Shiva Kant Jha

Untitled Document

THE HIGH COURT OF DELHI AT NEW DELHI

Under Art 226 of the Constitution of India

CWP (PIL) NO. 1357 OF 2007

In the matter of:

SHIVA KANT JHA

A-320 SFS, Sarita Vihar

New Delhi-110 044 …. Petitioner-in-person

1. UNION OF INDIA

Through The Secretary (Revenue)

North Block, New Delhi

2. Through Secretary (the Ministry of Commerce & Industry),

Udhyoga Bhawan, New Delhi

3. Central Board of Direct Taxes

Through its Chairman

North Block, New Delhi

…. Respondents

WRITTEN SUBMISSIONS BY THE PETITIONER

[In obedience to the Hon'ble Court's Directions given on Feb. 4, 2009]

Introduction

1. Power is always delicious: brute power is most delicious whether exercised from the stage or via green-room. The Executive, whether in the time of the Tudors, or in the days we live have, bereft of all the covering plumage it is accustomed to put on, , share the same character. Its most conspicuous trait is the lust for uncontrolled power exercised under an opaque system to evade and escape public accountability and transparency. . In modern times the government's treaty-making power has been most abused. Its ‘democratic deficit' has been perceived. How to control the abuse of treaty-making power by subjecting it to democratic control is a burning problem in the Commonwealth countries: it is more so in our country where the Constitutional Polity of subjects, at every moment and at every step, the Executive power to constitutional control.

2. The situation in the Commonwealth countries, on the points now under presentation before this Hon'ble Court, were thus summarized by Joanna Harrington

in his article on ‘The Role of Parliaments in Treaty-Making': [1]

‘With respect to Westminster-style democracies, the analysis begins with the now trite statement that, at common law, a treaty does not automatically have domestic legal effect and thus Parliament , in theory, retains its role as the body with primary responsibility for law-making by enacting legislation to give a treaty domestic effect. But law-making by treaty does not always require the enactment of legislation, particularly if the treaty obligation can be implied within or carried out through a pre-existing law, and thus Parliament may not always have a role. Moreover, once ratified, treaties are clearly binding under international law and their legal character puts pressure on a state's domestic institutions to ensure compliance, as evidenced by a long-standing rule of statutory interpretation that presume conformity with international law, at least where an ambiguity can be found. Further evidence of the domestic effect of treaties can be seen in the courts in the form of judicial modification to the doctrine of legitimate expectation in Australia, [2] new rules on statutory interpretation in New Zealand [3] and new uses for the values of an unimplemented treaty in Canada. [4]

Despite the fact that most treaties are in practice permanent law, made by one government with the ability to bind the next, the common law imposes no obligation on either the executive or the courts to secure or ensure the consent of the ultimate law-making authority in a Westminster style democracy. This lack of Parliamentary involvement supports complaints that a democratic deficit exists in the treaty-making process. It also motivates the reforms discussed in this evaluation of the role played by Parliament in the treaty-making practice of these comparable Commonwealth states: the UK, Australia and Canada. [5] ”'

This author has highlighted one more aspect of this ‘democratic deficit’ when he points out further:

" …Additional deficits raise further concerns, including a ‘federal democratic deficit’ in relation to a central executive’s capacity to make treaty law without the involvement of the sub-national units [6];…."

Such deficits are matters of great national concern as democratic polity and federalism are the essential parts of the Basic Features of our Constitution. Things done (in the domestic sphere or at the international plane) transgressing the constitutional limitations are void ex facie in our eyes.

3. This has become a most worrisome problem in the common law countries where the Executive is clinging steadfastly to the anachronistic and fossilized British view that this power is a political decision at the international plane immune from the control of parliament and the judiciary. The framers of the US Constitution were the first to subject this exercise of power to the control of the Senate, and in some matters, like NAFTA, the WTO Treaty, to a more rigorous Congressional supervision. The Constitutional amendment (the Bricker Amendment moved in the 1950s) ceased to have a relevance because the US Supreme Court made the treaty-making power of the Executive subject to constitutional limitations. As the U.S. Supreme Court had shown in the Brown v. Board of Education of Topeka, [347 U.S. 483 (1954)] a path to the nation away from racial segregation, so did the Supreme Court do in Reid v. Covert (1957). In Hamdan v. Rumsfeld, Secretary of Defense, et al (decided by the U.S. Supreme Court on June 29, 2006), the U.S. Supreme ‘… Court's conclusion ultimately rests upon a single ground: Congress has not issued the Executive a "blank check." Cf. Hamdi v. Rumsfeld, 542 U. S. 507, 536 (2004) (plurality opinion)’ [Justice Breyer, with whom Justice Kennedy, Justice Souter, and Justice Ginsburg join, concurring]. In Britain, right from the days of the World War I, public agitation remained afoot for parliamentary sanction of treaties. Much headway was made in the matter with the framing of the Ponsonby Rule (1924) for placing treaties before Parliament for 21 sitting days. A Private Member Bill to ‘subject treaty-making power’ to the British Parliament’s control led, since 1997, to set up a practice to provide detailed explanatory memorandum with the text of treaties placed before Parliament. The government is conceding the popular demand inch by inch. Now a Public Bill is before the U.K. Parliament: the U.K. draft Constitutional Renewal Bill [for text seehttp://www.publications.parliament.uk/pa/jt200708/jtselect/jtconren/166/166.pd]. Its effect on the Executive’s treaty-making power was stated by the Right Honourable Jack Straw MP, Lord Chancellor and Secretary of State for Justice on 25 March 2008 in the House of Commons: to quote[7]--

