Legislation

Can compensation be paid for crimes against the state?

In a recent judgement (Judgement on Feb 23 - Baldev Singh and Ors. V. State of Punjab), the Supreme Court reduced the sentence of three persons convicted of rape from 10 years to 3 and a half years, and also asked the three convicts to pay a fine of Rs 50,000 each to the victim.   In reducing the sentence, the court drew from the provision in S. 376 (punishment for rape) of the Indian Penal Code which allows the court to reduce the sentence for "adequate and special reasons". There have been a number of past cases where the Supreme Court has reversed High Court decisions reducing sentences under this provision for not giving suitable reasons.  In 2007, the Supreme Court struck down a decision of the Karnataka High Court which had reduced the sentence of a convicted rapist to 3 and a half years.  The High Court had stated that the sentence should be reduced since the accused was "a young boy of 18 years belonging to Vaddara Community and Illiterate".  The Supreme Court stated that there is a legislative mandate to impose a sentence for not less than 10 years.  Only in exceptional cases, for "adequate and special reasons" can a sentence less than 10 years be imposed.  It overturned the Karnataka High Court decision saying that there was an "absence of any reason which could have been treated as "special and adequate reason"". In Baldev Singh's case, the Supreme Court said: 1.  The fact that the incident is an old one (the incident took place in 1997) is a circumstance which fits into "adequate and special reasons" for reducing a sentence. 2. The parties have entered into a compromise among themselves. The issue is whether this judgement has gone beyond the legislative mandate, and whether it has adhered to the principles laid down by earlier decisions of the Supreme Court.  In 2007, the Supreme Court itself stated that for a crime like rape, strong reasons have to be given to reduce the sentence envisaged by the legislature.  Moreover, the provision does not envisage the settlement of a crime by payment of compensation to the victim of a crime.  A criminal act is seen in law as a crime against the whole of society (which is why the state's prosecution agency, and not the victim, goes to court against alleged criminals).  Therefore, criminal actions such as rape (or murder, robbery, kidnapping etc.) cannot be "settled" by the payment of compensation under the Indian Penal Code.  In this light, it should be interesting to see whether the State files an appeal against this judgement.

Lokpal - A 'toothless' tiger?

The union government is reportedly considering a legislation to create anti-corruption units both at the centre and the states. Such institutions were first conceptualized by the Administrative Reforms Commission (ARC) headed by Morarji Desai in its report published in 1966. It recommended the creation of two independent authorities - the Lokpal at the centre and the Lokayuktas in the states. The first Lokpal Bill was introduced in Parliament in 1968 but it lapsed with the dissolution of Lok Sabha. Later Bills also met a similar fate. Though the Lokpal could not be created as a national institution, the interest generated led to the enactment of various state legislations. Maharashtra became the first state to create a Lokayukta in 1972. Presently more than 50% of the states have Lokayuktas, though their powers, and consequently their functioning varies significantly across states. Existing institutional framework The Central Vigilance Commission (CVC) and the Central Bureau of Investigation (CBI) are the two cornerstones of the existing institutional framework. However, the efficacy of the current system has been questioned. [1] Though the CVC (set up in 1964) is an independent agency directly responsible to the Parliament, its role is advisory in nature. It relies on the CBI for investigation and only oversees the bureaucracy; Ministers and Members of Parliament are out of its purview. Thus, presently there is no authority (other than Parliament itself) with the mandate to oversee actions of political functionaries. At the state level, similar vigilance and anti-corruption organisations exist, although the nature of these organisations varies across states. Karnataka Lokayukta Act The Karnataka Lokayukta is widely considered as the most active among the state anti-corruption units. [1] It was first set up in 1986 under the Karnataka Lokayukta Act, 1984. The Act was recently amended by the state government following the resignation of the Lokayukta, Justice Santosh Hegde. Justice Hegde had been demanding additional powers for the Lokayukta - especially the power to investigate suo-motu. Following the amendment, the Lokayukta has been given the suo motu powers to investigate all public servants except the CM, Ministers, Legislators and those nominated by the government. Following are the main provisions of the Karnataka Lokayukta Act:

