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Archive for April, 2012

B.Tech students from new IITs may not get their degrees on time

April 29th, 2012 No comments

The first batch of B.Tech students will pass out in the next couple of months from six new IITs but they will not get their degrees unless Parliament passes an Amendment Bill.  M.Tech students who completed their course in IIT Hyderabad last year have not yet been awarded their degrees.

The Institute of Technology (Amendment) Bill, 2010 is listed for consideration and passing in the Rajya Sabha on April 30, 2012 along with the National Institutes of Technology (Amendment) Bill, 2010.  Both Bills were passed in the Lok Sabha in 2011Both Bills confer the status of institutions of national importance to a number of new institutions, which implies that they have the power to award degrees (other technical institutions have to be affiliated with a university to be able to award degrees).  These institutions cannot award degrees until Rajya Sabha also passes the Bill, the President gives assent and the central government brings it into effect through a notification.

Power to grant degrees

The Ministry of HRD established six new Indian Institutes Technology (IITs) in 2008 and two in 2009.  It also established five new Indian Institutes of Science Education and Research (IISERs).  However, they are still awaiting for the power to be recognised as degree granting institutions.  Entry 64 of the Union List states that only Parliament can declare an institution to be an institution of national importance (see here and here).  Also, the University Grants Commission Act, 1956 states that the right to confer degrees can be exercised only by a university, deemed university or any institution specially empowered by an Act of Parliament to do so.

According to news reports, students of the new IISERs who passed out in 2011 have not received their degrees because of the legislative delay.  Similar problems were reported by students in IIT-Benaras Hindu University.  The students of the new IITs, which were set up in 2008 would be passing out this year.  It is likely that they would face similar problems.  In fact, IIT-Hyderabad is already in the news for not being able to award degree to its Masters students.

Highlights of the Bills

The Institute of Technology (Amendment) Bill, 2010 amends the Institutes of Technology Act, 1961, which declares certain Institutes of Technology to be institutions of national importance by adding eight new Indian Institutes of Technology (IITs) in Bhubaneshwar, Gandhinagar, Hyderabad, Indore, Jodhpur, Mandi, Patna, Ropar.  It also seeks to integrate the Institute of Technology, Banaras Hindu University (BHU) within the ambit of the Act.  All these institutions shall be declared as institutions of national importance (see here for a Bill Summary).

The Bill was referred to the Standing Committee on HRD, which raised a few issues with regard to lack of clarity about the zone in which IIT-BHU shall be operating, the need to preserve the autonomy of the IITs and the need to fulfil qualitative parameters before the new IITs could transform into institutes of national importance (see here for the Standing Committee Report and a Summary).

The National Institutes of Technology (Amendment) Bill, 2010 amends the National Institutes of Technology Act, 2007 to add a schedule of five Indian Institutes of Science Education and Research (IISER) (established in Kolkata, Pune, Mohali, Bhopal and Thiruvananthapuram).  These institutions shall be declared to be institutions of national importance.  Currently, there are 20 institutions listed as institutions of national importance under the 2007 Act (see here for a Bill Summary).

The Standing Committee Report on the Bill made a few recommendations: (a) the composition of the Board of Governors should be made more expert specific in with the mandate of IISERs; (b) IISER Council should have less number of Secretaries, and (c) details of the inter-disciplinary knowledge regime should strive toward flexibility and freedom in research (see here for the Standing Committee Report and a Summary).

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TRAI’s recommendations on auction of spectrum

April 27th, 2012 No comments

TRAI released its recommendations on auction of spectrum on April 23, 2012.   The recommendations are in pursuance of the Supreme Court order cancelling 122 telecom licences.  The cancellation was ordered on grounds of procedural irregularities and arbitrariness in the first-cum-first-serve policy for allocation of spectrum.   The recommendations, if adopted by the Department of Telecommunications, would change various aspects of the present telecom policy, including (a) relationship between a telecom licence and spectrum; (b) procedure for allocation of spectrum; (c) pricing of spectrum; (d)  limits on spectrum allocation; and (e) use of spectrum.

