Shivakantjha.org - Triplet 9 - Constitutionality of 'Socialism' is questioned

Triplet 9

Constitutionality of 'Socialism' is questioned

By Shiva Kant Jha

March 6, 2009

A PIL [W.P.(C.) No. 679 of 2007] was filed by M/s Good Governance India Foundation against the Union of India making the following three prayers:

a) Grant an appropriate Writ striking down Section 2(a) of the Constitution (42 nd Amendment Act, 1976 as being in violation of the basic structure of the Constitution;

b) Consequently strike down Section 29A (5) of the Representation of the People Act, 1951 to the extent it mandates adherence to the policy of socialism, thereby being in violation of Articles 14, 19(1) (a) and 19 (1) (c) of the Constitution;

c) In the alternative, derecognize all political parties in the country who have wrongly sworn allegiance to the socialist ideal despite their contrary objectives as evident from Manifestoes, Political speeches, Common Minimum Programmes and other such documents.

But the Hon'ble Court issued a rule "confining to prayers (b) and (c) of the Writ Petition" only.

The expression ‘Sovereign Socialist Secular Democratic Republic' was substituted by Section 2 of the Constitution (Forty-second Amendment) Act, 1976 in the Preamble to the Constitution for the ‘Sovereign Democratic Republic'. It was to make manifest the core constitutional commitments made in the Preamble, the Fundamental Rights and the Directive Principles of the State Policy. The insertion of ‘socialism' was a step taken with a foresight to stem the galloping tide of corporate commercialism bred by neo-colonialism. Just a year before the 42 ND Constitutional Amendment, Bell wrote The Cultural Contradictions of Capitalism highlighting the irreconcilable contradictions of the neo-liberal capitalist society producing the sinister trends evidencing the gruesome " separation of law from morality, ‘especially since the market has become the arbiter of all economic and even social relations …..and the priority of the legal rights of ownership and property over all other claims, even of moral nature, has been renewed."

Our Constituent Assembly was never under the hangover of Karl Marx, though its leading lights knew Marx well. . Neither the Communist Party nor the Socialist Party had their representatives in the Constituent Assembly. Austin comments:

"The absence of a formal Socialist group meant little, however, for most members of the Assembly thought themselves as Socialists, and with few exceptions the members believed that the best and perhaps only way to the social and economic goals that India sought was by the road of government initiative of industry and commerce.'

The ‘socialist ‘mission, as conceived under our Constitution, has its roots, and is derived from, the collective consciousness of our people most powerfully expressed in the Bhagavadgita. Most of the framers of our Constitution must, to say on good grounds, have been aware of the critique of the exploitative capitalism. Albert Einstein had written in "Why Socialism?" (1949 Monthly Review): capitalist society a "predatory phase of human development". Pundit Nehru, whose Glimpses of the World History was widely read, had written a lot about the criminal inequities and callous injustice which writhed the commoners of our land. . Nehru quoted Benjamin Disraeli to stress the two separate nations (a criminal social pathology which bedevils us even now):

"Two nations; …...the Rich and the Poor."

Our social vision, as expressed in our Constitution, is egalitarian. This universalism accords with the Bhagavad-Gita. Krishna had held in the Bhagavad-Gita that Property was often acquired merely for acquisitiveness and greed. He called such an acquisition a sinister ‘THEFT' (Chapt. III.12). [the French anarchist Proudhon said: "Property is theft."]. The Chapter XVI of the Gita instructs for the creation of an egalitarian society which tames greed, and prevents the acquisitive proclivity of the ‘demonic persons' believing:

"I am rich and well-born," they say,
"Who else is equal unto me?"

Our Supreme Court never ever doubted the socialistic vision and mission of our Constitution [viz. Excel Wear AIR 1983 SC 130; Akadasi Padhan AIR 1963 SC 1047 ; and D. S. Nakara AIR 1983 S.C130]. In S. R. Bommai, Ahmadi, J. aptly said that the ‘concept of Secularism was very much embedded in our Constitutional philosophy'. The same could be said for ‘socialism': it makes explicit what was already implicit.

It is good that our Supreme Court did not grant a rule on the Prayer (a). It is a grave irony that a PIL was moved to strike down what constitutes the very heart of our Constitution. But as the matter is on the judicial anvil, I need not say more at present. We shall surely get sumptuous food for thoughts when the Petitioners before the Court unfold their nuggets of thoughts.

