. In a March 2019 ruling, the NGT asked Udupi Power Corporation Ltd (UPCL), a subsidiary of Adani Power A Paper Tiger?ThoughtheTribunalhasshownthewayinenvironmental jurisprudence,ithaslostitsteethasitsrulingsareeither overruledbytheapexcourtorfloutedbyhardenedviolators By Stephen David T
  13. 13. | INDIA LEGAL | 5, 2019 15 Ltd, to cough up a `5-crore fine by mid- April under the polluter pays principle of Section 20 of the NGT Act, 2010. The 1,200 MW coal power project in Yellur village between Mangalore and Udupi is part of four power projects across the country, making their owner, Adani, the largest private thermal power producer in India. The company is likely to fight the ruling in the Supreme Court, altho- ugh its president and CEO, Kishore Alva, told India Legal that he cannot discuss the matter “as it is sub judice”. The NGT wants the company to pay `5 crore to the Central Pollution Control Board as interim environmental com- pensation while asking a team of experts drawn from the Board, IIT Chennai and the Indian Institute of Science in Bengaluru to study the impact of the project on the environment in Udupi. In March 2019, the Supreme Court brushed aside a May 2016 NGT order that enlarged buffer zones around water bodies in Bengaluru. The NGT had directed city planners to maintain a buffer zone and green belt of 75 m from the periphery of lakes, 50 m from the edge of primary, 35 m from the edge of secondary and 25 m from the edge of tertiary Rajkulewas (storm water drains). The NGT order also banned all construction activities within that buffer zone. The Revised Master Plan of Bengaluru had listed much shorter dis- tances from the water bodies—30 m for lakes and 50 m from primary, 25 m from secondary and 15 m from tertiary Rajkulewas. The city corporation and the Karnataka government maintained that the Revised Master Plan had recei- ved statutory character and the buffer zones were in sync with the provisions of the Karnataka Industrial Areas Dev- elopment Act, Planning Act and the Karnataka Municipal Corporations Act, 1976. It was also argued before the apex court that the 2016 NGT order (city au- thorities must demolish all buildings raised/built before that date in the buffer zone) would entail the demolition of almost 95 percent of buildings in Bengaluru. Karnataka Advocate General Uday Holla maintained that the Revised Master Plan was statutory in nature and “the NGT had no power, competence or jurisdiction to consider the validity of any statutory provision/regulation”. The apex court stay came as a huge relief for thousands of property owners whose buildings would have been razed. I n February 2019, the apex court set aside an NGT order which allowed reopening of the Sterlite plant at Tuticorin in Tamil Nadu. In April 2018, the Tamil Nadu State Pollution Control Board (TNSPCB) had refused to renew the plant’s Consent to Operate certifi- cate for not adhering to the prescribed conditions. In May 2018, the Tamil Na- du Forests and Environment Depart- ment also sought permanent closure of the plant. The NGT in December set aside the Tamil Nadu government action and directed TNSPCB to pass a fresh order of renewal of consent and authorisation to handle hazardous sub- stances. The green court also directed Indiahasbeenapioneerinthedevelop- ingworkforestablishinga“greencourt” todealwithenvironment-relatedcases. ButtheNGT’srulingshavehadalimited impactastheyarenotmandatory. SLAMMED BY NGT (Facing page) The Udupi Power Corporation Ltd plant in Karnataka; dead fish in Ulsoor lake, Bengaluru 30000 25000 20000 15000 10000 5000 0 29,362 26,472 2,890 4/7/2011 to 28/2/2019 Institution Disposal Pending MisleadingRecord The total number of cases (filed, disposed and pending) handled by the principal bench of the NGT and all zonal benches from its inception until February 2, 2019. UNI
  14. 14. 16 April 15, 2019 restoration of electricity for its opera- tions. Following an appeal from the Tamil Nadu government, a Supreme Court bench of Justices RF Nariman and Naveen Sinha held that the NGT had no jurisdiction to entertain the matter. The parties were given the liber- ty to approach the Madras High Court. Local protests at the Vedanta copper plant in May-June 2018 resulted in police firing that resulted in the death of three persons. I n March 2019, the NGT slapped a `500-crore fine on German car maker Volkswagen for what it said was its role in installing cheat devices that lowered emissions during tests. The company said it would fight the order in the Supreme Court while maintaining that its cars complied with India’s BS-IV emission norms. In another case in October 2018, the Supreme Court stayed the operation of an NGT judgment that approved the Char Dham highway project in Uttara- khand. The apex court bench of Justices Rohinton Nariman and Abdul Nazeer passed the stay order following a plea by a local non-profit organisation and a local resident who alleged unfairness and lack of propriety on the part of the NGT in dealing with the original appli- cation filed by them. The applicants said that the Char Dham highway project Lead/ NGT Rulings OPEN TO REVIEW (Above) The apex court has set aside an NGT order allowing reopening of the Sterlite plant at Tuticorin; The NGT’s order on Volkswagen could be challenged in the SC UNI
  15. 15. would involve widening of the 900 km of the double-lane highway in the Himalayan region “leading to diversion of a vast area of reserved forest/forest area in ecologically fragile region”. In December 2017, the NGT held Sri Sri Ravi Shankar's Art of Living (AoL) responsible for damage to the Yamuna floodplains caused by the holding of the World Culture Festival in 2016. However, it did not levy any additional penalty on it other than the `5 crore imposed as interim environ- ment compensation. A bench, headed by NGT Chairperson Swatanter Kumar, said the DDA | INDIA LEGAL | April 15, 2019 17 COMING DOWN HARD The 2016 NGT order took Sri Sri Ravi Shan- kar’s Art of Living to task for damaging the Yamuna floodplains by holding a culture fest The National Green Tribunal was established on October 18, 2010, under the National Green Tribunal Act, 2010, for effective and expeditious dis- posal of cases relating to environmen- tal protection and conservation of forests and other natural resources. It was also meant to enforce any legal right relating to the environment and give relief and compensa- tion for damages to persons and property and for such mat- ters. It is a specialised body equipped with the necessary expertise to handle environ- mental disputes involving multi- disciplinary issues. The Tribunal is not bound by the procedure laid down under the Code of Civil Procedure, 1908, but shall be guided by principles of nat- ural justice. The Tribunal's dedicated jurisdiction in environmental matters shall provide speedy environmental justice and help reduce the burden of litigation in higher courts. It is mandated to endeavour for disposal of applications or appeals within six months of filing of the same. New Delhi is the principal place of sit- ting for the NGT and Bhopal, Pune, Kolkata and Chennai are other places of sitting. Thegreencourt Anil Shakya Anil Shakya