Relationship between telecom licences and spectrum

Previously, under the Telecom Policy 1994 (updated in 1999), spectrum was tied in with telecom licences.  Since 2003, licence conditions provided for award of two blocks of 6.2 MHz of spectrum for GSM technology and two blocks of 5 MHz for CDMA technology.  As per the government’s decision of January 17, 2008 (as explained in TRAI’s consultation paper, see page 3 paragraph 7) additional spectrum would be awarded on the basis of increment in the number of subscribers.  Service providers had to pay a licence fee (on obtaining the licence), an annual licence fee and a spectrum usage charge determined on the basis of their adjusted gross revenue.

TRAI has recommended that telecom licences and spectrum should be de-linked.  The service provider would thus pay separately for the value of the licence and the spectrum.  With this formulation an entity that does not hold a licence, but is eligible to secure one, may also procure spectrum.  This would help in avoiding situations where licence holders have to wait to secure spectrum or offer wire line services in the absence of spectrum.

Procedure for allocation of spectrum

TRAI has recommended that spectrum be auctioned by means of a simultaneous multiple round ascending auction (SMRA).  This means that the service providers would bid for spectrum in different blocks simultaneously.  In the first round of auction a reserve price (base price) set by the government is used.

Reserve price for auction and payment mechanism

A reserve price indicates the minimum amount the bidder must pay to win the object.  In case it is too low, it may reduce the gains made by the seller and lead to a sub-optimal sale.  If it is too high, it may reduce the number of bidders and the probability of the good not being sold.

Various countries have adopted a reserve price of 0.5 times the final price.  TRAI has recommended that the reserve price should be 0.8 times the expected winning bid.  It has also recommended that telecom companies pay 67% to 75% of the final price in installments over 10 years, depending on the spectrum band.

TRAI has reasoned that a higher price would reduce the possibility of further sales upon bidders securing spectrum.  However, this may lead to fewer bidders and ultimately fewer service providers.  It is argued in news reports that this may increase investments to be made by the service providers and eventually an increase in tariffs.

Spectrum blocks and caps

TRAI has recommended that the spectrum cap should be determined on the basis of market share.  A service provider can now secure a maximum of 50% of spectrum assigned in each band in each service area.  However, a service provider cannot hold more than 25% of the total spectrum assigned in all the bands across the country.

As per the January 2008 decision, additional spectrum could be awarded to telecom companies when they reached incremental slabs of subscribers.  This could extend to two blocks of 1 MHz for GSM technology, and two blocks of 1.25 MHz for CDMA, for each slab of subscribers.

TRAI has recommended that spectrum should be auctioned in blocks of 1.25 MHz.  Each auction would at least offer 5 MHz of spectrum at a time.  Smaller blocks would ensure that service providers who are nearing the spectrum cap may secure spectrum without exceeding the cap.  However, experts have argued that 1.25 MHz block may be too limited for launching services.  Also, TRAI in the recommendation has noted that a minimum of 5 MHz of contiguous spectrum is required to launch efficient services with new technologies.

Use of spectrum

TRAI has recommended that the use of spectrum should be liberalised.  This implies that spectrum should be technology neutral.  Telecom companies would now be free to launch services with any technology of their choice.

The Piracy Bill, 2012

April 27th, 2012 No comments

The Piracy Bill was introduced in Lok Sabha on April 24, 2012.  According to the Statement of Objects and Reasons, there has been a significant increase in attacks by pirates, particularly in the Gulf of Aden and off the coast of Somalia.  This has affected security of maritime traffic and personnel plying between Asia, Europe and Africa.  Moreover, enhanced naval presence in the Gulf of Aden is now causing pirates to shift operations close to India’s Exclusive Economic Zone.   As a result, a number of Somali pirates are presently in the custody of Indian police authorities. However, since piracy as a crime is not included in the Indian Penal Code (IPC), this has led to problems in prosecution.

The Piracy Bill intends to fill this gap and provide clarity in the law.