  • The public servants who are covered by the Act include the CM, Ministers, Legislators and all officers of the state government including the heads of bodies and corporations established by any law of the state legislature.
  • The body is constituted for a term of five years and consists of one Lokayukta and one or more Upalokayuktas. All members must have been judges, with either the Supreme Court or some High Court.
  • Members are appointed on the advice of the CM in consultation with the Chief Justice of the Karnataka High Court, the Chairman of the Karnataka Legislative Council, the Speaker of the Karnataka Legislative Assembly, and the Leader of Opposition in both Houses.
  • Investigations involving the CM, Ministers, Legislators and those nominated by the government must be based on written complaints; other public servants can be investigated suo-motu.
  • Reports of  the Lokayukta are recommendatory. It does not have the power to prosecute.

The forthcoming Ordinance/ Bill Given that a Lokpal Bill is on the anvil, it might be useful at this point to enumerate some metrics/ questions against which the legislation should be tested:

  • Should the Lokpal limit itself to political functionaries? Should CBI and CVC be brought under the Lokpal, thereby creating a single consolidated independent anti-corruption entity?
  • Should Lokpal be restricted to an advisory role? Should it have the power to prosecute?
  • Should it have suo-motu powers to investigate? Would a written complaint always be forthcoming, especially when the people being complained against occupy powerful positions?
  • What should be the composition of the body? Who should appoint members?
  • Should the Prime Minister be exempt from its purview?
  • Should prior permission from the Speaker or the Chairman of the House be required to initiate inquiry against Ministers/ MPs?

What do you think? Write in with your comments. Notes: [1] Report of the Second Administrative Reforms Commission (ARC), 'Ethics in Governance' (2007) [2] Additional reading: An interview with the Karnataka Lokayukta

Legislation referred to parliamentary committees for scrutiny and report

In the recently concluded Winter Session of Parliament, nine Bills were introduced. Of the Bills introduced, 4 bills have been referred to the relevant Standing Committee for examining the Bill. The Standing Committees have been given three months to scrutinize the bills, hold consultations and present a report.  Details of these Bills are: 1.      The Forward Contracts (Regulation) Amendment Bill, 2010 (to be examined by the Committee on Food, Consumer Affairs and Public Distribution) 2.      The Multi-State Co-operative Societies (Amendment) Bill, 2010 (to be examined by the Committee on Agriculture) 3.      The NIMHANS, Bangalore Bill, 2010 (to be examined by the Committee on Health and Family Welfare) 4.      The National Identification Authority of India Bill, 2010 (to be examined by the Committee on Finance) The composition of the Standing Committees examining the Bills can be found here. Typically, during the process of review the parliamentary standing committees issue advertisements in newspapers inviting public feedback and comments on the Bill. As and when the advertisements appear, details can be found on the PRS website.

Will judges have to declare assets under the new Bill on judicial accountability?

The issue of judges declaring their assets assumes importance in light of recent allegations and inquiries into allegations of wrongdoing by judges (read our post on the report of the Committee set up to examine allegations of wrongdoing by Justice Soumitra Sen of the Calcutta High Court).  The Delhi High Court also gave a judgement recently, requiring judges of the Supreme Court to declare their assets. The Bill on judicial accountability (read summary here) requires judges to declare their assets to a specified authority within 30 days of them taking their oath of office.  The assets of spouses and dependents is also required to be disclosed.  The Bill also states that the assets declared will be put up on the website of the relevant court.

