Memorandum of procedure: Govt and SC in tug of war over appointments and turf

Flash points: importance of seniority, need for judges to write their reasons down, having a committee to vet candidates to tapping the Bar for the bench.

Given the trust deficit between the two after the Supreme Court, in October 2015, struck down the National Judicial Appointments Commission (NJAC) Act and the 99th Constitutional Amendment which gave politicians and civil society a final say in the appointment of judges in High Courts and the Supreme Court, both sides are locked in an unprecedented exchange of notes, arguments and terms to hammer out the Memorandum of Procedure (MoP) that will define the contours of this vital and uneasy balance of power.

The judgment had recommended "appropriate measures" to improve the working of the Collegium system. A further order listed factors - these included eligibility criteria, transparency in the appointment process, secretariat and complaints - for preparing the MoP.

Seniority & Merit

The government's proposal is that while promoting a High Court Chief Justice or a judge to the Supreme Court, the criteria of seniority, merit and integrity would be followed. Preference should be given to Chief Justices of the High Courts keeping in view their "inter-se seniority".

However, the judge's view is that "the criteria of seniority as a High Court judge, subject to merit and integrity, would be followed".

Reasons in writing

The government has proposed that "in case a senior Chief Justice being overlooked for elevation to the Supreme Court, the reasons for the same be recorded in writing". The government says that of the five judges of the Collegium for appointing Supreme Court judges, the views of each one must be made known to the government. This is necessary for the sake of "transparency" and to ensure there is no "favouritism", is the government's argument.

The Collegium's counter-argument is that "recordings of reasons for overlooking a Chief Justice or a senior puisne Judge will be counter-productive" as the reasons specified may mar his/her prospects of being elevated to the Supreme Court at a "future point of time". Moreover, it may also affect his/her duties as judge or Chief Justice and may become a "permanent blot on his/her career".

Three-judge quota

The government proposed that up to three judges may be appointed from the Bar or from distinguished jurists with proven track records. And that all judges of the Supreme Court should be open to recommend names for these postings. But the judiciary says that this "upto three" tantamounts to "either restricting the intake from the bar or fixing a quota of the bar". And in neither case does it fall within the framework of the Constitutional provisions. After deliberation, the government has agreed with this view that fixing a limit is not necessary so long as their representation is assured.

Committee & Secretariat

One serious difference between the two sides is over the government's proposal to set up an institutional mechanism in the form of a committee to assist the Collegium in evaluation of the suitability of prospective candidates. It wants two retired judges of the Supreme Court and an eminent person/jurist to be jointly nominated by the Chief Justice of India and the government. The Collegium feels that's not necessary.

The government counters that "wider consultation is necessary to select best candidates". To underline this, it argues that "consultation" is embedded in the Constitution when it comes to judge's postings. Article 124(2) says: "Every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Courts in the States as the President may deem necessary for the purpose."

The government has also proposed that there be a secretariat that maintains a database of judges, schedules Collegium meetings, maintains records and receives recommendations and complaints related to judge's postings. The judiciary hasn't rejected the idea of "a permanent secretariat " but it believes that forming and functioning of it should be left to the wisdom of the CJI and it should be under the ambit of the Registrar of the apex court.

The government, however, wants it to be under the Law Ministry. It argues that the secretariat would help cast a wider net for better candidates and for the Collegium to decide, it should have comparative data.

Conclusion

Surely, the binding nature of the Collegium's recommendation is what's bothering the government. As per the existing system, the Collegium's recommendations can be sent back but if it reiterates then the same, it is binding on the President. The government argues that its recommendations is "only a matter of Healthy Convention" and not a legitimisation of the judiciary to "ride roughshod" on the appointments.

Above all, the government is arguing that three important judgments of 1993, 1998 and 2015 on appointment of judges does not give absolute powers to the Collegium. Instead, they ask for "participatory consultative process at the highest level". All these arguments by the government reiterates, expectedly, that in the integrated process "political executive has no role to play is incorrect".

Black money and Economic growth

Economic experts say the magnitude of the global economic crisis at times is not felt in India because of strong (parallel) economy of black money. Black money in economic parlance means 'unaccounted money/income' which has escaped taxation. It may be hoarded in cash, but eventually gets itself converted into various assets like property, jewellery and durable consumer goods.

Black-money arises due to various reasons.

Unrealistically high rates of taxes which strain human nature. India is today one of the highest taxed nation.

Complicated Tax-laws in country which a layman fails to understand and hence fail to file tax returns.

Corruption prevailing in the tax collection department. The high rates of taxes induce businessmen to falsify their accounts and they are successful in doing so by bribing the concerned authorities.

Numerous controls, licenses and other governmental regulations.