The Bill, if passed by Parliament, would extend to the entire Exclusive Economic Zone of India (EEZ).  Under international law, EEZ is a seazone over which a country has special rights for exploration and use of marine resources.  It stretches outward from the coast, up to 200 nautical miles into the sea.

The Bill defines ‘piracy’ as any illegal act of violence or detention for private ends by the crew or passengers of a private ship or aircraft on high seas or at a place outside the jurisdiction of any State.  This definition is akin to the definition of piracy laid down under the ‘United Nations Convention on the Law of the Sea‘.

The Bill seeks to punish piracy with imprisonment for life.  In cases where piracy leads to death, it may be punished with death.  It also provides that if arms, ammunition are recovered from the possession of the accused, or if there is evidence of threat of violence, the burden of proof for proving innocence would shift to the accused.

The Bill empowers the government to set up designated courts for speedy trial of offences and authorizes the court to prosecute the accused regardless of his/ her nationality.  It also provides for extradition.

You can access the Bill text here.

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Supreme Court upholds 25% reservation in private schools

April 14th, 2012 2 comments

In a landmark judgment on April 12, 2012, the Supreme Court upheld the constitutional validity of the provision in the Right to Education Act, 2009 that makes it mandatory for all schools (government and private) except private, unaided minority schools to reserve 25% of their seats for children belonging to “weaker section and disadvantaged group”.  The verdict was given by a three-judge bench namely Justice S.H. Kapadia (CJI), Justice Swatanter Kumar and Justice K.S. Radhakrishnan.  However, the judgment was not unanimous.  Justice Radhakrishnan gave a dissenting view to the majority judgment.

According to news reports (here and here), some school associations are planning to file review petitions against the Supreme Court order (under Article 137 of the Constitution, the Supreme Court may review any judgment or order made by it.  A review petition may be filed if there is (a) discovery of new evidence, (b) an error apparent on the face of the record, or (c) any other sufficient reason).

In this post, we summarise the views of the judges.

Background of the petition

The 86th (Constitutional Amendment) Act, 2002 added Article 21A to the Constitution which makes it mandatory for the State to provide free and compulsory education to all children from the age of six to 14 years (fundamental right).  The Parliament enacted the Right of Children to Free and Compulsory Education Act, 2009 to give effect to this amendment.

The Act provides that children between the ages of six and 14 years have the right to free and compulsory education in a neighbourhood school.  It also lays down the minimum norms that each school has to follow in order to get legal recognition.  The Act required government schools to provide free and compulsory education to all admitted children. Similarly, aided schools have to provide free and compulsory education proportionate to the funding received, subject to a minimum of 25%.

However, controversy erupted over Section 12(1)(c) and (2) of the Act, which required private, unaided schools to admit at least 25% of students from SCs, STs, low-income and other disadvantaged or weaker groups.  The Act stated that these schools shall be reimbursed for either their tuition charge or the per-student expenditure in government schools, whichever is lower.  After the Act was notified on April 1, 2010, the Society for Unaided Private Schools of Rajasthan filed a writ petition challenging the constitutional validity of this provision on the ground that it impinged on their right to run educational institutions without government interference.

Summary of the judgment

Majority

The Act is constitutionally valid and shall apply to (a) government controlled schools, (b) aided schools (including minority administered schools), and (c) unaided, non-minority schools.  The reasons are given below:

First, Article 21A makes it obligatory on the State to provide free and compulsory education to all children between 6 and 14 years of age.  However, the manner in which the obligation shall be discharged is left to the State to determine by law.  Therefore, the State has the freedom to decide whether it shall fulfill its obligation through its own schools, aided schools or unaided schools.  The 2009 Act is “child centric” and not “institution centric”.  The main question was whether the Act violates Article 19(1)(g) which gives every citizen the right to practice a profession or carry out any occupation, trade or business.  However, the Constitution provides that Article 19(1)(g) may be circumscribed by Article 19(6), which allow reasonable restriction over this right in the interest of the general public.  The Court stated that since “education” is recognized as a charitable activity [see TMA Pai Foundation vs State of Karnataka (2002) 8 SCC 481] reasonable restriction may apply.