  16. 16. 18 April 15, 2019 Twitter: @indialegalmedia Website: Contact: should carry out restoration of the floodplains after AoL deposited the remaining amount. However, an expert committee headed by Shashi Shekhar, secretary, Ministry of Water Resources, said it would cost `13.29 crore and take almost 10 years to restore the flood- plains. The committee said that due to the three-day event, the floodplains lost “almost all its natural vegetation” like trees, shrubs, tall grasses, and aquatic vegetation, including water hyacinth. As expected, AoL said it was disappointed with the decision taken by the NGT. I n another case, the NGT in 2015 passed orders to the Delhi govern- ment to enhance the strength of the forest department. Environmental ac- tivist and advocate Aditya Prasad brought to the attention of the NGT that its 2015 orders were not complied with for several years. This forced NGT Chairman Justice AK Goel to call for a compliance report from the chief secre- tary. Prasad had sought the NGT direct Delhi’s forest department to fill vacan- cies for forest rangers and field staff for regulatory functions. The NGT’s December 2015 order read: “The Chief Secretary of NCT of Delhi is directed to undertake a meeting with the Secretary of the concerned Ministry, the Principal Chief Conservator of Forest and the sen- ior most officers for field staff in the Forest Department and consider the issues in relation to preservation and conservation of forest in NCT of Delhi. We further direct him also to consider appropriate enhancement in the strength of the forest department and provision of proper infrastructure and such electronic or other gadgets that would ensure that all cadres of the forest department are able to discharge their duties and functions as required under the above Acts." In some cases, the NGT’s directives were handled so ineptly that it led to the death of people. In 2014, the Tribunal banned rat-hole mining in Meghalaya, but the deaths of labour- ers last December in these mining shafts exposed the state government’s disre- gard of NGT directives. The NGT ban followed a petition by the All Dimasa Students’ Union. How- ever, Meghalaya Chief Minister Conrad Sangma told the state assembly that there were more than 1,000 cases of illegal coal mining detected in the state after the ban came into effect. In December 2018, despite search and rescue operations by experts from the Navy and other agen- cies in these mines, it was impossible to rescue the 15 miners trapped in the East Jaintia Hills. There are hundreds of rat- hole mining shafts here and rescue work is often hampered because these mines are unmapped tunnels. These are unlike the mines in Thailand where 12 mem- bers of a football team were rescued by an international team of divers in July 2018 even after they were trapped there for nearly three weeks. Meghalaya’s coal reserves are esti- mated to be over 600 million tonnes. Coal was nationalised in 1973 but this tribal state could continue its mining, forcing hundreds to ingeniously mine coal from the South Garo Hills and East Jaintia Hills. Whether the NGT rulings will be overruled by the apex court or whether the guilty choose to look away, the wheels of environmental justice will hopefully continue to roll steadily, even if slowly. InOctober2018,theSCstayedtheNGT verdictapprovingtheCharDhamhighway projectinUttarakhand.TheCourtpassed theorderfollowingapleabyalocalnon- profitorganisationandalocalresident. Lead/ NGT Rulings TIMELY WARNING In 2014, the NGT banned rat-hole mining in Meghalaya, but the state government has not complied with the order
  17. 17. | INDIA LEGAL | April 15, 2019 19 Supreme Court/ SCBA Event N the evening of April 4, the Supreme Court, a place usually packed with busy lawyers and worried liti- gants, turned into a differ- ent sort of meeting ground. A massive canopy in purple-pink and gold-white hues hung over the central lawn of the Court premises as a bevy of lawyers, taking a break from their packed schedules, showed up to attend an event organised by the Cultural Committee of the Supreme Court Bar Association (SCBA). This was no ordinary event. It was the final round of a talent hunt reality show titled “Mera Bhi Naam Hoga” organised by the SCBA with the aim of showcasing the talent of Supreme Court lawyers in singing, dancing and acting, and even anchoring. The quarter-finals and semi-finals had taken place earlier on March 30 and 31, respectively. The event was inaugurated by Chief Justice of India Ranjan Gogoi, who was accompanied by Justices NV Ramana, Indira Banerjee and KM Joseph. Several senior advocates and members of the SCBA executive committee, including PH Parekh, Vikas Singh, Rakesh Khanna and Rupinder Suri, were also in attendance. Senior advocate Pinky Anand, who was also present, told India Legal: “Honestly, I was in two minds about coming for it. But it’s a very magnificent effort and it is fun to see people relax in a legal environment which can be very stressful otherwise. I think the SCBA should do more such events which are on a lighter side and have scope for social interaction. This is a great beginning.” What was even more commendable was the enthusiasm and talent which the contestants put on display. Young and old, men and women, singers, dancers and actors, the contestants were a motley mix and regaled the audience one after the other. India Legal spoke to some of them about their experience. Shobha Gupta, who danced to the Waheeda Rehman number “Aaj Phir Jeena Ki Tamanna Hai”, said: “It was a wonderful experi- ence. It has given a very good platform for lawyers to show their talent.” Stuti Chopra, who sang a song from the movie Raazi, said: “It was an amazing experience. The event was organised very professionally and transparently. The huge turnout shows how well it has been planned and executed.” Indeed, the event was a packed house as lawyers kept trickling into the venue, some sitting on sofas, some crowding around the stage and others enjoying the snacks. Cheers of “Wah wah!” and “Once more!” kept reverber- ating through the grounds. And, as evening gave way to dusk, there was a special guest to entertain the audience—poet Surendra Sharma. He began his performance saying: “I am not associated with this Bar (SCBA) but definitely associated with the other bar” and left the audience in splits. In his inimitable comic style, he also espoused the message of peace and nationhood while lamenting the charged political climate we live in. He was full of praise for the performers and lauded the SCBA for organising the event. A little later, another powerhouse of talent—Padma Shri Soma Ghosh—graced the stage. One of the judges for the event, she mesmerised all with her singing. The SCBA executive committee also honoured various office-bearers without whose valuable contribution the event would not have been possible. Nothing Legal About It AculturaleventorganisedbytheSupremeCourtBarAssociationontheCourt’spremisesgavea chancetohardworkinglawyerstoshowcasetheirothertalents By India Legal Bureau Twitter: @indialegalmedia Website: Contact: O Photos: Anil Shakya CULTURAL EXTRAVAGANZA (Left) CJI Ranjan Gogoi inaugurates the SCBA event in the presence of Pradeep Rai, senior executive member, SCBA (centre), and Solicitor General Tushar Mehta; a participant
  18. 18. Supreme Court/ Gujarat Leaders 20 April 15, 2019 N the space of 24 hours, two lead- ers from Gujarat who looked for succour from the Supreme Court were left with different expecta- tions. In the first case, the Court on April 1 stayed the Election Commi- ssion's decision notifying the Talala assembly constituency seat in Gujarat as vacant and declaring a bypoll there along with the Lok Sabha polls. There was hurry in the process of law at all levels in disqualifying Congress legisla- tor Bhagabhai Barad of Talala. In the second case, the apex court refused urgent hearing of a plea by Congress leader Hardik Patel to suspend his conviction in a 2015 rioting case and thereby put paid to his ambitions of contesting the Lok Sabha polls. It all began in 1995 when an FIR was lodged against Barad which accused him of illegal mining of limestone worth `2.83 crore in Sutrapada area. Almost 24 years later, on March 1, 2019, he was sentenced by a court under Section 379 of the IPC to two years and nine months imprisonment. He was disqualified as an MLA by the Gujarat assembly Speaker, Rajendra Trivedi, on March 5. Barad challenged his conviction and the principal district judge of Veraval in Gir Somnath district, MM Babi, stayed it on March 9 and even allowed his plea seeking suspension of the sentence as well as bail during the pendency of the appeal. Soon after, the leader of the Congress Opposition in the Vidhan Sabha, Paresh Dhanani, met the Speaker and present- ed the Court order suspending his con- viction alongside a memorandum seek- ing his reinstatement. Apparently in a tearing hurry to get the Congress MLA out of the way, the BJP government moved the High Court on March 11, challenging the stay. On March 15, a single-judge bench of Justice Sonia Gokani set aside the stay and asked the sessions court to once again apply its mind, noting that lower courts should stay convictions only in rare cases. However, the hearing in the sessions court could not take place as scheduled on March 25 as the judge went on leave until April 1. Barad then approached a division bench of the High Court on March 11 but failed to get any relief. The bench ruled that conviction automatically lea- ds to disqualification, so the seat stood vacated. Post this order, the byelection was to be held on April 23 along with the Lok Sabha elections to 26 seats in Gujarat. On March 28, Barad moved the Supreme Court, where a bench led by Chief Justice Ranjan Gogoi along with Justices Deepak Gupta and Sanjiv Khanna stayed the bypoll and issued a notice to the Election Commission. The Court took exception to the unusual hurry by the poll body in notifying the election, without Different Strokes for Different People WhiletheCourtgaverelieftoa GujaratCongressMLAregardinghis disqualification,itrefusedurgent hearingofapleafromHardikPatelof thesameparty,bringingintoques- tionhisabilitytocontestthepolls By RK Misra in Gandhinagar I