"Part 4 makes it a statutory requirement that treaties must be laid before both Houses of Parliament before ratification. If this House were then to vote against the ratification of a treaty, the government could not proceed to ratify it."

In Australia the decision in Teoh’s Case [(1995) 183 C.L.R273] led to the formation of the Joint Standing Committee on Treaties, a Parliamentary Committee. The Senate Legal and Constitutional Committee came out with its report entitled; Trick or Treaty? Commonwealth Power to Make and Implement Treaties. In Australia the proposed treaty actions are placed before Parliament with ‘National Interest Analysis.’ Many other procedural innovations have been made to make the executive accountable to Parliament in the matter of treaty-making. In Canada similar trends are seen though they are less efficacious. Constitutional amendment was moved to prescribe consultation with the provinces on treaties affecting their domain. There is a growing realization that the federal-democratic deficit be removed.

4. The purpose of the above fleeting summary of events is just to stress the global concern how to remove the democratic deficit in treaty-making. With the exception of the British government, the executives in other Commonwealth countries seem very resistant to the idea of an effective Parliamentary control. The record of the Government of India in this matter is surely the worst. The outcry against the WTO Treaty or the Indo-U.S Nuclear Deal meant nothing for it. When in February, 1992, Shri M.A. Baby, Member of Parliament, Rajya Sabha gave a notice of his intention to introduce the Constitution (Amendment) Bill, 1992 providing that “every agreement, treaty, memorandum of understanding contract or deal….shall be laid before each House of Parliament prior to the implementation of such agreement, treaty, …… and shall operate only after it has been approved by resolutions of both Houses of Parliament” failed because of most unworthy pleadings by the leading lights of the government of the day.

Now we have some fresh breeze, some good news for our countrymen. I understand two Private Members’ Bills are in the process of being moved. The Bill by Dr. Murli Manohar Joshi M.P. is for a Parliamentary enactment, the other by Mrs. Brinda Karat is for Constitutional amendment. They want Parliamentary approval of treaties before they are ratified by our government.

5. This Petitioner with utmost good faith believes that under our Constitution the Superior Judiciary is fully competent to address to the problems of the transgression of the constitutional limitations prescribed in imperative terms by the Constitution which we had given to ourselves when we had made our tryst with our destiny on our Independence. This trust this Petitioner holds also on the close reading of our Constitution after sharing empathetically the collective consciousness of our Constituent Assembly. It is prudent not to move in the blinkers under the anachronistic British judicial principles.

6. This Written Submission is rather longish: (i) as it responds to about 90 pages of the Respondents’ Counter-Affidavit; (b) as it deals with points of Constitutional law with complex, but evident, Public Law Dimensions; (c ) as the issues presented are wholly res integra, and as such deserve judicial examination; and (d) as it deals with that species of jurisprudence which even the experts consider as ‘the law nobody knows’ [8].

7. For centuries the exercise of the Treaty-Making power was of no concern to the common people. International affairs hardly affected their course of life. Hence they were the exclusive preserve of the autocrats, high chancelleries, and the imperialists. There was a paradigm shift in the 20th century. People got alarmed when the governments in the West entered into secret treaties and military alliances for furtherance of their imperial designs which led to the World Wars I & II. The same strategy by vested interests are even now, perish the thought, paving a way for the World War III by driving us to the edge. The members of our Constituent Assembly was conscious of all these sinister saga of the Western history; they knew why and how the crooks drove the Government of Turkey to enter into the Treaty of Sèvres, and had in their marrow the various treaties by which the traitors had sold us to slavery for two centuries. Our Constitution amply demonstrate their concern. They framed this Constitution subjecting all the organs of the polity to Total Constitutional Control which can be dented only in those most unfortunate and morbid moments when our country is crushed under the spiky boots of the victors (as was done to Germany under the Treaty of Versailles in 1919), or when our people, low arousal though they are, are etherized by criminal omissions and commissions. Our Constitution presents an impregnable Bastian of which our Superior Courts are on the qui vive.

