Raw Realities of Our Time and The Agenda of Neo-Liberal Paradigm

By Shiva Kant Jha


Azadi Bachao [Union of India & Anr. Vs. Azadi Bachao Andolan & Anr. (2004) 10 SCC ] has the effect of promoting the Neo-liberal paradigm

There is a strange syndrome of a simultaneous rollback of the State's functions and an incessant aggrandizement of the executive power.


The Points in the Neo-constitutionalism promotive of Neo-liberal paradigm

A paradigmatic change in constitutional philosophy[1] now erecting altered institutional and legal structures to promote the market order aiming to establish Pax Mercatus, or Pax Corporatus run by rabid Homo Economicus illustrating Friedrich A. Hayek's The Constitution of Liberty, published in 1960, about which Margaret Thatcher is reported have said "This is what we believe"'

The emerging effects of the judicial position in Azadi Bachao

Azadi Bachao (i) promotes the interest of the MNCs both those entitled to avail of the benefits of a bilateral tax treaty, and also those who wrongfully turned masqueraders from the third States to avail of such benefits beyond the Personal Scope of Tax Treaties through the entente cordiale of fraud and collusion. Azadi Bachao considered corporations' 'personality' so impregnable by holding that in the realm of Tax Treaties the Doctrine of the Lifting of the Corporate veil was not applicable because it applied in the domestic law. This illustrates 'the continuing pressure by corporate interests to expand corporate rights and limit the corporate obligations'. Azadi Bachao sustains of the Circular 789 of 2000, ignoring Justice Reddy's legal perspective provided in the Constitution Bench decision of McDowell. This led Azadi Bachao to recognize the paper companies of Mauritius thousand of which hibernated in the tax haven's chartered accounts' hip-pocket,..


The abandonment/modification of the traditional constitutional assumptions evolved through national institutional structures to promote primarily national agenda.

Azadi Bachao amply illustrate the assumptions evolved under the neo-liberal paradigm. The Encyclopaedia Britannica notes: "In the middle years of the century (the 19th century) it had been widely held that colonies were burdens and that materials and markets were most effectively acquired through trade."[2] But after the emergence of this global architecture, a ruthless regime of Market got established.The corporations which emerged triumphant after World War II, succeded in establishing their hegemonial impact through the Bretton Woods institution culminating in the WTO. Their toughest problem was how to supersede the national constitutions and laws, as they threatened their corporate regime with their constitutional mission and agenda. It was decided to erect a system through the Treaties which can validly derogate from them for pursuing the corporate objectives. The WTO Treaty and the Agreements under its umbrella, and the Tax Treaties ( and many otheres not needed to be catalogued) illustrate this strategy. Whilst the USA and many other States did such things with various riders legislatively imposed.. The Government of India executed such traties wholly under the opaque system wholly by the Executive under the notion that its Treaty-making power was not subject to constitutional restraints. Azadi Bachao erroneously holds that the Government's sovereign power to make treaties for political ends under the conviction that the Treaties prevail over the statute or law.


Commitment to the neo-liberal economic paradigm for promoting and establishing capitalism as a hegemonic over-weaning system: thus emergence of new Market Leviathan to tame which the national constitutions are yet to evolve mechanism of control and accountability.

Azadi Bachao has the effect of promoting the neo-liberal economic paradigm for promoting and establishing capitalism. Azadi Bachao permits the creation of 'residents' out of airy nothing so that taxes can be evaded, dirty wealth can be layered through stratagem, so that the triumph of capitalism creates situation when some are born to all delight but many to eternal night.


Norms of private property and individual liberty

As perceived by 'the Invisible Hand' of the Market which considers 'Equality' and'Social Justice' detrimental to socio-economic growth[3].: hence the Objective of the Rule of Law is the preservation of private property and individual liberty in the specific neo-liberal sense.

A little reflection on what emerged from the decision of Azadi Bachao would show how it goes against 'Equality' and'Social Justice' without which our Constitution gones with the wind.


The Executive

To promote the neo-liberal Market Order there must be almost wholesale delegation of the legislative power : hence Parliament should pass open-ended legislation leaving law-making power to the executive not subject to public scrutiny or accountability. Where there no specific limitation imposed by a statute, the executive's perception is itself binding law. The executive is beyond constitutional limitations in promoting the new agenda.