  19. 19. Court, seeking prosecution of Solanki. The matter turned controversial in 2012 when Governor Kamla Beniwal granted sanction to prosecute Solanki. However, the Modi government chal- lenged her decision in the High Court but lost. The case continues to be in liti- gation. In December 2018, the High Court refused to quash lower court pro- ceedings against the two and ordered them to appear before the Gandhinagar court in two weeks. Solanki, ailing with kidney complications, has not done so till date. Solanki, incidentally, also figured in the Srikrishna Commission report on the 1993 Mumbai riots where he alle- gedly led the mobs. He is also a former TADA detainee. A warrant of arrest for non-appearance before a court is out for a sitting minister of the BJP govern- ment in Gujarat, yet not a fly stirs among the ruling elite crusading against corruption. In the second case, the Supreme Court refused urgent hearing of a plea by Hardik Patel to suspend his convic- tion in a 2015 rioting case so that he could contest the Lok Sabha elections. A bench headed by Justice Arun Mishra and also comprising Justices MM Shantanagoudar and Navin Sinha said there was no urgency in hearing the matter as the High Court order was passed in August last year. “The order was passed in August 2018. What is the urgency now?” the bench said while refusing to give urgent hearing on the petition. Patel had moved the Court after his plea for stay was rejected by the Gujarat High Court last week. He was awarded a two-year jail term by a Visnagar court in July 2018 in connection with the ran- sacking of local MLA Rishikesh Patel’s office in July 2015. It is obvious that there are different strokes for different people from Gujarat. and was made a cabinet minister in the Modi government. In November 2014, Bokhiria was acquitted in the case. At one point, he faced numerous criminal charges but the taint did not prevent him from rising in the ranks. T hen there is the 2008 case of the `400-crore fisheries scam when Dilip Sanghani and Purshottam Solanki were ministers in the Modi cabi- net in Gujarat. Solanki, then minister of state for fisheries, and currently state minister for animal husbandry and cow protection, had granted fishing con- tracts for 58 reservoirs to his favourites. Sanghani was then agriculture minister. There were allegations of corruption by both of them and an aggrieved cont- ractor, Maradia, knocked at the doors of the High Court, which scrapped the `2.4-crore contract granted by the min- ister. A repeat tender fetched `45 crore. Maradia claimed that the loss to the exchequer over 10 years was `400 crore. Maradia again approached the High taking notice of the stay then in exis- tence. “How can you declare the seat to be vacant on March 10 when his convic- tion was stayed on March 7?” the bench asked. While the Vijay Rupani-led govern- ment in Gujarat showed great speed in the case of the Congress legislator, the same alacrity was not witnessed in the case of its own ministers. In June 2013, Union Water Resour- ces Minister Babubhai Bokhiria, who was sentenced to three years’ imprison- ment by a Porbandar court in a `54- crore illegal limestone mining case along with others did not face any dis- qualification. His conviction was also stayed by the sessions court. But the state government did not challenge it. After the complaint against Bokhiria in 2006, he had left the country and was declared a proclaimed offender. The Porbandar police arrested him in 2007. The High Court later released him on bail. He contested the Vidhan Sabha elections in December 2012, defeated Congress president Arjun Modhwadia | INDIA LEGAL | April 15, 2019 21 SOME WIN, SOME LOSE The SC observed that there was hurry in disqualifying Congress legislator Bhagabhai Barad of Talala (left); the SC dealt a blow to Hardik Patel’s poll debut ambition Twitter: @indialegalmedia Website: Contact: TheVijayRupani-ledgovernmentin Gujaratshowedgreatspeedinthecase oftheCongresslegislator,butthesame alacritywasnotwitnessedinthe caseofitsownministers. UNI
  20. 20. Courts/ Punjab and Haryana/ Caste Label 22 April 15, 2019 ESPITE several reformist movements and calls for eradication of the caste system, the country has not been able to do away with it. Far from getting rid of this pernicious system, it is actual- ly being perpetuated and backed by gov- ernments and political parties even after over 70 years of independence. Even officialdom has not been able to get rid of old habits. One such, an 85-year-old law, which is followed till date, relates to the men- tioning of the caste of the accused, vic- tims and witnesses in FIRs and official court documents. The Punjab Police Rules, 1934, also followed by Haryana and the Union Territory of Chandigarh, provides for a column to mention caste. Despite several undertakings in the past stating that governments would delete the column and not mention caste in FIRs, the practice continues. Now the Punjab and Haryana High Court, in a highly appreciable step, has directed Punjab, Haryana and Chandi- garh to refrain from mentioning the caste in police and judicial proceedings. A division bench, comprising Justices Rajiv Sharma and Kuldip Singh, said in a recent judgment that “mentioning of caste/status separately in criminal pro- ceedings is a colonial legacy and requires to be stopped forthwith”. The issue was first brought to the notice of the Court in 2017 when a law- yer, HC Arora, filed a petition in public interest seeking directions to all investi- gating officers against mentioning caste or religion of the accused, victim or wit- nesses in recovery memos, FIRs, seizure memos, inquest papers and other forms prescribed under the Code of Criminal Procedure, 1973, as well as the Punjab Police Rules, 1934. However, despite assurances given by the representatives of governments, there is nothing to show that the Court directive has been followed till date. The latest directive came while the division bench was hearing a murder case in which the Haryana Police had mentioned the caste of the accused, vic- tims and eyewitnesses. Stating that such a practice was impermissible, the Court said that the right of dignity was a fun- damental and basic human right. “The founding fathers of the Indian Constitution were of utmost belief that the caste system would come to an end with the passage of time. However, unfortunately, the caste system is still prevalent. There is no scientific, intellec- tual, social or logical basis for the caste system. The caste system is profoundly illogical and is also against the basic tenets of the Constitution,” the bench observed. Stating that human dignity is the foundation of constitutional rights and values, the Court observed it was, rather, one of the basic features of the Const- itution, which also guaranteed a caste- less and classless society. It asserted that the “right to life” included right to live with human digni- ty. It was the State’s bounden duty not only to protect human dignity, but also facilitate it by taking positive steps in that direction. The Bench added that it “would be pertinent to mention here To Cast It Off Inawelcomestep,thePunjabandHaryanaHighCourthasdirected governmentsinthetwostatesandChandigarhtorefrainfrom mentioningthecasteinpoliceandjudicialproceedings By Vipin Pubby in Chandigarh D ThedivisionbenchofthePunjab andHaryanaHighCourtcompris- ingJusticesRajivSharmaand KuldipSingh(farleft)saidthat thecastesystemwasstillpreva- lentandhadnoscientific,intel- lectual,socialorlogicalbasis.It wasalsoagainstthebasic tenetsoftheConstitution.