8. The violations of the norms governing the Executive’s Treaty-Making Competence have become so shocking and gruesome in the 1990s, and thereafter, that some of our greatest souls have felt it their national duty to assert precisely what our Constitution says (to which our Executive Government is turning its deaf ears). To illustrate his point: this Petitioner draws attention of this Hon’ble Court to the following, though in course of this Written Submissions (and more so in the Writ Petition) their ideas are discussed as this Petitioner endorses them and adopt them wholly: these are--

(a) Peoples’ Commission Report on GATT by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon’ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon’ble Chief Justice of Delhi High Court);

(b) Declaration by 3 former Judges [Justice V.R. Krishna Iyer, former Judge of the Supreme Court of India; Justice P.B. Sawant, former Judge of the Supreme Court of India; and Justice H. Suresh, former Judge of the Bombay High Court];

(c) Declaration emanating from the Seminar was inaugurated by the Former Prime Minister Shri I.K.Gujral and presided over by the Former Chief Justice of India Shri J.S. Verma and of which the Valedictory address was delivered by Dr. Murli Manohar Joshi, M.P.

9. The constitutional issues presented in this Writ Petition are, it is most humbly submitted, the most important constitutional question in our country, nay in the Commonwealth itself. This Petitioner finds this concern expressed in “The National Commission to Review the Working of the Constitution: a Consultation Paper on Treaty-Making Power under our Constitution”, which said:

“Judiciary has no specific role in treaty-making as such but if and when a question arises whether a treaty concluded by the Union violates any of the Constitutional provisions, judiciary come into the picture. It needs no emphasis that whether it is the Union Executive or the Parliament, they cannot enter into any treaty or take any action towards its implementation which transgresses any of the constitutional limitations. ….I am sure that if and when any such question is considered by the Supreme Court, it will be considered in greater depth….”

10. This Petitioner submits that he considers the prime issue presented in this Writ Petition wholly res nova (‘an undecided question of law’: Black’s Law Dictionary) as none of the decisions of our Hon’ble Court has ever DECIDED this issue. This Petitioner makes this statement after going through all the reported cases and evaluating the effect of certain obiter dicta made in some anachronistic contexts.

Structure of this Written Submissions

11. This Written Submissions is neither a rehash or reply of the Writ Petition, nor it raises any issue of fact or law not already presented. This Written Submissions is structured in the following Parts:

[Part I]. An Overview

[The quintessential presentation of core prime issues]

[Part II]. Countering the Counter-Affidavit

[Reply to the Respondents' Counter Affidavit to show that they have made out no case]. The Part II of this Written Submissions is structured thus:

[Segment A]. Countering the Respondents' Preliminary Submissions pp. 18-32

[Segment B]. Treaty making power of the Union Executive pp. 32-49

[Segment C]. The Legality of entering into the WTO Agreement pp. 49-62

[Segment D]. Constitutional Validity of Sec. 90 &90A of the I.T. Act, 62-94

[Segment E]. The Validity of the MAP & the impugned Instructions do

[Segment F]. The Claim for Cost 94-95

Conclusion 95-97

[Part III]. Concluding Submissions

Part I

AN OVERVIEW OF ISSUES

(i) The Statement of the Constitutional Issues involved

11. This Writ Petition is founded on this Petitioner's comprehension of certain fundamental postulates of our Constitutional Law. This Petitioner has stated them compressively in the Writ Petition and its Annex ‘C'. However, the core propositions have been summarized in para 11 of the Writ Petition. As these propositions are seminal to this Petitioner's case, they are quoted hereunder for a proper exfoliation of points in this Written Submissions: to quote--

“This Petitioner's position in nutshell; and core legal propositions constituting legal perspective.