Andhra Pradesh Micro Finance Institutions (Regulation of Moneylending) Act, 2010

The Andhra Pradesh government issued an Ordinance on October 15, 2010, which stipulated conditions for the microfinance activities in the State. This Ordinance was ratified two months later on December 15, 2010 by the lower house of the Andhra Pradesh assembly. The key features of the Bill are: •All MFIs should be registered with the district authority. •No person should be a member of more than one SHG. •All MFIs shall make public the rate of interest charged by them on the loans extended. •There would be a penalty on the use of coercive action by the MFIs. •Any person who contravenes any provision of the Ordinance shall be punishable with imprisonment for a period of 6 months or a fine up to the amount of Rs 10,000, or both. The State assembly accepted most of the features from the earlier Ordinance in the Bill. However, the demand for a cap on the interest rates charged by the MFIs for the loans extended to the SHGs was rejected during the ratification.

Bill on accountability of Judges

The Judicial Standards and Accountability Bill, 2010 was introduced in the Lok Sabha on December 1, 2010. The Bill was introduced by the Shri M. Veerappa Moily, the Minister of Law and Justice. The Bill seeks to (a) lay down judicial standards, (b) provide for the accountability of judges, and (c) establish mechanisms for investigating individual complaints for misbehaviour or incapacity of a judge of the Supreme Court or High Courts. It also provides a mechanism for the removal of judges. Find the main features of the Bill explained here.

The Companies Bill, 2009

All companies are currently governed by the Companies Act, 1956. The Act has been amended 24 times since then. Three committees were formed in the last ten years, chaired by Justice V B Eradi (2001), Naresh Chandra (2002) and J J Irani (2005) to look into various aspects of corporate governance and company law. The Companies Bill, 2009 incorporates some of these recommendations. Main features The major themes of the Bill are as follows: It moves a number of issues that are currently specified in the Act (and its schedules) to the Rules; this change will make the law more flexible, as changes can be made through government notification, and would not require an amendment bill in Parliament. On a number of issues, the Bill moves the onus of oversight towards shareholders and away from the government. It also requires a super-majority of 75 percent shareholder votes for certain decisions. The powers of creditors have been enhanced in cases where a company is in financial distress. It has new provisions regarding independent directors and auditors in order to strengthen corporate governance. Finally, the bill increases penalties, and provides for special courts. Types of companies The Bill provides for six types of companies. Public companies need to have at least seven shareholders, and private companies between two and 50 shareholders. Charitable companies should have at least one shareholder, may have only certain specified objectives, and may not distribute dividend. Three new types of companies have been defined, which have less stringent provisions. These are one-person companies, small companies (private companies with capital less than Rs 50 million and turnover below Rs 200 million), and dormant companies (formed for future projects, or no operations for two years). Corporate Governance The Bill defines the duties of directors and norms for composition of boards. The number of directors is capped at 12. At least one director should be resident in India for at least 183 days in a calendar year and at least a third of the board should consist of independent directors. The Bill also sets guidelines for auditors. Certain related persons such as creditors, debtors, shareholders and guarantors cannot be appointed as auditors. Certain services such as book-keeping, internal audit and management services may not be undertaken by the auditors. Removal of an auditor before completion of term requires approval of 75 percent of the shareholders. Adjudication The Bill provides for a National Company Law Tribunal (NCLT) to adjudicate disputes between companies and their stakeholders. It also establishes an Appellate Tribunal. The NCLT may ask the government to investigate the working of a company on an application made by 100 shareholders or those who hold 10 percent of the voting power. Arrangements All arrangements such as mergers, takeovers, debt split, share splits and reduction in share capital must be approved by 75 percent of creditors or shareholders, and sanctioned by the NCLT. Standing Committee’s Recommendations The Parliamentary Standing Committee on Finance has submitted its report, and suggested several significant amendments. Corporate governance Substantive matters covered in various corporate governance guidelines should be contained in the Bill. These include: separation of offices of Chairman and Chief Executive Officer; limiting the number of companies in which an individual may become director; attributes for independent directors; appointment of auditors. Delegated legislation The Committee noted that the Bill provided excessive scope for delegated legislation. Several substantive provisions were left for rule-making and the Ministry was asked to reconsider provisions made for excessive delegated legislation. The Ministry has agreed to make some changes to include the following provisions in the Act: the definition of small companies; the manner of subscribing names to the Memorandum of Association; the format of Memorandum of Association to be prescribed in the Schedule; the manner of conducting Extraordinary General Meetings; documents to be filed with the Registrar of Companies. The Committee recommended that provisions relating to independent directors in the Bill should be distinguished from other directors. There should be a clear expression of their mode of appointment, qualifications, extent of independence from management, roles, responsibilities, and liabilities. The Committee also recommended that the appointment process of independent Directors should be made independent of the company’s management. This should be done by constituting a panel to be maintained by the Ministry of Corporate Affairs, out of which companies can choose their requirement of independent directors. Investor protection The Ministry, in response to the Committee’s concerns for ensuring protection of small investors and minority shareholders, indicated new proposals. These include: enhanced disclosure requirements at the time of incorporation; shareholder’s associations/groups enabled to take legal action in case of any fraudulent action by the company; directors of a company which has defaulted in payment of interest to depositors to be disqualified for future appointment as directors. The Ministry also made some suggestions on protection of minority shareholders/small investors, which the Committee accepted, including the source of promoter’s contribution to be disclosed in the Prospectus; stricter rules for bigger and solvent companies on acceptance of deposits from the public; return to be filed with Registrar in case of promoters/top ten shareholders stake changing beyond a limit. Corporate Delinquency Recommendations include: subsidiary companies not to have further subsidiaries; main objects for raising public offer should be mentioned on the first page of the prospectus; tenure of independent director should be provided in law; the office of the Chairman and the Managing Director/CEO should be separated. The Committee emphasised that the procedural defaults should be viewed in a different perspective from fraudulent practices. Shareholder democracy The Committee recommended that the system of proxy voting should be discontinued. It also stated that the quorum for company meetings should be higher than the proposed five members, and should be increased to a reasonable percentage. Foreign companies The Bill requires foreign companies having a place of business in India and with Indian shareholding to comply with certain provisions in the proposed Bill. The Committee observed that the Bill does not clearly explain the applicability of the Bill to foreign companies incorporated outside India with a place of business in India. It recommended that all such foreign companies should be brought within the ambit of the chapter dealing with foreign companies. Next steps The report of the Standing Committee indicates that the Ministry has accepted many of its recommendations. It is likely that the government will take up the Bill for consideration and passing during the winter session, which starts on 9th November. This article was published in PRAGATI on November 1, 2010