To roll back the welfare state. In the constitutional state conceived under the neo-liberal paradigm the welfare state[4] deserves to be rolled back, and a limited government must operate for the exclusive welfare of the Market Order.[5]

Azadi Bachao has the effect of granting powers wide enough to override the law of the land and its Constitution. As the tax treaties are wholly executive acts, the executive becomes unaccountable to Parliament, and the procedure suffers from 'democratic deficit'. . As in other instances of the intrusion of domestic space through existing laws by widening their province, through the existing law. The MAP is sought to be justified under Section 90(1) when that was never under its contemplation (as the Government promotes IMF-WTO agenda by invoking the Land Acquision Act of the last century. This Mutual Agreement Procedure subverts the rule of law by subverting the statutory judicial control and by allowing even adjudication in certain situations to be shifted to foreign fora. And all this done without the statutory foundation which was provided in the U.K. through statutory amendment.

The judicial view that tax treaties can override the law is, if investigated, based only on the self-serving circulars issued by the CBDT to establish strange executive imperium to serve the interests of those who can manipulate the governmental system for their benefit.



As the electoral politics has failed in creating a democratic order promotive of the Market Order, the wings of the Legislature must be clipped leaving the power and discretion to rule to the executive and judiciary bidden to act to promote the neo-liberal agenda. Parliament must allow the subjugation of the political realm to the economic realm as per the architecture of the neo-liberal paradigm.

In the realm of treaty-making our Parliament is said to have no function. There was a time before the onset of the neo-liberal waves when this 'democratic deficit' did not matter as the governmental acts at international plane did not matter in the domestic realm. But through the Treaty terms the domestic space of policy and sovereignty are now invaded. Azadi Bachao failed to see how certain dicta to that effect in Maganbhai and Berubari had lost their constitutional relevance, and are ex facie erroneous

Azadi Bachao .permits most unfortunate trespass by the Executive on the legislative sphere, illustrating the growing irrelance of our Parliament. Nothing illustrates it better than than the reasons for which the CBDT Circular 789 of 200 was sustained in Azadi Bachao: viz. its approval of the conclusive presumptions as to owenership and residency in the said Circular forgetting that presumptopns or conclusive presumptions are only legislatively enacted. And MAP override limitations provisions which can be done only legislatively..


The Role of Judiciary

The Judiciary to give a new pro market and corporation view of the Rule of Law and the Doctrine of the Separation of Powers. The judiciary's policy making role must be in synergy with the executive's. Judiciary's constitution role must undergo a functional change. through the technique of MBO (management by objective).

To take steps roll back the welfare state thus complementing the task of the executive. .

Azadi Bachao has the effect of patronizing the new despotism of the executive by approving for judiciary a costitutional role under which groundswell of neo-liberal ideas will allow judges to roll back the welfare state, and narrow the domain of the judicial control on the specious plea invoking the doctrine of "Juices est. jus dicer, non dare" (now not approved in Standard Chartered Bank[6] Case }. This led the Hon'ble Court to severely criticize McDowell which reflected the ideas in Furniss v. Dawson [1984] 1 All ER 530, [1984] AC 474 and National Federation of Self-Employed and Small Businesses Ltd[7] which our Court had accepted before and approved later [as in S.P. Gupta & Ors v President of India & Ors (AIR 1982 SC 149] . The net effect of Azadi Bachao is a futile cri de Coeur to Parliament and the executive defeating Lord Denning's dictum that 'Fraud unravels everything'"[8] and benedicting the neo-liberal stratagem by considering certain evils 'tolerable'. This approach led Azadi Bachao to ridicule its own Constitution Bench decision, and to bank on a book by the interested party illustrating a gruesome departure from judicial norms. This also led it wrongfully to assume that the doctrine of the Lifting of the corporate veil belonged to the sphere of domestic law. Our law and Constititution were ignored, our value even under our Fundamental Duties were ignored but copious borrowings of ideas were made from the OECD etc countries commiting the fallacy which Sir Francis Bacon, the Lord Chancellor of England 1618-21 ) called the fallacy of non "recognition of similitudes".


Even Satan be the Guide

Market Forces are amoral, if it helps even Satan be its Guide as he was always a better logician than God who could Paradise lost meekly whereas He had lost it to the majestic Satan. In effect. Means matters not


Azadi Bachao is gnawingly unfortunate. If the doctrine of toleration of Evil "in the interest of long term development", is allowed to have a grip over our thinking, even God would leave us to groan under the Slough of Despond. Hitler destroyed the Weimer Constitution justifying his act as a necessary evil to wipe out the disgrace that the Peace Treaty of Versailles. Mrs. Gandhi justified the ignominious Emergency pleading this as a justification.