“ This Petitioner's stand taken in the Writ Petition, are stated in nutshell at the threshold itself to put the issues before this Hon'ble Court under a sharp focus:

(i) Our State's legal Sovereignty reveals itself in the terms of our Constitution only [except in those unfortunate moments, perish the thought, when a constitution goes down the gutter, and the crude realities of realpolitik become the sole determiner as it had become when the treaties like the Treaty of Allahabad, or Treaty of Versailles, or the Treaty of Surrender were signed by the vanquished under the spiky boots of the ruthless victors];

(ii) Our State has no Sovereign power, unbridled and unlimited, to enter into a treaty even at the international plane; it has only a Treaty-making capacity under the constitutional limitations. As the Executive represents our State at international plane , it acts only as the authorized agent of the State , and as such it is incompetent to transgress the obvious limitations on its power imposed by the Constitution which creates it and keeps it alive only with controlled competence. “In general it seems that the Crown makes treaties as the authorized representative of the nation.” (Keir & Kawson, Cases in Const Law p.160 which can run the risk of acting without capacity if it goes in breach of the constitutional limitations on its capacity. Oppenheim observes [9] :

‘If the Head of State ratifies a treaty without first fulfilling the necessary constitutional requirements (as, for instance, where a treaty has not received the necessary approval from Parliament of the state), his purported expression of his state's consent to be bound by treaty may be invalid.”

Art 53 of the Vienna Convention states that if a treaty which at the time of conclusion conflicts with peremptory norm of international law it would be void. And Article 45 of the Vienna Convention – probably reflecting rules of customary international law – allows a state (by way of exception) to invoke non-observance of its internal law as a basis for invalidating its consent to be bound by the treaty only if the rule of internal law relates to competence to conclude treaties, if it is a rule of fundamental importance, and if the violation is manifest, i.e objectively evident to any state conducting itself in the matter in accordance with normal practice and in good faith .

(iii) “It is well established as a rule of customary international law”, says Oppenheim, “ that the validity of a treaty may be open to question if it has been concluded in violation of the constitutional laws of one of the states party to it, since the state's organs and representatives must have exceeded their powers in concluding such a treaty.. Such constitutional restrictions take various forms.” This aspect of the matter has been pursued in Section IV of this Writ Petition.

(iv) Nothing turns on the concept of “inherent sovereign power” theory because sovereignty inheres in our Constitution, and it is essentially, as Oppenheim says, “ a matter of internal constitutional power”. Oppenheim, while analyzing what Sovereignty means in the 20 th century, observed:

“Sovereignty was, in other words, primarily a matter of internal constitutional power and authority, conceived as the highest, underived power within the state with exclusive competence therein”

Even the U S Supreme Court has observed in Hamdan's Case [Hamdan v. Rumsfeld, Secretary of Defense , et al decided by the U.S. Supreme Court on June 29, 2006] that ‘ The Court's conclusion ultimately rests upon a single ground: Congress has not issued the Executive a “blank check. [Justice Breyer , with whom Justice Kennedy , Justice Souter, and Justice Ginsburg join, concurring.]

(v) ‘A number of states in their constitutions have made express provision for limitations on their national sovereign powers in the interest of international co-operation. These provisions are to the effect that certain sovereign rights and powers of the state may be limited in connection with international organizations, or may be conferred upon or transferred to international organizations. This has particularly become necessary in some states whose constitutions provide for certain rights and powers, for example the power to legislate, to be exercised only by organs of the state: by becoming a member of an international organization which can in some degree be said to be exercising such powers, the state, in absence of a provision envisaging a transfer of those powers, could be said to be acting unconstitutionally and the resulting exercise of the powers by the organization could be said to be ineffective within the state.' [10]

Under the Constitution of India there is no provision for limitations on the national sovereign powers of our State which can grant an overriding effect on the constitution .

(vi) The constitutional limitations work both in matters of

(a) treaty formation , and

(b) treaty i mplementation .

The opinion of Lord Atkin ( in Attorney General for Canada v. Attorney General of Ontario ) on the possibilities of different approaches in the aforementioned two segments are right under the British constitution but invalid under our Constitution for numerous reasons including the express indication in the narration under entry 14 of the Union List which suggests that our Constitution contemplates within its matrix both the formation (entering into) and implementation of a treaty. Lord Atkin himself observes that different considerations would be at work in a federal polity and under a system of governance under a written constitution with express constitutional limitations.

New Realities and Art 51 of our Constitution

(vii) That in the Minister of State for Immigration and Ethnic Affairs v Teoh [11] , case, the Court found that by entering into a treaty the Australian Government creates a “legitimate expectation” in administrative law that the Executive Government and its agencies will act in accordance with the terms of the treaty, even where those terms have not been incorporated into Australian law. Whilst the effect of this norm would be submitted later in para 69(vii) p. 21of the Writ Petition, it is worthwhile asserting that the conventional differentiation between the governmental acts with fall outs at the international plane, and the acts impacting the rights and interests of the subjects/ citizens within the realm (domestic jurisdiction), which had been once upon a time made by of Sir R. Phillimore's decision in The Parlement Belge [vide para 23 p. 30 of this Petition], and which was quoted in Maganbhai v. Union [12] , does not survive now. Now we live in a world in which the executive acts done at the international plane, seep into domestic sphere to act often as catalytic agent, but most often as prime over and operative force, mostly, now, through the executive process. Under the Law of Nationality the States protect the interests of their nationals in foreign jurisdictions, but under, what this Petitioner would call the Post-modern International Law, the mighty States promote their business and corporate interests subjecting the not so-fortunate interests under the noxious burden of executing their agenda best if done covertly, otherwise by coercing their Parliaments through the pleas of fait accompli. The realities of the day are captured in the following lines from Noam Chomsky's Hegemony or Survival (p. 13):