Political activities such as elections where candidates spend well above the ceiling prescribed by the Election Commission. There is a growing tendency of funding of political parties with the help of black money. Big business houses are donating a huge amount of black money to the political parties, especially the ruling party with the sole intention to tame the political leadership for deriving benefits by manipulating policy decision.

Illegal activities like smuggling, drug-peddling and Government is still not in a position to control it.

The reluctance to bring agricultural earnings in the realm of income tax has also contributed to creation of black money. Big industrial houses, over the past few decades have entered the agriculture sector in a big way by acquiring big farms. The black money accrued from other sources is sought to be transformed into white by viewing it on the agricultural returns account.

Why is black money good for any economy?

Black money is known to play a major role in sectors such as real estate. Hence, it could be argued that a clampdown on black incomes would lead to reduced activity in the sector and hence adversely affect employment generation in the construction sector, which has been a major employment generation sector in recent times.

Why is black money not good for the economy?

Substantial loss in revenue for the government, which could be used for augmenting economic growth.
Attempts to meet the shortfall created by black money by resorting to raise more indirect taxes leads to a higher incidence of tax on the poor and consequently erodes mass demand.
Black money encourages investment in precious stones and jewellery, which is not productive.
Black money has encouraged diversion of resources in the purchases of real estate and investment in luxurious housing and lot of black money is made white. This has also pushed up prices of land to astronomical heights.
Black money results in transfer of funds from India to foreign countries through clandestine channels. Such transfers are made possible by violations of foreign exchange regulations through the device of under invoicing of exports and over invoicing of imports.

Black income has also been causing underestimation of GDP in India as an enormous volume of income is diverted to this unaccounted sector resulting in growing continuation of parallel economy of the country.

A part of the black incomes is held in cash and as a result there is abundance of liquidity which becomes available through the addition of savings held in the form of cash, bullion, gold, silver, etc.

Black money, also described as tainted money, has seeped into every walk of life and is posing a great threat to the stability of our real economy. The most unfortunate aspect is that it has come to be accepted as normal act of life. It also has pernicious effect on the moral value of our society which puts a premium on dishonesty and shatters the faith of the common man in the dignity of honest labour and lawful living.

Various measures including voluntary disclosure scheme and demonetisation have been taken by the government to curb the menace of black money. However, this is not sufficient. Many more measures need to be taken by the government for the smooth functioning of the economy. Demonetisation will only solve part of the riddle, the government will have to carry out many other steps, such as checking tax evasion, implementing anti-graft laws and checking crime, to rid the country of black money. To check the parallel economy, the government also needs to first tackle the generation of unaccounted wealth, then stop the conversion of black money into white, and lastly, clean up sectors, wherein black money is parked.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT):

A renewed push by Urban development ministry as it seeks to invest in sanitation and infrastructure projects more robustly in the next three years.

AMRUT is the new avatar of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). It adopts a project approach to ensure basic infrastructure services relating to water supply, sewerage, storm-water drains, transportation and development of green spaces and parks with special provision for meeting the needs of children.

Under this mission, 10% of the budget allocation will be given to states and union territories as incentive based on the achievement of reforms during the previous year.

AMRUT will be implemented in 500 locations with a population of one lakh and above. It would cover some cities situated on stems of main rivers, a few state capitals and important cities located in hilly areas, islands and tourist areas.

Under this mission, states get the flexibility of designing schemes based on the needs of identified cities and in their execution and monitoring. States will only submit state annual action Plans to the centre for broad concurrence based on which funds will be released. But, in a significant departure from JNNURM, the central government will not appraise individual projects.

Central assistance will be to the extent of 50% of project cost for cities and towns with a population of up to 10 lakhs and one-third of the project cost for those with a population of above 10 lakhs.

Under the mission, states will transfer funds to urban local bodies within 7 days of transfer by central government and no diversion of funds to be made failing which penal interest would be charged besides taking other adverse action by the centre.

India-Cyprus DTAA

A revised Agreement between India and Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal evasion (DTAA) with respect to taxes on income, along with its Protocol, was signed. The agreement will replace the existing DTAA that was signed by two countries in 1994.

New DTAA provides for source based taxation of capital gains arising from alienation of shares, instead of residence based taxation provided under the existing DTAA. However, a grandfathering clause has been provided for investments made prior to 1st April, 2017, in respect of which capital gains would continue to be taxed in the country of which taxpayer is a resident.

The new Agreement provides for Assistance between the two countries for collection of taxes and also updates the provisions related to Exchange of Information to accepted international standards, which will enable exchange of banking information and allow the use of such information for purposes other than taxation with the prior approval of the Competent Authorities of the country providing the information.

The new Agreement expands the scope of 'permanent establishment' and reduces the tax rate on royalty in the country from which payments are made to 10% from the existing rate of 15%, in line with the tax rate under Indian tax laws.