But our constitutional socialism cannot allow the neo-liberals to promote GREED as socially accepted good. They believe, as Milton Friedman said in Capitalism and Freedom, that freedom could only be brought about by a return to market economy which would ensure economic freedom to men; that as Friedman argued, that 'health, schooling, and racial discrimination could be helped by a return to free market economics only'

Azadi Bachao has the effect of approving such strides away from all that we valued in course of our Struggle for Independence, and Constitution. .


Fundamental Rights and the Doctrine of Basic Structure must be wrecked where to do so is good for the Market Order.

Azadi Bachao has the effect of approving such strides. Azadi Bachao approves the per incuriam ideas as to Treaty-Making Power casually stated in Maganbhai where none bothered about the Fundamental Rights, the Basic Structure of our Constitution, or the Preamble to the Constitution.


The Holistic approach[9]

To acquire a holistic control over matters cultural, political, social and social to charter ways following the loadstone of the Neo-liberal Paradigm. No idealism is higher than the Market

Azadi Bachao, in effect, reiterates what Roy Rohatgi said: 'Overall countries need to take, and do take, the holistic view' Under the Rogue Financial system the lobbyists paint rainbow. It is not clear how the calculus of revenue losses and non-tax benefits works when the tax authorities are prohibited from examining operative facts, and when Azadi Bachao approves this opaque system.

[1] Our Constitution rejects the idea of the "trickle-down theory," as its usefulness is not proved despite the claim by John F. Kennedy's that "a rising tide floats all boats". This plea, (so dear to the disciples of the IMF, the World Bank, the WTO, and the believers in Reaganomics or supply-side economics), deserves to be rejected (as it is, to borrow the expression of John Kenneth Galbraith, just a "horse and sparrow theory": if you feed enough oats to the horse, some will pass through to feed the sparrows. The State, which we have organized under our Constitution to promote our 'Constitutional Socialism', is not a corporation. It is distressing to see that these days it is getting adroitly turned into a Corporation with all the ills of modern corporations

[2]. Asa Briggs in the Encyclopaedia Britannica Vol. 29 p. 85 in the article on the United Kingdom.

[3] . The commitments of our government (under the Uruguay Round of GATT, of which the apex institution is the WTO, with a close nexus with the IMF and the World Bank) have the direct and inevitable effect of subverting our Fundamental Rights. The Market Economy, it is well known, is founded on the ideas of Frederich von Hayek who in The Road to Serfdom considers freedom as the function of the market, and those of Milton Friedman in his Capitalism and Freedom and Free to Choose. It is obvious that the idea of Social Justice seethes through the Preamble to Arts 14, 19, 21 and 29 (only to illustrate), and this idea is given a go bye the Fundamental Rights stand subverted. And this is the mandate of the Market Economy which the WTO has imposed on us through the deeds of our Executive. Hayek considers the concept of 'social justice' the most powerful threat to law conceived in recent years. Social justice, said Hayek, 'attributes the character of justice or injustice to the whole pattern of social life, with all its component rewards and losses, rather than to the conduct of its component individuals, and in doing this it inverts the original and authentic sense of liberty, in which it is properly attributed only to individual actions'. [Hayek , The Constitution of Liberty quoted by Peter Watson, A Terrible Beauty p. 518]

[4] The decisions of the Warren Court emerged to constitute the jurisprudential foundation of the Welfare State. 'Besides considering the great social/legal problems of the day, Dworkin grounded his work in the all important question of how, in a democracy, the rights of the majority, the minorities, and the state can be maintained."[4] [Peter Watson, A Terrible Beauty p. 644]

[5] Articles 14 or 21 are designed to survive only in a Welfare State. But the realities being shaped under the neo-liberal reforms protocol, being prescribed by the WTO, go counter to our constitutional policies and mandatory constitutional norms

[6]. [2005] 275 ITR 81 (SC).

[7] [1981] 2 All ER 93 HL

[8] Lazarus Estate Ltd. v. Beasley[1956] 1 QB 702 and 712

[9] A constitution is sacred to a Nation because of its three fundamental purposes; it establishes government, establishes how government will function, and protects the rights of citizens. The commitments of our government (under the Uruguay Round of GATT, of which the apex institution is the WTO, with a close nexus with the IMF and the World Bank) have the direct and inevitable effect of subverting our Fundamental Rights.

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