‘The whole frame-work of international law is just “hot air”, legal scholar Michael Glennon writes: ‘The grand attempt to subject the rule of force to the rule of law” should be deposited in the ashcan of history –a convenient stance for the one state able to adopt the new non-rules for its purposes, since it spends almost as much as the rest of the world combined on means of violence and is forging new and dangerous paths in developing means of destruction, over near-unanimous world opposition'”

Now, thanks to the Uruguay Round Final Act, adopted by our Central Government under an opaque system, we are led to such a morbid pass as would be evident from such illustrations as these:

(a) The effects of the TRIPS are certain coerced legislation, certain defeats at the WTO's Disputes Settlement Body, ouster of the jurisdiction of our Superior Courts, encroachment on our Sovereign Space, infraction (accomplished/threatened),…creation of inter-governmental fora to implement the TRIPS agenda without the nation knowing (the technique of Stealth) [crafted through the memorandum of understanding], censure and command under the U.S. Trade Act of 1974, which puts India on Priority Watch List in 2006, in words with which only a country under seize can put up. We are mandated: “The United States also encourages India to join and implement the WIPO Internet Treaties.” Even our judiciary is told how to behave. [13] Under the U S Trade Act 1974 Trade Representative can initiate action against India for punitive retaliation etc. if he is of opinion that our Government has violated a trade agreement (such as a World Trade Organization (WTO) agreement or the North American Free Trade Agreement. That Act even says “. 1. An act, policy or practice is considered to be unreasonable if it is unfair and inequitable, even if it does not violate the international legal rights of the United States.” [14] And all this to help the MNCs and to promote their agenda

(b) Again thanks to the WTO Treaty the MNCs are even going to the extent of asserting, in ways much more devastating that what is suggested in Minister of State for Immigration and Ethnic Affairs v Teoh [15] , that Section 3(d) of our Patents Act is unconstitutional as it is in breach of the TRIPS Agreement! In effect the executive act, without Parliament's involvement, saddled this nation with obligations which ride roughshod over the Constitution. Such an atrocious challenge is natural when the Mashelkar Committee considers Article 27 “ a specific mandate” holding that there is “ a perception that even the current provisions in the Patents Act could be held to be TRIPS non-compliant”. Hence, in its view, our law is to be made” TRIPS compliant.' One wonders if there is any difference between the Committee's approach and that of a MNC like Novartis AG. Both seem to assume that a treaty made by the opaque system can provide an anvil under our Constitution to crack even our statute to pieces on the ground of its being ultra vires the TRIPS. [And this is the abiding assumptions in the terms of reference to the Mashelkar Committee on Patents and its answers thereon on which more is submitted underneath Ground 14 at p. 116 of the Writ Petition .]

The core point is: Was this sort of Treaty contemplated by our Constitution to be done this way?

(viii) The core pleadings in this Writ Petition is squarely in tune with the decisions of the Hon'ble Supreme Court in [16] ; Raja Ram Pal vs. Hon'ble Speaker, Lok Sabha & Ors (Case No.W. P.(civil)1of 2006); I.R. Coelho (Dead) By LRs v. State of Tamil Nadu & Ors. Date of judgment 11/01/2007.

(ix) No treaty was ever done in the past having as wide and as long-lasting an impact in the domestic jurisdiction as the ratification of the Uruguay Round Final Act by the Executive. The U.S. adopted it, with several reservations, though an Act of the Congress. The U.S. rightly thinks that a treaty usurping the legislature's power over trade and commerce must be ratified by an Act, and only then to be adopted by the President. Like other recent trade agreements, including NAFTA, the United States-Canada Free Trade Agreement, the United States-Israel Free Trade Agreement and the Tokyo Round Agreement, the Uruguay Round Agreements was constitutionally executed by the President and approved and implemented by Act of Congress. In the U.K. accession to the EEC Treaty was after Parliamentary approval; participation was through enactment, and after obtaining a referendum .

(x) The issues presented in this Writ Petition deserve to be considered, or reconsidered. in the post- Royappa - Maneka Gandhi - Ajaya Hasia - Kesavanda -.ethos, keeping in view the crudities of the Economic Globalization.