NGOs and the legislative process

All stakeholders, including citizens, NGOs, etc. have an important role in the law making process. But for many stakeholders, the process is not obvious or easily explained. In PRS, we often receive a number of requests from NGOs about how it is that they can get Parliament to make changes in legislation and what would be productive ways in which citizens can make a difference in the law making process. To address this, PRS has developed a short Primer on "Engaging with Policy Makers: Ideas on Contributing to the Law Making Process", in which we have tried to explain the process of how a Bill becomes an Act and some of the opportunities for citizen groups to become part of the process. Sometimes, large parts of a Bill that is introduced in Parliament may not be agreeable to some groups. In such cases there is a tendency among NGOs to sometimes decide to redraft the Bill. To the extent that NGOs think of redrafting a Bill as a tactical negotiating position, they may have a point in trying to redraft legislation. To the extent that NGOs think of such redrafting as a way to keep the discourse alive on the most important issues in any legislation, such efforts are welcome and useful. But if there is a belief that the Bill introduced in Parliiament will be withdrawn to introduce another Bill on the same subject as drafted by NGOs, then history suggests that the probability of that happening is close to zero. This is not a comment on the quality of the Bill that may be drafted by the group of NGOs, but rather a result of a complex set of issues about lawmaking in India. Despite the odds, there are some recent examples in which NGOs were able to bring about significant changes to Bills in Parliament. The Right to Information Act stands out as one of the best examples in recent times. On the recently passed Right to Education Bill, NGOs were able to exert sufficient pressure to bring about changes in the Bill, and also get the government to bring in an amendment Bill to make further changes. In the Seeds Bill which was introduced in 2004, the Government appears to have agreed to bring about important changes thanks to the efforts of a number of farmer groups approaching the government directly, and through their local MPs and political parties. It would be useful if we can get more examples/ comments/ suggestions about how some NGOs were able to bring about these changes in Bills. This will help more people understand how their voices can be heard in the corridors of power.