  21. 21. dirt. They have to live in dirty condi- tions and undertake the most menial jobs which can be termed as inhuman. More significantly, they can’t eat from the same utensils as the “upper castes” and have to bow every time someone from the “upper caste” passes by. Several schools don’t allow children from the underprivileged sections of society. Even Punjab, where the Sikh religion clearly talks of a no-caste system or dis- crimination, the teachings of the gurus are not followed. Most villages have sep- arate gurdwaras and even cremation grounds for the so-called lower castes. Unfortunately, most of these states still continue with the same British-era laws which perpetuate caste system and judge people on the basis of caste. The attitude is prevalent in various wings and departments of the government. Therefore it is no wonder that the police forces also get influenced and investigations are undertaken keeping in mind the caste equations. Some of these states can even be accused of abet- ting such a practice of singling out per- sons on caste basis. It is hoped that the governments reframe the rules and pass on strict instructions to comply with the direc- tives. There is certainly a viewpoint that it is high time the caste system was also abolished in matters of reservations in institutions and jobs. Instead, the quota system should only cater to the econo- mically deprived sections of society without discrimination of caste, religion or gender. There is definitely weight in this argument and it needs a larger debate. However, such a step would need politi- cal will and vision, both woefully lacking in today’s polity. all judicial officers to follow the direc- tions while dealing with cases. Advocate Kanika Ahuja, who repre- sented the appellants, said it was a case of honour killing and pointed out that the Court had given directives in the case and had not just made observations on the issue of mentioning the caste of the accused, the victims and the witnesses. P olitical parties continue to hedge their bets on caste and creed of voters. A recent instance is the decision of the Samajwadi Party and the Bahujan Samaj Party to join hands with their so-called vote banks among Yadavs and Dalits. These two parties think that theirs is an unbeatable combination on the basis of the votes polled in the 2014 general election. While the scourge of the caste system exists in varied forms across the country, the worst affected is the cow belt of Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan and parts of Haryana. One has to just visit these states to see the extent of discrimination. The so- called lower caste people are treated like that during the course of investigation, the police have used the caste of the accused, witnesses as well as of the vic- tim. This is not permissible. Mentioning of the caste status separately in the criminal proceedings is a colonial legacy and requires to be stopped forthwith… .The Constitution guarantees a casteless and classless society. All are born equal”. The Bench observed that there was no scientific, intellectual, social or logi- cal basis for the caste system and that it is profoundly illogical and against the basic tenets of the Constitution. “We should, as a public policy, shun the caste system,” the Bench added. It then directed the home secretaries of the two states and Chandigarh to issue instructions to all investigating officers against mentioning the caste of the accused, victims or witnesses in the recovery memos, FIRs, seizure memos, inquest papers and other forms pres- cribed under the Code of Criminal Procedure, 1973, and the Punjab Police Rules. The High Court Registrar-General was also directed to issue instructions to | INDIA LEGAL | April 15, 2019 23 UNI THE MINDSET CONTINUES Upper caste outfits protesting against favourable changes in the SC/ST Act Twitter: @indialegalmedia Website: Contact:
  22. 22. My Space/ Constitutional Morality Upendra Baxi 24 April 15, 2019 AM puzzled by the lack of reader response to Professor Madhav Menon’s eight questions (India Legal, January 21, 2019) concern- ing “constitutional morality” (CM). His questions were triggered by my analysis (India Legal, December 24, 2018) but it would be presumptuous to think that these were only addressed to me. Faute de mieux, let me say that both the manner in which these were raised and underlying views deserve serious consideration. Broadly, Prof Menon believes in the following self-evident truths. First, the power of judicial review must run sub- servient to the will of the people as expressed in the constitutional text and on maxims of public morality. Second, CM should never function as a ground for invalidation of statutes or constitu- tional amendments. Third, fundamental rights as guaranteed in the text of the Constitution should not be regulated by public morality. Fourth, in a democracy, any abuse of judicial power, especially CM, should yield to reification by leg- islative wisdom. Fifth, at best CM is a constitutional sentiment of slow growth, and the remedy for preventing majori- tarian excesses cannot be attained by showing “less deference to the legisla- ture” as “some judges seem to think”. CM should not “be yet another tool beyond ‘Basic Structure’ for exercising judicial power”. Sixth, the “ugly conse- quence which resulted in forcible enforcement of the Supreme Court judgment in Sabarimala by a govern- ment controlled by a party of ‘non- believers’ cannot be dismissed as a con- flict between public morality and Constitutional Morality”. CONFLICT OF RIGHTS AND CM A review of the Supreme Court decision in Sabarimala, which is now under con- stitutional review, is not presented here. Nor one may speak about the impas- sioned public contention, partisan polit- ical debate, changing legal postures, and lots more besides. Within the discipline of sub judice rule, all one may say is that the Court was confronted with a conflict between two sets of fundamental rights: rights of essential religious practice (Article 25) and rights of non-discrimi- nation and gender equality (Article 14). Article 25 of the Constitution, of course, protects the right to the essential practices of religion, but it also confers the right to conscience. We so keenly engage with the right to religion as to almost obliterate the right to conscien- ce; but it is this moral entity that impels us to be atheists or choose religion. The party of “non-believers” is as much con- stitutional as the parties of piety. The choice is not among faiths merely but also between faith and agnosticism: whose/what “morality” shall trump my right to conscience? How far in matters of the right to conscience may it be constitutional to keep courts out alto- gether? Further, Article 25 itself is subject to restriction/regulation arising from four grounds; morality, public order, health, and other provisions of Part 111. The conflict between “morality” and “essen- tial religious practice” is deep and diverse, and not easy to settle, but to reiterate, one is not dealing here with a conflict between rights and morality but between two sets of basic rights (religion “No Entry” in Adjudication? ProfNRMadhavaMenon’sarticlegavecurrencytotheidea thatCMasagroundofinvalidationisalmostnew.Butthat isnotsoasitisembeddedinthePreambleandisdifferent frompublicmoralityandevenjudicialmorality I
