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LATEST NEWS UPDATES | Overreaching? by Pratap Bhanu Mehta

Overreaching? by Pratap Bhanu Mehta

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published Published on Jul 5, 2011   modified Modified on Jul 5, 2011
The latest Supreme Court order appointing two former justices to superintend the special investigation team (SIT) on black money is a serious indictment of government. It reflects a widespread sentiment about the laws of government motion: government is a body that will not move unless compelled by an external force. A shameless government is provoking a thousand saviours to step in and save the country. The Supreme Court is, rightly, trying to hold the government to account. Its indignation at the government too is widely shared. But we should be under no illusion that this order is itself a symptom of a crisis of governance. It is not a solution to it.

This is an interim order and has to be read with appropriate caveats. But it is unprecedented. It has a couple of solid technical points. It, for example, dismisses the government’s plea that bilateral treaties prevent the government from revealing the names of those being investigated for holding foreign bank accounts. The court, persuasively, regards these arguments unfounded based on the text of the treaty and a common sense interpretation of the law. The court is also, not for the first time, relying on judges to goad an SIT into action. But this use of the SIT is unprecedented in several respects. Most SITs are formed around specific cases and allegations. This particular SIT is now charged with “preparing a comprehensive action plan, including the creation of necessary institutional structures that can enable and strengthen the country’s battle against generation of unaccounted monies, and their stashing away in foreign banks, or in various forms domestically”.

All depends on how the SIT is operationalised. But this is an astonishingly wide and unspecific mandate that requires the committee to take over the governance function of every executive agency, from the Enforcement Directorate to the RBI, from the CBI to the CBDT. With all due respect to the court, this is deeply problematic. There is no doubt that black money is a serious issue. But other than a vague appeal to Article 32, such sweeping mandates should have some basis in law. The paradox of our times, exemplified by the court, is that in the name of restoring some general conception of the rule of law we now don’t have to worry about any specific laws or legal doctrine.

The court’s intentions are noble. But it should have also taken cautionary tales from its own history. Faced with executive abdication, it tried taking environmental governance almost entirely into its own hands. The results were not salutary. The lesson the court should have drawn is that it should put pressure on the government in specific cases, not imagine that committees can be a substitute for governance.

But there are two more things troubling about the judgment. The court seems to unwittingly legitimise the politics of innuendo against respected institutions. Take one example. The court, without serious comment, makes broad claims the petitioners made about UBS the basis of its argument. The petitioners alleged that in 2007 the RBI had some “knowledge of the dubious character” of UBS, that the Securities and Exchange Board of India (Sebi) had alleged that UBS played a role in the 2004 stock market crash. UBS applied for a licence to operate in India. It was granted an in-principle approval, which was then withheld in 2008 pending investigation of the Hasan Ali case. The RBI reversed its decision in 2009. The petitioners allege that this could have been accomplished “only through high level intervention and that it is further evidence of the linkages between members of the political class and possibly even the bureaucracy and such banking operations and the illegal activities of Hasan Ali”.

We should not second guess whether UBS is guilty or not. The whole saga of banking approvals is complex. But instead of legitimising this innuendo, the court could have examined this claim on its merits. By including it, without comment, the court has unwittingly cast aspersion on the integrity of the RBI. But consider this. In 2005, a Supreme Court bench of Justices Ruma Pal and A.R. Lakshmanan declined to stay a portion of the order passed by the Securities Appellate Tribunal that overturned a Sebi ban on trading activities of UBS Securities; in 2009 the Supreme Court put its imprimatur on a compromise between Sebi and UBS. Would it be fair for anyone to conclude that there is a Supreme Court-UBS nexus, just because the court allowed UBS Securities to trade? But this is exactly the same logic the petitioners seem to be applying to the RBI, without a comment from the court. The court itself has so many occasions to sort out the truth. The need of the hour is a judicious sifting of the truth, not a broad-based innuendo on the legitimacy and function of every institution.

But this order is also a sweeping ideological broadside. Some elements of this are entirely reasonable. The Supreme Court ought to remind the government of its constitutional duties. But despite a qualifier that it does not want to wade into the thicket of models of development, the court has launched a rather undiscriminating broadside against what it calls “neo-liberalism”. This broadside would be amusing but for the fact that this inchoate critique is now being widely regarded as the right diagnosis of corruption. It again gives credence to the idea that everything is conspiratorial. Take this gem: “From within the neo-liberal paradigm also emerged the undergirding of the thought that revenues for the state implies a big government, and hence strong tax collecting machinery itself would be undesirable.” I am never sure what the judges mean by “neo-liberal”. Even the most ardent votaries of the market insist that India’s tax over GDP ratios should increase dramatically. This statement is not just a gross misrepresentation of every reformer; it seamlessly moves from specific cases to global ideological conspiracies. The judges are right in pointing out that the market will not solve everything. But they fail to consider that their “predatory capitalism” exists most in sectors where the state has to make allocative decisions: mining, spectrum, land. The court’s legitimation of all kinds of sweeping historical claims is as much about a jurisprudence of exasperation as it is about justice.

India’s crisis of governance is producing knights in shining armour by the dozen. This is the vitality of our society. But all kinds of roles are getting confused, perhaps even between a pulpit and a court of law. The Supreme Court is, rightly, our most esteemed institution. After all, if it does not exercise fine-grained judgment, who will?

The writer is president, Centre for Policy Research, Delhi, express@expressindia.com

The Indian Express, 6 July, 2011, http://www.indianexpress.com/news/overreaching/813221/


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