Land Acquisition: Public realm, private gain

One of the most politically contentious issues in recent times has been the government’s right to acquire land for ‘public purpose’.  Increasingly, farmers are refusing to part with their land without adequate compensation, the most recent example being the agitation in Uttar Pradesh over the acquisition of land for the Yamuna Express Highway. Presently, land acquisition in India is governed by the Land Acquisition Act, an archaic law passed more than a century ago in 1894.  According to the Act, the government has the right to acquire private land without the consent of the land owners if the land is acquired for a “public purpose” project (such as development of towns and village sites, building of schools, hospitals and housing and state run corporations).  The land owners get only the current price value of the land as compensation.  The key provision that has triggered most of the discontent is the one that allows the government to acquire land for private companies if it is for a “public purpose” project.  This has led to conflict over issues of compensation, rehabilitation of displaced people and the type of land that is being acquired. The UPA government introduced the Land Acquisition (Amendment) Bill in conjunction with the Rehabilitation and Resettlement Bill on December 6, 2007 in the Lok Sabha and referred them to the Standing Committee on Rural Development for scrutiny.  The Committee submitted its report on October 21, 2008 but the Bills lapsed at the end of the 14th Lok Sabha.  The government is planning to introduce revised versions of the Bills.  The following paragraphs discuss the lapsed Bills to give some idea of the government’s perspective on the issue while analysing the lacunae in the Bills. The Land Acquisition (Amendment) Bill, 2007 redefined “public purpose” to allow land acquisition only for defence purposes, infrastructure projects, or any project useful to the general public where 70% of the land had already been purchased from willing sellers through the free market.  It prohibited land acquisition for companies unless they had already purchased 70% of the required land.  The Bill also made it mandatory for the government to conduct a social impact assessment if land acquisition resulted in displacement of 400 families in the plains or 200 families in the hills or tribal areas.  The compensation was to be extended to tribals and individuals with tenancy rights under state laws.  The compensation was based on many factors such as market rates, the intended use of the land, and the value of standing crop.  A Land Acquisition Compensation Disputes Settlement Authority was to be established to adjudicate disputes. The Rehabilitation and Resettlement Bill, 2007 sought to provide for benefits and compensation to people displaced by land acquisition or any other involuntary displacements.  The Bill created project-specific authorities to formulate, implement and monitor the rehabilitation process.  It also outlined minimum benefits for displaced families such as land, house, monetary compensation, skill training and preference for jobs.  A grievance redressal system was also provided for. Although the Bills were a step in the right direction, many issues still remained unresolved.  Since the Land Acquisition Bill barred the civil courts from entertaining any disputes related to land acquisition, it was unclear whether there was a mechanism by which a person could challenge the qualification of a project as “public purpose”.  Unlike the Special Economic Zone Act, 2005, the Bill did not specify the type of land that could be acquired (such as waste and barren lands).  The Bill made special provision for land taken in the case of ‘urgency’.  However, it did not define the term urgency, which could lead to confusion and misuse of the term. The biggest loop-hole in the Rehabilitation and Resettlement Bill was the use of non-binding language.  Take for example Clause 25, which stated that “The Government may, by notification, declare any area…as a resettlement area.” Furthermore, Clause 36(1) stated that land for land “shall be allotted…if Government land is available.”  The government could effectively get away with not providing many of the benefits listed in the Bill.  Also, most of the safeguards and benefits were limited to families affected by large-scale displacements (400 or more families in the plains and 200 or more families in the hills and tribal areas).  The benefits for affected families in case of smaller scale displacements were not clearly spelt out.  Lastly, the Bill stated that compensation to displaced families should be borne by the requiring body (body which needs the land for its projects).  Who would bear the expenditure of rehabilitation in case of natural disasters remained ambiguous. If India is to attain economic prosperity, the government needs to strike a balance between the need for development and protecting the rights of people whose land is being acquired. Kaushiki Sanyal The article was published in Sahara Time (Issue dated September 4, 2010, page 36)