  23. 23. | INDIA LEGAL | April 15, 2019 25 and non-discrimination) which are in conflict. Prof Menon’s analytic, there- fore, misleads. When the “Text is Clear, It Compels” is the maxim of legal positivism as well as its trumpet cry. Three basic ques- tions may still be raised: first, what and whose morality may trump rights to conscience and to religion? Second, how can a religious practice ever be declared not “moral”? Third, who shall have the final power to decide this? The lawyer’s answer is clear enough. In interpreting Part 111 of the Constitution, the Court should follow, as far as possible, a disciplined inter- pretation dictated by it. As such, are our justices not duty bound to ask what the term “morality” may mean in Article 25 (bearing in mind the related provi- sion regulating or restricting Article 25’s rights by “other provisions of this Part’’)? Is it not a fair answer that morality here refers to CM? May it be ever otherwise? Should justices be now asked to forswear an interpretation of Article 32 (the right to constitutional remedies) and Part 111 as a whole, whose general message is that whenever a rights-reinforcing moral reading of the Constitution is available, a rights negating one should be avoided? MEANING AND USE Even in Dharmendrasinhji College, Rajkot, we were taught in the sixties, to distinguish the meaning of a concept from its use. The fact that the concept is misused does not invalidate it. The con- cepts of basic structure, constitutional republic, equality, non-discrimination may be held to be misunderstood and misapplied in specific fact situations but such interpretation does not invalidate the concept. Or further, the concept may be accepted but is held applicable in ways differently from others (as careful readers of Justice Indu Malhotra’s dis- senting Sabarimala well know). One may freely invent a philosophy of language to suggest otherwise. Perhaps the greatest philosopher of the 20th century, Ludwig Wittgenstein, did precisely this by the aphorism that “in most cases, the meaning of a word is its use”. That is, it does not really matter what you say; what matters is the way you say it and the context in which you say it. The use of a word, then, is what the words mean in a given context. I do not know what theory of lan- guage Prof Menon adopts. On my part, much depends on the meaning of the phrase “in most cases” with which this aphorism begins and the meaning we want to give to the word “context”. Surely, one way of crafting and reading judgments is that this endeavours to resituate the contexts of which they are a part. CM, like all metalinguistic con- cepts is an important aspect of judicial pedagogy of the nation as setting a schema for interpretation of the related constitutional terms. CONSTITUTIONAL MORALITY NOT A NEW NOTION Prof Menon gives currency to the idea that CM as a ground of invalidation is almost altogether new. Scarcely so; it MORALITY AND PIETY In the Sabarimala verdict, the SC allowed entry of women of all ages into the temple IntheSabarimala case,theCourtwas confrontedwithaconflictbetween twosetsoffundamentalrights:of religiouspractice(Art25)andofnon-dis- criminationandgenderequality(Art14). Photos: UNI
  24. 24. My Space/ Constitutional Morality/ Upendra Baxi 26 April 15, 2019 stands variously embedded in the Preamble, Parts 111, and now IVA (as more fully stated in my article of April 3, 2019). It is clear from many a past decision that CM is different from pub- lic morality, and even judicial morality. In the immortal dissenting words of Justice O Chnnapaa Reddy, who despite being a self-confessed Marxian (who believed that chanting “of prayer … mere jingoism and observance of ritual, plain superstition”) said that his “views about religion, my prejudices and my predilections…are entirely irrelevant. So are the views of the credulous, the bigot and the zealot. So also the views of the faithful, the devout, the Acharya, the Moulvi, the Padre and the Bhikshu each of whom may claim his as the only true or revealed religion”. It is “the people of the Socialist, Secular, Democratic Republic of India, who have given each of its citizens Freedom of conscience and the right to freely profess, practice and propagate religion and who have given every religious denomination the right to freely manage its religious affairs, mean by the expressions ‘reli- gion’ and ‘religious denomination’” (MS.P. Mittal v .Union of India (UOI), (1983) at Para 2). The majority did not disagree with this proposition. The stan- dards of CM have to be observed in each case, regardless of a judge’s views about morals. SHOULD JUSTICES ALWAYS LEAVE CM TO LEGISLATURES? Sociologically, such a popular advice at least overlooks two factors. The first is the situation of conflicting fundamental rights (presented most recently in Sabarimala); and the second is where the problem of rights arises because the legislature, knowing full well that it has the power to decide, does not do so. This is notoriously the situation with regard to sexuality. The Supreme Court had to step in on the eve of the golden jubilee of the Constitution to judicially legislate certain guidelines regarding sexual harassment and the court law prevailed till 2103 when the Union draped itself into lineaments of law against sexual harassment. In Koushal, the Court again left the matter of legalisation of same sex relations (December 11, 2013), but it reiterated that “the… legislature shall be free to consider the desirability and propriety of deleting Section 377 IPC from the statute book or amend the same as per the suggestion made by the Attorney General”. Nothing happened since, excepting that the Court proceeded to decrimi- nalise gay sex finally on September 6, 2018 (in Navtej Johar). The prevention and punishment of torture provides another sad story; and the Court has issued a number of directions to expe- dite the fulfilment of the Directive Principles of State Policy (including the securing of gender justice through reform of personal law). When the legislature continues to overlook situations of continuing gross violations of core fundamental human rights, and all nudging functions are exhausted, what should be the nature and scope of judicial duty? May the Supreme Court acting under compelling notions of constitutional morality not assume what I have called the adjudica- tory demosprudential role? Or is it a moral mistake to take constitutional law and adjudicative pedagogy seriously as guiding the course of evolution of natu- ral sentiments into constitutional ones? Should we continue to let the doctrinal past rule the future? —The author is an internationally renowned law scholar, an acclaimed teacher and a well-known writer Twitter: @indialegalmedia Website: Contact: RAINBOW NATION The Supreme Court decriminalised consensual homosexuality last year TheCourthasissuedanumberof directionstoexpeditethefulfilmentof theDirectivePrinciplesofStatePolicy includingthesecuringofgenderjustice throughreformofpersonallaw.
