July 17

Prashant Narang: Difficulty of Doing Business – A Study of Judicial Review of Economic Restrictions

The post argues that in the context of article 19(1)(g) – Right to practise Profession, Occupation, Trade and Business (POTB) of the Constitution of India, the Court often responded to constitutional challenges under article 19(1)(g) with either a partial review, weak review or deference.

Judicial Review under article 19(1)(g)

As per the Constitution, reasonableness and public interest are the two grounds to defend and uphold a restriction curbing article 19(1)(g). By merely justifying the public interest requirement in a large number of cases, the Court neglects the reasonableness review and foregoes the duty to scrutinise the means employed to achieve the end under the garb of legislature-knows-better response. Nowhere it is defined in the Constitution as to what constitutes reasonableness or public interest. Grounds such as Directive Principles of State Policy (non-enforceable policy prescriptions in the Indian Constitution), Fundamental Duties (non-binding duties on citizens in the Indian Constitution), Statutory Object/Purpose, Constituent Assembly Debates, Legislative Debates, Committee Reports and values/ ethics (such as safety, public health) indicate the final outcome a restriction seeks to achieve. A judge can determine whether an impugned restriction or “end” furthers public interest.

Reasonableness

If the means are not relevant to achieving the desired end, then such means would be arbitrary and if the impugned means restrict individual liberty more than what it required, then those would be excessive. A limitation should not be arbitrary or excessive as decided by the Supreme Court in Chintaman Rao v State of Madhya Pradesh 1950 SCR 759 (“Chintaman Rao“). The five-judge judgment continues to be valid law though a number of subsequent judgment have diluted the definition of reasonableness and some have embraced deference in derogation of Chintaman Rao. This test symbolises the Prudential grounds – assessing the relevance of means to achieve a particular end, the scope and the intensity/severity of the means. Judges have also invoked the principles of administrative law to check the administrative discretion for reasonableness under article 19(1)(g). Administrative safeguards include principles such as discretion should be guided or canalised, not arbitrary; rule against bias or conflict of interest and audi alterem partem or hearing and a set of substantive grounds such as leaving out relevant consideration and malafide.

Where a judge invokes the normative values inherent in the right to POTB such as the right to bargain, the right to shut down a business, the right to bid or the right to compete, there she may not need to justify the downside of the restriction through prudential grounds and it can also trump the utilitarian considerations, asserting the right is too sacrosanct and non-negotiable to be compromised through those impugned means.

Partial Review

If an instance of judicial review is not decided on prudential, administrative safeguards or normative grounds, it may have been decided based on a “Precedent on subject matter” (Precedents may also be cited on a general proposition such as definition of reasonableness, Directive Principles or deference; those are not included in reasonableness scrutiny). Instances where no review is undertaken based on prudential, administrative safeguards, normative grounds or precedent on subject matter, such review would be a partial review. It entirely skips reasonableness scrutiny.

Weak Review

Weak review would either include considerations based on consent or acquiescence, instances with no reasoning or cryptic reasoning or rhetorical downplaying of grounds to save the restriction. An example is Union of India and Ors v. Motion Picture Association and Ors. (1999) 6 SCC 150 wherein an alleged tax was charged through an agreement. Although the petitions argue that the agreement is not consensual, they have to enter into it, the judge holds it as an “agreed” payment. In few cases, judges have used rhetoric to downplay certain grounds. “Mere” absence of an otherwise essential administrative safeguard such as hearing or appellate authority suddenly becomes inadequate for striking down a law [Shri Cooverjee B. Bharucha v The Chief Commissioner, Ajmer and Ors. 1954 SCR 873]. In case of prudential grounds as well, restrictions found to be excessive have been saved by saying “mere excessiveness” is not enough to strike down a restriction.

Deference

Deference is judge’s choice to not scrutinise the impugned law at all or at least not scrutinise it on reasonableness and expressly submitting to the legislative will. Express provisions in the Indian Constitution – article 32 as well as in article 226 mandates the constitutional courts to review a law whenever petitioned by a citizen. One of the first judicial review cases State of Madras v V.G. Row 1952 SCR 597 supports this position. In Chintaman Rao as well, the Court had expressly rejected deference.

Findings

A simple keyword search with “Article 19(1)(g)” from 1950 to 2015 for Supreme Court database yields 663 cases. Only the ones involving a judicial review under article 19(1)(g) and yielding a clear outcome for that review are selected. These cases may involve multiple instances of judicial review under article 19(1)(g). So, the total number of instances of judicial review pertaining to article 19(1)(g) comes out to be 259.

Screen Shot 2018-07-16 at 10.34.18 AM.pngWithout applying any prudential grounds, administrative safeguards, normative grounds or precedents, the Court decided around 17 per cent of the instances. Judges have abdicated its responsibility to review in 35 instances and not surprisingly, the outcome in such cases is cent per cent in favour of state. Please note that deference may not be the sole ground. The Court might have referred to object, other references or DPSP and then deferred to skip the reasonableness review. The Court decided six instances on consent, five on cryptic reasoning and eight on rhetorical downplaying of grounds; none of these instances favour the citizen.

Excluding the overlapping instances, 47 instances (out of 259) are found to be accorded either a partial, weak or deferred review.

Limitations

The result does not imply everything-is-good with rest of the instances or cases. The study has not probed into the propriety and the intensity of the reasonableness review. Same applies to precedents – whether those were correctly applied. Secondly, the study solely depends on the judgments and has no access to written pleadings submitted by both sides or the arguments made before the judges. It is quite possible that some arguments might not have made it to judgment, not recorded or not considered by judges. Third, not all the Supreme Court judgments are published. The study is limited to only the published ones.

Conclusion

The Court is expressly vested with the power of judicial review to safeguard the individual liberties including the economic ones from state excess but it has not performed its duty well. Also, the study speaks volumes about the quality of judgments being delivered. Whether it is a bias against the economic liberty or in favour of state, the aberrancy is too blatant and large to be ignored.


Prashant Narang is from the Centre for the Study of Law and Governance at the Jawaharlal Nehru University in New Delhi, India.