An Analysis of the Deferred Educational Tribunals Bill, 2010

Given India’s anti-defection laws, the Educational Tribunals Bill, 2010 should have sailed through smoothly in the Rajya Sabha.  The Bill was passed in the Lok Sabha on August 26 in spite of opposition from many MPs who raised a number of pertinent issues. However, in a surprising turn of events the Bill faced opposition from Congress Rajya Sabha MP K. Keshava Rao (along with other Opposition members).  It forced the Minister of Human Resource Development Shri Kapil Sibal to defer the consideration and passing of the Bill to the Winter session of Parliament. Such an incidence raises the larger issue of whether an MP should follow the party line or be allowed to express his opinion which may be contrary to the party.  Last year, Vice President Hamid Ansari had expressed the view that there was a need to expand the scope for individual MPs to express their opinion on policy matters.  One of the ways this could be done, he felt, was by limiting the issuance of whips “to only those bills that could threaten the survival of a government, such as Money Bills or No-Confidence Motions.”  There are others who feel that MPs should not oppose the party line in the House since they represent the party in the Parliament. (See PRS note on The Anti-Defection Law: Intent and Impact). The Educational Tribunals Bill, introduced in the Lok Sabha on May 3, 2010, seeks to set up tribunals at the state and national level to adjudicate disputes related to higher education.  The disputes may be related to service matters of teachers; unfair practices of the higher educational institutions; affiliation of colleges; and statutory regulatory authorities.  The tribunals shall include judicial, academic and administrative members.  The Bill bars the jurisdiction of civil courts over any matters that the tribunals are empowered to hear.  It also seeks to penalise any person who does not comply with the orders of the tribunals. (See the analysis of PRS on the Educational Tribunals Bill). The Bill was referred to the Standing Committee on Human Resource Development, which submitted its report on August 20, 2010.  Although the report expressed dissatisfaction with the lack of inputs from states and universities and made a number of recommendations on various provisions, the HRD Ministry rejected those suggestions. Some of the key issues raised by the Standing Committee are as follows:

  • The Committee observed that no specific assessment about quantum of litigation has been carried out. It recommended that before setting up tribunals, the magnitude of cases and costs incurred in litigation should be assessed. A minimum court fee should be fixed to ensure viability of the tribunals.
  • The Committee pointed out that the status of existing tribunals is unclear. Also, since the number of educational institutions vary from state to state, the Committee felt that one educational tribunal per state cannot be made uniformly applicable.
  • The Committee stated that there is no clear rationale for fixing a minimum age limit of 55 years for members of the tribunals. It recommended that competent people with adequate knowledge and experience, irrespective of age, should be considered.
  • In case there is a vacancy in the chairperson’s post, other two members shall hear cases in the state educational tribunals. However, this leaves the possibility of cases being heard without a judicial member (since chairperson is the only judicial member). The Committee pointed out that a recent Supreme Court judgment states that every two-member bench of the tribunal should always have a judicial member. Also, whenever any larger or special benches are constituted, the number of technical members should not exceed the judicial member. The Committee were of the view that certain provisions of the Bill violate the Supreme Court judgment and should be re-thought.
  • The Committee recommends that the term “unfair practice” should be defined in the Bill so that it is not open to interpretation by the courts.
  • The Selection Committee to recommend panel for national tribunal includes the Chief Justice of India and Secretaries, Higher Education, Law and Justice, Medical Education and Personnel and Training as members. The Committee recommended that there should be adequate representation of the academia in the Selection Committee.
  • The Committee proposed that the government needs to identify the lacunae of the existing tribunal systems and ensure that orders of the tribunals have some force.