  25. 25. 28 April 15, 2019 HE Centre has proposed forming committees under the Cabinet Secretary to look into complaints against the Chief Infor- mation Commissioner (CIC) and Information Commissioners (ICs). The government has proposed to set up two committees: One to receive and decide on complaints against the CIC, that would include the cabinet sec- retary; secretary, DoPT; and a retired CIC, and the second for complaints against ICs. This committee would com- prise the Secretary (Coordination) in the Cabinet Secretariat; Secretary, DoPT; and a retired IC. The proposal sent to the CIC by the Department of Personnel and Training was discussed in a meeting of the Commission on March 27 and was unanimously opposed. This idea appears to be the brainchild of the top bureaucracy in Delhi in response to an innocuous Supreme Court query about the procedure to handle complaints against ICs. This is what a former Chief Infor- mation Commissioner has to say in the matter: “How can a cabinet secretary or any other officer of the government, who under law can be investigated, sum- moned, questioned and penalised by the CIC, investigate it? The proposal also says that other secretaries will be a part of the committee. This is a serious attack on the independence of the Commission.” This retrograde move is not surpris- ing, considering the chequered history accountable to the governed. The objec- tive of the Act was to secure access to information under the control of public authorities, in order to promote trans- parency and accountability in the work- ing of every public authority. But rooted in the colonial years of autocratic governance and secrecy in the government, India’s bureaucracy resis- ted RTI from the start. They were feel- ing uncomfortable with the severe dilu- tion of the Official Secrets Act which TheNDAgovernment’smovetobringtheChiefInformationCommissionerandInformation Commissionersdirectlyunderthedisciplinarycontrolofbabus isaseriousattack ontheindependenceoftheCommission T Regulating the Regulator of the Right to Information Act (RTI Act) enacted in 2005 after several years of struggle by civil society. From the very beginning it was a love-hate relationship between the gov- ernment and the people. The preamble of the Act does use pompous words like democracy requiring an informed citi- zenry and transparency of information which are vital to its functioning and to contain corruption and to hold govern- ments and their instrumentalities Column/ Information Commissioners MG Devasahayam RIGHT TO KNOW Protest in Delhi against RTI Act dilution
  26. 26. independent-minded and professionally competent Public Information Officers (PIO) or First Appellate Authority (FAA). Even after 14 years this “Right to Information” remains mostly on paper with low level of awareness and infor- mation access for the people. Information seekers face several constraints in filing applications and obtaining information. There are no standard formats for RTI application leading to lack of clarity by the info seeker and confused response by the info provider. Even the payments method is hazy and confused. Submission channels for RTI appli- cation continue to be inadequate and clumsy. Chaotic record management practices still continue within the Public Authority with a loose and unnumbered filing system. The RTI Act has not served the pur- pose of bringing about transparency and integrity in the functioning of govern- ments. It has not yet been synchronised and dovetailed into the governance and anti-corruption process. It is confined to providing piecemeal information, often faulty and misleading, with utmost reluctance and under duress. Largely due to governments resort- ing to compromising the Act by packing them with obliging sinecure-seekers, most of the State Information Commissions are functus officio. They are ill-equipped, short-financed and understaffed. In the event, hardly any worthwhile information is coming through the RTI process. Added to this is blatant regulatory capture which is a theory wherein regu- latory agencies come to be dominated by the agencies, institutions or interests they are charged with regulating. The result is that the agency, which is charged with acting in the public inter- est, instead acts in ways that benefit the entities it is supposed to be regulating. Governments at the centre and in states—the main entities that are to mation is a part of our fundamental rights. Though there was really no need to enact a law to confer something citi- zens already possess, it was necessary because of the culture of secrecy in gov- ernments and the predominance of the Official Secrets Act. T he RTI Act came as a paradigm shift from the secretive, archaic and moth-eaten procedures root- ed in colonial governance. The Act was a thermal shock to most government officials for whom transparency is anathema! This legislation was meant to end the asymmetrical and undemocratic power relationship between the admin- istration and the public and tilt it in favour of the latter. But this has not happened even by a distant measure. Barring honourable exceptions, most departments have not even complied with Section 4 of the Act dealing with suo motu disclosure of information by public authorities which lays down that all records should be maintained and indexed properly in a way that facilitates easy access to information and inspec- tion. Departments have not earmarked most of them worshipped. So, they started to sabotage the Act from within by packing the Information Commiss- ions with retired bureaucrats and other favourites from different walks of life. In the event, hundreds of hardcore retired bureaucrats who had revered the Official Secrets Act while in office and had trod the line of their political mas- ters became “agents of transparency” and began catering to the needs of an “informed citizenry”. A sweeping trans- formation indeed! The Right to Information has its moorings in the democratic philosophy that the people are the masters and they have a right to know how the govern- ments, meant to serve them, are func- tioning. Further, every citizen pays taxes and therefore has a right to know how his/her money is being spent. These principles were laid down by the Supreme Court while saying that infor- | INDIA LEGAL | April 15, 2019 29 UNI AformerCICsaid:“Howcanacabinet secretaryorotherofficers,whounder lawcanbeinvestigated,summoned, questionedandpenalisedbythe CIC,investigateit?” THE COP ON RAISINA HILL The Cabinet Secretariat
  27. 27. 30 April 15, 2018 be regulated under the RTI Act—have been playing tricks to capture and keep the Information Commissions under their thumb. Yet as a law that empowers the citizen, the RTI Act quickly struck root in a country saddled with the colo- nial legacy of secretive governance. S o, the NDA government has been seeking to amend the far-sighted law, aiming at eroding the inde- pendence of the ICs. Through these amendments, the central government sought control over the tenure, salary and allowances of the CIC and ICs at the centre, and in the states. The centre will also fix the terms for State Information Commissioners. This was an ill-advised move towards regula- tory capture. Particularly so, because the Supreme Court has held the right to information as being integral to the right to free expression under Article 19(1)(a) of the Constitution and weaken- ing the transparency law would negate that guarantee. The genesis of the move to dismem- ber the CIC is its categorical order in 2013 that political parties would come under the purview of the RTI Act, since they are the “building blocks of a consti- tutional democracy”. The CIC’s ruling was well reasoned on general, legal and financial grounds. Under the Tenth Schedule of the Constitution, a political party can have a Member of the House disqualified in certain circumstances; a political party is required to be regis- tered by the Election Commission of India (ECI) under the Representation of the People Act, 1951; under the Act, political parties are required to submit a report for each financial year to the ECI in respect of contributions received by it in excess of `20,000; ECI allots symbols to various political parties; political par- ties are mandated to file regular income tax returns. On the financial side, governments give several concessions to political par- ties, like large tracts of land or accom- modation in Delhi; total tax exemption for all their income; free air time during the elections and copies of electoral rolls by the ECI free of cost, at the time of elections. Therefore, CIC ruled: “In view of the above discussion, we hold that INC, BJP, CPI(M), CPI, NCP and BSP have been substantially financed by the Central Government under section 2(h)(ii) of the RTI Act. The criticality of the role being played by these Political Parties in our democratic set-up and the nature of duties performed by them also point towards their public charac- ter, bringing them in the ambit of sec- tion 2(h). The constitutional and legal provisions discussed also point towards their character as public authorities...” Consequently, the CIC directed these political parties to designate PIOs and appellate authorities in a time-bound manner and respond to the RTI appli- cations expeditiously. Parties were also directed to comply with the provisions of Section 4(1) (b) of the RTI Act by way of making voluntary disclosures on the subjects mentioned in the clause. This set the wolf among the vultures, and the response has been fierce. All political parties “ganged up” against the order. While some argued that political parties are private organisations, others said that the order will cause a lot of damage to parliamentary democracy and could harm the integrity and role of parties in a democratic political system! And so, till date there has been no com- pliance with the CIC order. Instead, political bosses and their bureaucratic henchmen seem to have decided to do the final act of regulatory capture by bringing the information commissioners directly under the disciplinary control of the government secretaries who are the major entities being regulated under the RTI Act. Indeed, this is regulatory capture in its rawest form which cannot be countenanced. —The writer is a former Army and IAS officer Twitter: @indialegalmedia Website: Contact: Column/ Information Commissioners / MG Devasahayam TheRTIActcameasaparadigmshift fromthesecretive,archaicand moth-eatenproceduresrootedincolonial governance.TheActwasathermalshock tomostgovernmentofficials. TRANSPARENCY WHAT? The Central Information Commission was set up under the Right to Information Act