Second, the Act places a burden on the State as well as parents/guardians to ensure that every child has the right to education.  Thus, the right to education “envisages a reciprocal agreement between the State and the parents and it places an affirmative burden on all stakeholders in our civil society.”  The private, unaided schools supplement the primary obligation of the State to provide for free and compulsory education to the specified category of students.

Third, TMA Pai and P.A. Inamdar judgments hold that the right to establish and administer educational institutions fall within Article 19(1)(g).  It includes right to admit students and set up reasonable fee structure.  However, these principles were applied in the context of professional/higher education where merit and excellence have to be given due weightage.  This does not apply to a child seeking admission in Class I.  Also, Section 12(1)(c) of the Act seeks to remove financial obstacle.  Therefore, the 2009 Act should be read with Article 19(6) which provides for reasonable restriction on Article 19(1)(g).  However, the government should clarify the position with regard to boarding schools and orphanages.

The Court also ruled that the 2009 Act shall not apply to unaided, minority schools since they are protected by Article 30(1) (all minorities have the right to establish and administer educational institutions of their choice).  This right of the minorities is not circumscribed by reasonable restriction as is the case under Article 19(1)(g).

Dissenting judgment

Article 21A casts an obligation on the State to provide free and compulsory education to children of the age of 6 to 14 years.  The obligation is not on unaided non-minority and minority educational institutions.  Section 12(1)(c) of the RTE Act can be operationalised only on the principles of voluntariness, autonomy and consensus for unaided schools and not on compulsion or threat of non-recognition.  The reasons for such a judgment are given below:

First, Article 21A says that the “State shall provide” not “provide for”.  Therefore, the constitutional obligation is on the State and not on non-state actors to provide free and compulsory education to a specified category of children.  Also, under Article 51A(k) of the Constitution, parents or guardians have a duty to provide opportunities for education to their children but not a constitutional obligation.

Second, each citizen has the fundamental right to establish and run an educational institution “investing his own capital” under Article 19(1)(g).  This right can be curtailed in the interest of the general public by imposing reasonable restrictions.  Citizens do not have any constitutional obligation to start an educational institution.  Therefore, according to judgments of TMA Pai and PA Inamdar, they do not have any constitutional obligation to share seats with the State or adhere to a fee structure determined by the State.  Compelling them to do so would amount to nationalization of seats and would constitute serious infringement on the autonomy of the institutions. Rights guaranteed to the unaided non-minority and minority educational institutions under Article 19(1)(g) and Article 30(1) can only be curtailed through a constitutional amendment (for example, insertion of Article 15(5) that allows reservation of seats in private educational institutions).

Third, no distinction can be drawn between unaided minority and non-minority schools with regard to appropriation of quota by the State.

Other issues related to the 2009 Act

Apart from the issue of reservation, the RTE Act raises other issues such as lack of accountability of government schools and lack of focus on learning outcomes even though a number of studies have pointed to low levels of learning among school children.  (For a detailed analysis, please see PRS Brief on the Bill).

Presidential Reference in the 2G case

April 12th, 2012 No comments

As per news reports, the union government has filed a Presidential Reference in relation to the 2G judgment.  In this judgment the Supreme Court had cancelled 122 2G licences granting access to spectrum and had ordered their re-allocation by means of an auction.  It also held that use of first cum first serve policy (FCFS) to allocate natural resources was unconstitutional.  It had held that natural resources should be allocated through auctions.

As per the news report, the Presidential Reference seeks clarity on whether the Supreme Court could interfere with policy decisions.  This issue has been discussed in a number of cases.  For instance, the Supreme Court in Directorate of Film Festivals v. Gaurav Ashwin Jain[1] held that Courts cannot act as an appellate authority to examine the correctness, suitability and appropriateness of a policy.  It further held that Courts cannot act as advisors to the executive on policy matters which the executive is entitled to formulate.  It stated that the Court could review whether the policy violates fundamental rights, or is opposed to a Constitutional or any statutory provision, or is manifestly arbitrary.  It further stated that legality of the policy, and not the wisdom or soundness of the policy, is the subject of judicial review.  In Suresh Seth vs. Commissioner, Indore Municipal Corporation[2] a three judge bench of the Court observed that, “this Court cannot issue any direction to the Legislature to make any particular kind of enactment.  Under our constitutional scheme Parliament and Legislative Assemblies exercise sovereign power or authority to enact laws and no outside power or authority can issue a direction to enact a particular piece of legislation.