But it is not inappropriate to mention, in passing, that as "the right to vote, or stand as a candidate" is a mere statutory right [ Ponnuswami AIR 1952 SC 64], it can be statutorily controlled. Section 29A (5) deals with the registration with the Election Commission of ‘associations' and ‘bodies' as political parties:

"The application …... shall contain a specific provision that the association or body shall bear true faith and allegiance to the Constitution …., and to the principles of socialism, secularism and democracy and would uphold the sovereignty, unity and integrity of India ."

It is obvious that the expression ‘socialism' is an integral part of the Preamble to Constitution. One who expresses allegiance to the Constitution cannot take that by excluding ‘socialism'. But Prayer (c) is surely interesting. We all are worried how to prevent a continuing fraud on the common people because of the hiatus between what the political parties preach and what they do. What has been done over these years is a morbid story of bathos, pathos, and sinister irony. It has led to the emergence of Corporatocracy hand and glove with Kleptocracy; and the increase in the number of the billionaires going grotesquely with the increase in inequalities, poverty, squalor, and decline in public morality. We stand driven to a point where the plight of the the most gets portrayed in words like these from William Blake:

Some are born to Sweet delight,
Some are Born to Endless Night

II

Tax-Recovery actions in foreign countries

EVERY reader must be aware of a proverb: "Fools & their money are soon parted". Nothing illustrates it better than our Government's conduct, especially in the litigations before the international fora, and the courts and tribunals abroad. Reasons are various. They cannot be summarized on this brief leaf of this Triplet. Our Government suffers from ‘financial deficit', ‘moral deficit', ‘democratic deficit' and no less gruesome ‘knowledge deficit' when up against the foreign sharks and the multinationals who rule the roost the world around. The etiology of the general and multiple deficits deserves to be studied by someone abler than me so that someday our ‘low arousal' people get aroused even at long last.

On this leaf I portray only an illustration of the lack of governmental vigilance and public indifference. This is to draw attention to one the likes of which abound in our country. If you critically scan the way our Government has litigated in the foreign jurisdictions, you would be convinced that our authorities and counsels need to undergo a compulsory good course on public international law. The fault, it seems, is not theirs. How many of our lawyers have studied this beyond the Allahabad Law Series, or to be most charitable, Starke or Fenwick!

Now the illustration. Government of India , Ministry of Finance (Revenue Division) v. Taylor (2009-TIOL-01-HOL) is a leading case frequently referred in standard text-books. But it is so cited not for good reasons. It is cited to state the settled law that the steps to recover taxes cannot be taken in foreign jurisdictions. T his decision of the House of Lords establishes inter alia the following two propositions:

(a) in no circumstances will the Courts of a country directly or indirectly enforce the revenue laws of another country and therefore no State can sue in a foreign country for taxes due under the law of that State; and

(b) a claim for foreign taxes is not a liability which the liquidators of a company in liquidation are bound to discharge.

The operative rule is thus summarized by Oppenheim (International Law 9 th ed. 488):

"….the courts of many countries…. decline to give full effect to the public law… of foreign states (unless otherwise required by any relevant treaty). In particular they refuse, in respect of assets within their jurisdictions, to enforce directly or indirectly on behalf of a foreign state its revenue laws as well as its penal and confiscatory legislation."

This rule is pervasive, and prohibits any attempt to do something indirectly which cannot be done directly. To obtain a decision of a domestic court in order to seek its enforcement in a foreign jurisdiction is rightly treated an impermissible device.

The story that Taylor unfolds is a national disgrace. The mandarins of the Ministry of Finance of our Government acquired the assets of a foreign company. The company received consideration for the transfer. The company repatriated what it got, and left India for good. Thereafter the Government of India tried to recover the taxes due. But all this after bird had flown away. Our Government instituted recovery actions in the U.K. Our Government wasted resources on a litigious errands before the courts there including the Court of Appeal and the House of Lords. Our Government's wonderful alacrity, so assiduously carried out, amazed the Court of Appeal and the House of Lords. Viscount Simonds could not restrain himself from making a barbed comment in his leading opinion that he was "greatly surprised to hear it suggested that the courts of this country would, and should, entertain a suit by a foreign state to recover a tax." He called this rule "perfectly elementary". The Court of Appeal had already castigated our Government's action by quoting Lord Mansfield's dictum (‘For no country ever takes notice of the revenue laws of another ) " from which", said he, "according to the books as they are now available to us, everything else flowed".