  29. 29. Column/ IAF Air Crashes Wg Cdr Praful Bakshi 32 April 15, 2019 OMBAT flying anywhere in the world is synonymous with extreme risk and fatal- ity. This has been the case right from the days of World War I to the present- day wars. This is equally true for the IAF, especially after the introduction of jet fighters and bombers in the late 1940s. Unfortunately, this precarious state of things continues even today as can be seen from the numerous air crashes taking place regularly. Defence flying is different from com- mercial aviation. Though aviation came as a boon for mankind, its militarisation brought with it extreme demands on man and machine. Both were required to operate at the outer edges of their performance envelope on a routine basis. This got them closer to failures in all aspects—the operating system of the machine and the physiological capacity of the pilot. Take, for example, a routine tactical flying sortie of a modern fighter aircraft at 300 ft or below. The high gravitational forces experienced by the pilots coupled with the demand for split second deci- sions due to the proximity to the ground generates a phenomenal amount of stress on the human body and the machine. This can lead to failures of sys- tems and the structure of the machine. So the life of a combat plane part is far shorter than that of commercial plane parts and requires regular change. This is also true to a large extent for military transport planes and helicopters operat- ing in the Himalaya, the North and the East. These operations are carried out on a daily basis, be it dropping supplies for the army or undertaking medical evacu- ation in the far reaches of snowy valleys. With the modernisation of the air force, there was a constant requirement to change the spare parts of engines, air frames, avionics and weapon sys- tems. This also required indigenisation of the aviation industry instead of dep- ending on a foreign supplier to meet these demands. That is when the rude realisation The Flying Coffin Syndrome InnumerablecrashesofIAFjetsareatestimonytoIndia’spoorindigenisation,precariousspare partsrecordandlackofpoliticalwill C PRICE OF APATHY Wreckage of two Surya Kiran jets that crashed in Bengaluru in February 2019
  30. 30. | INDIA LEGAL | April 15, 2019 33 dawned on the nation that it had practi- cally no capacity to meet these military demands in spite of having a long-estab- lished military industry in the form of HAL, DRDO, 41 ordnance factories, etc. Though these organisations were mak- ing some basic weapons and equipment, they were not modern machinery for land, sea and air. The total dependency upon the supplier led to various pres- sures being exerted on decision-makers so that there was no indigenisation and India remained constantly at the mercy of the supplier. This became clear after the second phase of modernisation of the air force in 1963 when India went in for Russian planes such as MiG-21s, AN-12s, IL-14s and Su-7s. Though the Russians met the equip- ment demands, they were reluctant to help in indigenisation. This resulted in a constant and heavy demand for spare parts, putting pressure on the IAF and forcing it to start the practice of giving life extensions to spare parts. Many acci- dent investigations revealed that these parts had started to either break down due to metal fatigue or had become too worn out to give the required perform- ance. This led to another unhealthy practice—cannibalisation. This meant that spares from an aircraft that was not flying due to some serious problem or expiry of airframe hours could be used for other needy aircraft. The hierarchical pressure became so great that commanders, in order to curry favour from their military or polit- ical bosses, did not want to load their superiors with extra demands. Hence, cannibalisation from ailing aircraft was arranged at the local base level. So, due to the extreme demands of flying cou- pled with constant failures of technolo- gy, the rate of accidents saw a sharp rise. This was seen in MiG-21s mostly and other aircraft such as MiG-27s, Jaguars and even Mirage 2000s. I t was only recently that a MiG-27 went down in the Jodhpur area. In fact, our record has been dismal—16 aircrafts have been lost in this financial year. Coupled with many flight safety incidents, it has not been a happy sce- nario. These also include the recent bat- tle crash of a MiG Bison and a Mi-17 V-5. There was also the infamous acci- dent of a Mirage 2000 which was being repaired at HAL, Bengaluru. The air- craft was on a sortie for the IAF and was being flown by two test pilots. It crashed at the airport, leaving both pilots dead. It was mentioned in Parliament that in the three financial years between 2014-15 and 2016-17, 35 military air- crafts including 11 helicopters were lost. While we all know that during war we are bound to lose aircraft due to enemy action as during the 1971 war, what is not palatable is that we lost 20 aircraft in 14 days due to air accidents caused by tech failure. The cause of the acci- dents could be human error on the part of the pilot or ground crew, tech error due to failure of the aircraft parts or accidents due to environmental factors like weather or bird hits (again a very serious problem being tackled on a war footing). Pilot error stems from wrong train- ing practices when he is a trainee. In the mid-1970s, the famous La Fontaine report stated that due to lack of training facilities like simulators, pilots miss out on various crucial aspects. This, coupled with lack of advanced jet trainers, becomes dangerous for flight safety. That is why Hawk Trainers managed to gain an entry into IAF training after a struggle of over 30 years. Hence, our dismal safety record is due to lack of proper training equipment which we don’t make and don’t possess due to the high cost factor. During 2000-2015, we lost 264 fighters, which amounts to close to one squadron every year. This forced the government to take stern measures, including getting better training facili- ties, stern flight safety measures and better aircraft. It has been observed that during 2014–17, the loss of aircraft came down to seven per year, ie, the crash rate reduced by 50 percent. New policies of the government must include self-sufficiency in military flying equipment due to proper indigenisation coupled with necessary R&D. This will allow us to have our own aircraft and training simulators to meet the overall demands of safety and efficiency. —The writer is a military analyst and air accident investigator Twitter: @indialegalmedia Website: Contact: ACCIDENT-PRONE IAF personnel inspecting the site after a MiG-27 crashed in Jodhpur in June 2016 Photos: UNI
  31. 31. Economy/Real Estate Investment Trust 34 April 15, 2019 TABLE, liquid and trans- parent financial markets are a necessary condition for the growth of a modern economy. An economy grows by developing new products and services and incubating new ideas, and this requires capital. Fin- ancial markets (also called capital mar- kets) provide a marketplace where savers can find those who need money for new products. These markets work efficiently only if they operate free of government controls and manipulation. Good companies will find the prices of their stock bid up by investors, which in turn brings in new capital, while bad companies are forced out. This mecha- nism of free-market pricing provides for the efficient allocation of a scarce res- ource like capital without any need for centralised planning or state interven- tion. That is at the heart of a modern capitalist system. Critical to the functioning of free and efficient capital markets is the availabili- ty of a broad range of financial instru- ments. In large financial centres such as New York, London, Tokyo, Singapore, etc. there are hundreds of asset classes available for all types of investors. India desperately needs a broad and well-dev- eloped capital market if it is to provide the financial resources to support its economic growth and to create employ- ment opportunities for its people. It has developed a large and liquid stock market—the National Stock Get a Pie in Commercial Space Inamajorsteptowardsfinancialreform,India’sfirstREITwillenableinvestorstoownashare inrealtyprojectsandbringprofessionalism,transparencyandliquiditytothesector By Sanjiv Bhatia S Anthony Lawrence