(xi) Under our constitutional system whilst within domestic jurisdiction the terms of a treaty can be challenged if they contravene statutory or constitutional limitations, no statute or a constitutional provision can be challenged before our domestic court for enforcement of treaty terms de hors them.

(xi) The constitutional powers and duties required by our Constitution to be exercised within the domestic jurisdiction, or having impact within the domestic jurisdiction, can not be abdicated, ignored or subjected to extraneous restrictions for any reason whatsoever. In the context of the Irish Constitution (Ireland has a written Constitution from which a lot of borrowings our Constitution-makers had made), in Crotty v An Taoiseach [1987] 2 CMLR 666 the Court observed [17] :

‘It would be quite incompatible with the freedom of action in foreign relations conferred on the Government to qualify it or to inhibit it in any manner by formal agreement with other States to do so. The free do, does not carry with it the power to abdicate the freedom or enter into a binding agreement with other States to exercise power to decide matters of foreign policy in a particular way or to refrain from exercising it save by particular procedures and so to bind the State in its freedom of action in foreign policy.'

(xi) The central thesis in this Writ Petition is founded on propositions inter alia the following:

(1) The Central Government has no unbridled power in its hip-pocket to be exercised at international plane (through treaty making, or foreign relations) de hors the Constitution of India, as the Union of India has no such power conferred under the Constitution.

(2) It a constitutional solecism to think that any Treaty ( be it a Tax Treaty or the WTO Treaty or treaties of other conceivable species) can ever enable the Executive to transgress constitutional competence.

(3) There are only two Articles in our Constitution granting Treaty-making power: Art 73 and Art 253. They, in effect, say what this Petitioner is asserting in the Petition. Art 73 subjects the exercise of power to constitutional limitations. And Art 253 can if invoked only if a Treaty is constitutionally valid. If the executive enters into a treaty, agreement or convention in breach of the basic features of our Constitution, or the Constitution's mandatory mandate, then such an agreement, treaty or convention is constitutionally invalid: hence domestically inoperative and non est . Our courts, as the creatures of the Constitution, must uphold the Constitution by declaring such a treaty, agreement or convention bad. Ours is a written constitution under which all the organs of the polity are the creatures of written constitution: hence bound by its limitations, both express and implied. Our Supreme Court clearly stated in Ajaib Singh v. State of Punjab [18] :

“Neither of Articles 51 and 253 empowers the Parliament to make a law which can deprive a citizen of India of the fundamental rights conferred upon him”.

This Petitioner's view is fully supported by (a) Peoples' Commission Report on GATT by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon'ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon'ble Chief Justice of Delhi High Court); (b) V R Krishna Iyer, Dialectic and Dynamics of Human Rights in India pp.364-365; and Shiva Kant Jha, Judicial Role in Globalised Economy pp 306-307

(4) This Petitioner deems it a cardinal principle of our jurisprudence that Hon'ble Court is the ultimate decision-maker in the matter of what sort of norms (their ambit and reach also) of International Law are expected to be given effect within the constraints and culture of polity as structured by our Constitution. “The modern rule”. Stephension LJ quoted the illuminating comment of Lord Alverstone CJ, in West Rand Centrla Gold Mining Co v R [19] :

“…any doctrine, so invoked must be one really accepted as binding between nations, and the international law, sought to be applied must, like anything else, be proved by satisfactory evidence which must shew either that the particular proposition put forward has been recognized and acted upon by our own country, or that it is of such a nature, any civilized state would repudiate it. …. But the expressions used by Lord Mansfield when dealing with the particular and recognized rule of international law on this subject, that the law of nations forms part of the law of England, ought not to be Construed so as to include as part of the Law of England, opinions of text-writers upon a question as to which there is no evidence that Great Britain has ever assented, and a fortiori if they are contrary to the principles of her laws as declared by her Courts.”

The tsunami of economic globalization has subordinated the political realm to the economic realm established under the overweening majesty of Pax Mercatus. Geza Feketeluty has brought out this reality thus:

“Clearly, the reality of globalization has outstripped the ability of the world population to understand its implications and the ability of governments to cope with its consequences. At the same time, the ceding of economic power to global actors and international institutions has outstripped the development of appropriate global political structures.” [20]

‘[But in this world we are faced with a complex nerve-wrecking problems. Our executive may through its commitments at the international plane, give rise to international customary law on a particular point; or may make our country party to a treaty having domestic or extra-domestic impact. This situation is likely to be worse as the institutions of economic globalization are clearly in a position to call the shots. Under such circumstances we must uphold our Constitution. No norm of international law can be so forged/evolved as to enable the executive to defile or deface the Constitution.' [21]

The views of Lord Alverstone CJ echo in the observations of Lord Atkin said in Chung Ch Cheung v. R [1938] 4 All ER 786 at 790 :

“….so far at any rate as the courts of this country are concerned, international law has no validity save in so far as its principles are accepted and adopted by our own domestic law”.