In the present case it may be argued that whereas the Court was empowered to declare a policy such as FCFS as unconstitutional, it did not have the jurisdiction to direct auctioning of spectrum and other natural resources.  The Presidential Reference may conclusively determine the Court’s jurisdiction in this regard.  However, it has been urged by a few experts that this Presidential Reference amounts to an appeal against the decision of the Court.  They have argued that this could be done only through a Review Petition (which has already been admitted by the Court).

The advisory jurisdiction of the Court invoked through Presidential References, is governed by Article 143 of the Constitution.  Under Article 143 of the Constitution of India, the President is empowered to refer to the Supreme Court any matter of law or fact.  The opinion of the Court may be sought in relation to issues that have arisen or are likely to arise.  A Presidential Reference may be made in matters that are of public importance and where it is expedient to obtain the opinion of the Supreme Court.  The Court may refuse to answer all or any of the queries raised in the Reference.

A Presidential Reference thus requires that the opinion of the Court on the issue should not have been already obtained or decided by the Court.  In the Gujarat Election Case[3] the Supreme Court took note of Presidential References that were appellate in nature.  Thus, a Presidential Reference cannot be adopted as a means to review or appeal the judgment of the Supreme Court.  Against judgments of the Court the mechanisms of review is the only option.  This position was also argued by Senior Advocate Fali S. Nariman in the Cauvery Water Case[4], where the Court refused to give an opinion.

Whether the Court had the authority to determine a policy, such as FCFS, as unconstitutional is not disputed.  However, there are conflicting judgments on the extent to which a Court can interfere with the executive domain.    It would be interesting to see whether the Court would give its opinion on this issue.  In the event it does, it may bring higher level of clarity to the relationship between the executive and the judiciary.


[1] AIR 2007 SC 1640

[2] AIR2006SC767

[3] (2002) 8 SCC 237

[4] (1993) Supp 1 SCC 96(II)

Can States levy entry tax?

April 4th, 2012 2 comments

The government of West Bengal has recently imposed a tax on the entry of goods into the local areas of the State.  According to the Finance Minister, this will help meet ‘cost for facilitating trade and industry in the State’.

Many States impose entry tax on goods coming into their areas of jurisdiction.  Entry Tax is imposed by States under the provisions of Entry 52 of the State List and Article 304 of the Indian Constitution.  These read as under:

Entry 52, List II of the Seventh Schedule (State List)

“Taxes on the entry of goods into a local area for consumption, use or sale therein.”

Article 304: Restriction on trade, commerce and intercourse among States

“Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law –

(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest:

Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.”

Are there any restrictions to the power of States to impose entry taxes?

The use of the words ‘so, however, as not to discriminate ‘ and ‘reasonable restrictions’ in the above articles constrain the power of States to some extent.  Several petitions challenging the imposition of entry taxes have been filed before courts.  In 2008, the Supreme Court has referred the entry tax issue to a larger bench.  This case is currently pending.

What are the arguments in favour and against the imposition of such taxes?

Arguments in favour of entry tax

  • Resource mobilization
  • Protection to state producers and manufactures

Arguments against entry tax

  • Upward pressure on prices
  • Delays and bottlenecks to movement of goods at state borders
  • Reduction in competition and consumer choice

In addition to the above, it can also be said that an entry tax goes against the principle envisaged under the Goods and Services Tax (GST) regime.  The GST aims to create a common market throughout India without any taxes on inter-state movement of goods.  A Constitutional Amendment Bill to facilitate the implementation of GST is currently pending in Parliament.

 


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