  32. 32. | INDIA LEGAL | April 15, 2019 35 Exchange (NSE) with a total market capitalisation of about US$2.1 trillion is the world’s seventh largest stock ex- change and the second largest in terms of daily share volume traded. But that is about it. India’s bond markets are rela- tively modest in size as are the commod- ity and futures markets. It is an astoun- ding fact in a country that has been one of the largest importers of oil, trading in oil futures contracts that allow compa- nies to hedge against oil price increases, started just three weeks ago. In this context, the oversubscription of a recent initial public offering (IPO) of the Real Estate Investment Trust (REIT) is great news. REITs, as an investment vehicle, have been around for almost 50 years in the US, and are now popular in more than 30 countries. In India, they were initially proposed in 2008 but finally formalised by the SEBI in 2014. The first public offering of a REIT was in March this year by Embassy Office Parks, a joint venture between the world’s largest alternative investment fund, the Blackstone Group, and Indian real estate major, the Embassy Group. The IPO, which planned to raise `4,750 crore, was oversubscribed by almost two and a half times. In other words, India’s first REIT generated a lot of investor in- terest which is an encouraging sign for the real estate sector especially the com- mercial segment. A REIT is a company that collects money from investors to buy, operate or finance income-producing real estate. The income it collects as rent and the profit from selling property is passed on to the investors. Similar to a mutual fund, which allows investors to own part of a company by buying its stock, a REIT will enable investors to own a share in real estate projects. By chan- nelling capital from savers towards real estate projects, REITs help provide vital capital to help communities grow. Also, REITs remove pressure from the bank- ing system which would otherwise have been required to fund these projects. This, in turn, helps to bring down inter- est rates. But most importantly, REITs bring professionalism, transparency, depth and liquidity to the real estate marketplace which is essential if Indian real estate is to attract foreign investors. T he Embassy Office Parks REIT will be Asia’s largest REIT with a portfolio of 33 million square feet of commercial space across Mumbai, Pune, Bengaluru and Noida. It has 150 tenants of which almost 50 percent are Fortune 500 companies like Microsoft, Google, JP Morgan, IBM, Cisco, Wells Fargo and Mercedes Benz. The company expects to earn annual lease revenue of over `2,000 crore from tenants. Black- stone, with almost 100 million square feet of office space, is the largest owner of commercial real estate in India. This IPO allows Blackstone to monetise some of its investments and sends a strong signal to foreign investors that India’s commercial real estate market is open for business. The development of a transparent and liquid REITs market will encourage many foreign funds to invest in Indian real estate. Additional capital will also come from a large swathe of domestic inves- tors who have so far been shut out of India’s commercial real estate market because of high capital requirements. Now anyone with around `2 lakh to invest can become part owner of com- mercial properties. The Securities Exchange Board of India (SEBI) which regulates REITs requires that it have a minimum of `500 crore in assets, with at least 80 percent of the capital invested in properties that are already complete and generating rent. A minimum of 75 percent of REIT’s revenue will come from rental and leasing income. Currently, the focus is on commercial properties, but eventu- ally the REIT structure can be used to raise capital for other real estate proj- ects such as student housing, data cen- tres, healthcare offices, medical facilities and assisted-living communities. REITs are required to raise capital through an open public offering. Inves- tors can buy shares (also called units) in the IPO. Currently, SEBI has put a min- imum investment amount of `2 lakh. So, any investor with `2 lakh in savings can get into the action by buying shares in REIT. After the IPO, the shares of REIT must be listed on the stock ex- change, and investors can then buy and sell these shares just like any other com- pany. The minimum trading lot size is currently `1 lakh. INVESTOR INTEREST Commercial places in Connaught Place, Delhi, will be in high demand due to REITs
  33. 33. 36 April 15, 2019 REITs have significant advantages for investors. They allow small investors to invest in real estate without having to purchase any property. The liquidity provided by the listing of REITs on ma- jor stock exchanges will make real estate investing fast, easy and efficient, allow- ing investors to get in and out of their investments quickly. Continuous pricing of REIT shares in an open and free marketplace will bring much-needed transparency and price discipline to the sector. What returns can investors expect from REITs? The table (see on top), based on data from the US, shows the annual investment returns (in percent) from REITs and stocks for ten years from 2009 to 2018. Although stocks had a higher average return over the ten years, REITs outperformed stocks for six out of ten years. The real benefit from investing in REITs is the diversification it provides. The concept of portfolio-based investing is still new in India. Most investors don’t appreciate the benefits of diversification as a strategy to reduce risk. There are two types of risk that investors face— unsystematic and systematic. When investors put money in a mutual fund, they reduce unsystematic or company- specific risk because mutual funds invest in a broad portfolio of stocks. But buy- ing a bunch of mutual funds will not reduce systematic risk which is the risk of the entire stock market going down. That risk can only be mitigated by inves- ting in a broad range of asset classes like bonds, gold, real estate, commodities etc., which are unrelated to stocks. The critical variable in portfolio management is the correlation between different asset classes. To achieve proper diversification and to reduce systematic risk, investors need to consider asset classes that are unrelated so that when one asset class is doing poorly, the other compensates by going up. Bonds are a popular way to diversify due to their very low correlation with other major asset classes, particularly stocks. Ano- ther viable option is real estate, which has a relatively low correlation with the stock market. Until now, the latter was unavailable to most small investors in India, but with the introduction of REITs, investors can add real estate diversification to their portfolio. Historical data shows that stocks and REITs have a very low correlation (glob- ally it is around 0.2), which suggests that REITs provide a nice diversification benefit and must be included in every investor’s portfolio. An allocation to REITs can help reduce the overall risk of an investor’s portfolio while at the same time providing increased returns. This is particularly true during periods of high inflation when stocks suffer and real estate does well. The portfolios of large institutional investors like global pen- sion funds generally include real-estate assets with target allocations ranging from 4 percent to 10 percent. Globally, REITs make up about 5 percent of the entire universe of investible assets, which is a good benchmark for how much a typical investor should allocate to REITs. The success of India’s first REIT offering is a very encouraging sign for those who believe India has the poten- tial to become a significant global finan- cial centre like Singapore and Hong Kong. India needs huge capital for new infrastructure. There isn’t enough tax money to pay for this, so the money will have to come from capital markets. The development of India’s capital markets must, therefore, be given the highest priority. In 2009, a committee headed by ex RBI governor Raghuram Rajan, put together a report titled, A Hundred Small, which provided a comprehensive blueprint for financial reform in India. The next government should make it a policy priority to implement these reforms. Infusion of capital through innovative financial instruments is the only way to produce double-digit growth in India. —The writer is a financial economist and founder, Twitter: @indialegalmedia Website: Contact: ThesuccessofIndia’sfirstREIToffering isaveryencouragingsignforthosewho believeIndiahasthepotentialtobecome asignificantglobalfinancialcentrelike SingaporeandHongKong(above). Economy/Real Estate Investment Trust Apromisingfuture Annual investment returns (in percent) from REITs and stocks for ten years from 2009 to 2018 in the US Year REITs Stocks (S&P 500) 2009 30.08 26.37 2010 28.37 15.06 2011 8.62 1.89 2012 17.63 15.97 2013 2.31 32.31 2014 30.36 13.46 2015 2.42 1.25 2016 8.6 12.01 2017 4.1 21.7 2018 2.81 9.71 Average 13.5 15.1
  • gopinath007

    Apr. 9, 2019

HAS IT BECOME A PAPER TIGER? An analysis of whether the nation’s key environmental watchdog is losing its teeth to violators who flout its rulings with apparent impunity


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