And of Cockburn CJ said in R. Keyn (1876) 2 EX.D. 63 at 202:

‘ For writers on international law, however valuable their labours may be in elucidating and ascertaining the principles and rules of law, cannot make the law. To be binding, the law must have recived the assent of the nations who are to be bound by it…..”

[Discussed in detail by Shiva Kant Jha in Final Act of WTO: Abuse of Treaty Making Power at pp. 22-24 Annex ‘C' of the Writ Petition pp.148-185]”

This author has highlighted one more aspect of this ‘democratic deficit' when he points out further:

“ …Additional deficits raise further concerns, including a ‘federal democratic deficit' in relation to a central executive's capacity to make treaty law without the involvement of the sub-national units [6] ;….”

3. This has become a most worrisome problem in the common law countries where the Executive is clinging steadfastly to the anachronistic and fossilized British view that this power is a political decision at the international plane immune from the control of parliament and the judiciary. The framers of the US Constitution were the first to subject this exercise of power to the control of the Senate, and in some matters, like NAFTA, the WTO Treaty, to a more rigorous Congressional supervision. The Constitutional amendment (the Bricker Amendment moved in the 1950s) ceased to have a relevance because the US Supreme Court made the treaty-making power of the Executive subject to constitutional limitations. As the U.S. Supreme Court had shown in the Brown v. Board of Education of Topeka , [347 U.S. 483 (1954)] a path to the nation away from racial segregation, so did the Supreme Court do in Reid v. Covert (1957). In Hamdan v. Rumsfeld, Secretary of Defense , et al (decided by the U.S. Supreme Court on June 29, 2006), the U.S. Supreme ‘… Court's conclusion ultimately rests upon a single ground: Congress has not issued the Executive a "blank check." Cf. Hamdi v. Rumsfeld, 542 U.S. 507, 536 (2004) (plurality opinion)' [Justice Breyer , with whom Justice Kennedy , Justice Souter, and Justice Ginsburg join, concurring]. In Britain, right from the days of the World War I, public agitation remained afoot for parliamentary sanction of treaties. Much headway was made in the matter with the framing of the Ponsonby Rule (1924) for placing treaties before Parliament for 21 sitting days. A Private Member Bill to ‘subject treaty-making power' to the British Parliament's control led, since 1997, to set up a practice to provide detailed explanatory memorandum with the text of treaties placed before Parliament. The government is conceding the popular demand inch by inch. Now a Public Bill is before the U.K. Parliament: the U.K. draft Constitutional Renewal Bill [for text see http://www.publications.parliament.uk/pa/jt200708/jtselect/jtconren/166/166.pd]. Its effect on the Executive's treaty-making power was stated by the Right Honourable Jack Straw MP, Lord Chancellor and Secretary of State for Justice on 25 March 2008 in the House of Commons: to quote [7] --

“Part 4 makes it a statutory requirement that treaties must be laid before both Houses of Parliament before ratification. If this House were then to vote against the ratification of a treaty, the government could not proceed to ratify it.”

In Australia the decision in Teoh's Case [(1995) 183 C.L.R273] led to the formation of the Joint Standing Committee on Treaties, a Parliamentary Committee. The Senate Legal and Constitutional Committee came out with its report entitled; Trick or Treaty? Commonwealth Power to Make and Implement Treatie s. In Australia the proposed treaty actions are placed before Parliament with ‘National Interest Analysis.' Many other procedural innovations have been made to make the executive accountable to Parliament in the matter of treaty-making. In Canada similar trends are seen though they are less efficacious. Constitutional amendment was moved to prescribe consultation with the provinces on treaties affecting their domain. There is a growing realization that the federal-democratic deficit be removed.

Now we have some fresh breeze, some good news for our countrymen. I understand two Private Members' Bills are in the process of being moved. The Bill by Dr. Murli Manohar Joshi M.P. is for a Parliamentary enactment, the other by Mrs. Brinda Karat is for Constitutional amendment. They want Parliamentary approval of treaties before they are ratified by our government.

6. This Written Submission is rather longish: (i) as it responds to about 90 pages of the Respondents' Counter-Affidavit; (b) as it deals with points of Constitutional law with complex, but evident, Public Law Dimensions; (c ) as the issues presented are wholly res integra , and as such deserve judicial examination; and (d) as it deals with that species of jurisprudence which even the experts consider as ‘the law nobody knows' [8] .