To get over this problem Section 90(1) (d) of the Income-tax Act 1961 provides that the double taxation avoidance agreement may provide for terms "for recovery of income-tax under this Act and under the corresponding law in force in that country". Section 228A of the Income Tax Act provides for "Recovery of tax in pursuance of agreements with foreign countries". It can be said that the Double Taxation Agreements can be used to authorize meaningful steps in foreign jurisdictions in matters of tax recovery. But there are several operative facts which negate such expectations. The following comments are worthwhile:

(i) We have not provided terms in most of the Double Taxation Avoidance Agreements which Sections 90(d) and 228A warrant. To illustrate: we all know that the Indo-Mauritius Double Taxation Avoidance Convention has been greatly misused by tax-evaders, money-launderers, fraudsters, treaty-shoppers, round-trippers, terrorists of all hues….Yet this Convention does not prescribe terms to assist tax recovery in Mauritius.

(ii) Even where a tax treaty does contain such terms they are greatly inapt, ambiguous, prone to long-drawn litigation, and deficient in essential comprehensiveness. India 's tax treaty with Poland is just an illustration. Such provisions are leaking umbrella which becomes of no use when it is needed most. We cannot treat a serious disease with a phony placebo. Let us hope that we learn lesson even the hard way.

(iii) We have reasons to wonder if there is some hidden octopus-grip on our Government, which makes it so reluctant to have a re-look on the tax treaties to ensure that they are not abused. Over decades we have not examined the tax treaties at work. We have learnt nothing from our discomfiture in Taylor . It is hoped that the authorities, who matter, would consider early to set afoot a stable and acceptable system ensuring that no wrongful loss is caused to the nation.

But the problems of recovery need solutions only through comprehensive and focused terms in tax treaties, and/or commercial treaties or conventions for the enforcement of claims under India's public laws. Our Government should also ensure that the treaty partners have in place within their domestic jurisdiction appropriate law because the domestic courts do not enforce treaty terms unless they are implemented by the law of the land. If this is not ensured, the treaty terms would give us at best a mere a Pyrrhic victory ; and would surely leave us in lurch when we would need their support most. But then: "Who watches the watchers?" [ Quis custodiet ipsos custodes?, as Juvenal put it.]

III

**This Kaliyugi Administration of Justice**

An insightful reflection on the administration of justice in our degraded times is given in the most celeberated 10 th century Srimad Bhagavad-Mahapurana (XII.2. ). It focuses in two of its mellifluous slokas on the blemishes in the administration of justice. to quote (rendered into English) -

"In Kaliyuga the wielders of power would succeed in tilting the scales of Justice in their favour. Those, who cannot bribe, may not expect Justice in the courts. Those, who excel in legal sophistry and logomachy , would alone be considered pundits (the lawyers?) scaling height in proportion to their attainments in such crafts."

We quite often see how justice is hurried to get buried, and how justice is delayed to the point where it stands denied in effect. Obtaining justice is most often becoming costly and bothersome. New versions of Charles Dickens Bleak House (where the litigants lost in expenditure all that he had expected to gain from the litigation) keep up coming to the mortification of many. To most of common Indians the judicial exposition, with all its technical abracadabra and western borrowings, seem commandments from some other world (reminding one of the trial of the helpless and hapless last Mughal Emperor who didn't understand anything of the pleadings made ferociously against him). The biggest problem in the administration of justice is how to keep the scales of justice even. In the Mahabharat the trader who never swerved from Dhama acquired the sobriquet of Tuladhar (the holder of scales). The apprehension of corruption polluting the stream of justice is now widely shared though ways to correct them are not yet in sight. The Purana cautions us against forensic sophistry which makes one feel that nothing succeeds like success (whether by hook or by crrok). Forensic skill is seen to find its climax in the craft of just winning a point at all costs. The Srimad Bhagavad-Mahapurana had said precisely what Karl Marx found as a fact when he articulated his thesis that the economic sub-structure shapes socio-political and jural superstructure. Didn't Bhartrihari say sarve gunah kanchanmasrtanti (All the good qualities reside in gold alone)"?

A reflection on this critique in the Mahapurana may help our friends in black robes to have the right perception of their duty in the administration of justice. To say the obvious, a pre-condition for this pursuit is a coherent value system with a steadfast commitment to promote public weal. Many great judges have treaded this path well. One such a judge was Lord Denning. Analyzing his judicial approach Prof. Schmitthoff observed:

"He thinks of the result before he considers the legal reasoning on which it has to be founded. If the result to which established legal doctrine leads is obviously unfair or out of touch with what ordinary people would expect to be the law, he will examine first principles in order to ascertain whether they really compel an unjust solution and often this method will enable him to arrive at an answer which is more adequate to modern needs."

I conclude this note with the words of Jackson, J. in Krulewitch [336 U.S. 440 (1949)]: "The most odious of all oppressions are those which mask as justice."