7. For centuries the exercise of the Treaty-Making power was of no concern to the common people. International affairs hardly affected their course of life. Hence they were the exclusive preserve of the autocrats, high chancelleries, and the imperialists. There was a paradigm shift in the 20 th century. People got alarmed when the governments in the West entered into secret treaties and military alliances for furtherance of their imperial designs which led to the World Wars I & II. The same strategy by vested interests are even now, perish the thought, paving a way for the World War III by driving us to the edge. The members of our Constituent Assembly was conscious of all these sinister saga of the Western history; they knew why and how the crooks drove the Government of Turkey to enter into the Treaty of Sèvres, and had in their marrow the various treaties by which the traitors had sold us to slavery for two centuries. Our Constitution amply demonstrate their concern. They framed this Constitution subjecting all the organs of the polity to Total Constitutional Control which can be dented only in those most unfortunate and morbid moments when our country is crushed under the spiky boots of the victors (as was done to Germany under the Treaty of Versailles in 1919 ), or when our people, low arousal though they are, are etherized by criminal omissions and commissions. Our Constitution presents an impregnable Bastian of which our Superior Courts are on the qui vive .

8. The violations of the norms governing the Executive's Treaty-Making Competence have become so shocking and gruesome in the 1990s, and thereafter, that some of our greatest souls have felt it their national duty to assert precisely what our Constitution says (to which our Executive Government is turning its deaf ears). To illustrate his point: this Petitioner draws attention of this Hon'ble Court to the following, though in course of this Written Submissions (and more so in the Writ Petition) their ideas are discussed as this Petitioner endorses them and adopt them wholly: these are--

(a) Peoples' Commission Report on GATT by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon'ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon'ble Chief Justice of Delhi High Court);

(c) Declaration emanating from the Seminar was inaugurated by the Former Prime Minister Shri I.K.Gujral and presided over by the Former Chief Justice of India Shri J.S. Verma and of which the Valedictory address was delivered by Dr. Murli Manohar Joshi, M.P.

9. The constitutional issues presented in this Writ Petition are, it is most humbly submitted, the most important constitutional question in our country, nay in the Commonwealth itself. This Petitioner finds this concern expressed in “The National Commission to Review the Working of the Constitution: a Consultation Paper on T reaty-Making Power under our Constitution”, which said:

“Judiciary has no specific role in treaty-making as such but if and when a question arises whether a treaty concluded by the Union violates any of the Constitutional provisions, judiciary come into the picture. It needs no emphasis that whether it is the Union Executive or the Parliament, they cannot enter into any treaty or take any action towards its implementation which transgresses any of the constitutional limitations. …. I am sure that if and when any such question is considered by the Supreme Court, it will be considered in greater depth… .”

10. This Petitioner submits that he considers the prime issue presented in this Writ Petition wholly res nova (‘an undecided question of law': Black's Law Dictionary ) as none of the decisions of our Hon'ble Court has ever DECIDED this issue. This Petitioner makes this statement after going through all the reported cases and evaluating the effect of certain obiter dicta made in some anachronistic contexts.

(ii) The Respondents' inconsistent and unsustainable position

12. The Respondents, in their Counter-Affidavit, has unfairly and unsuccessfully tried to steal the show, and thereby to steal this Petitioner's thunder by reiterating the Treaty-making power must conform to our Constitution: to quote from their Counter-Affidavit---

“It is humbly submitted that the Government of India can only enter into a treaty in conformity with the constitutional provisions laid down in the Constitution of India.” [para 2 p. 5 of the CA]

“ By virtue of article 73 of the Const., the executive power of the Union, in absence of Parliamentary legislation to the matters with respect to which the Parliament has power to make law subject of course to constitutional limitation.” [para 5 p. 7]

“ …..there has been no violation of any provisions of the Constitution in signing and ratifying the Uruguay Round Final Act. It is also denied that there has been any breach of Fundamental Rights and basis structure of the Constitution.” [page 52 of the CA].

13. The nub of the constitutional issue can be thus stated:

(i) The Respondents nowhere in the Counter-Affidavit admits that even at the International plane the Executive power must conform to the constitutional limitations. It seems that they are asserting that Treaty-Making power, so far its formation is concerned, is an act at the international plane in exercise of extra-constitutional power.

(ii) The Respondents state what is besides the point under consideration. The point is settled that the executive power, when exercised in the domestic jurisdiction, cannot transgress the constitutional limitations. None quarrels with proposition. But this proposition is not at all relevant to the issues involved in the formation or implementation of a treaty.

(iii) The Respondents, in their Counter-Affidavit, has evaded to face the the situations when domestic effects are given even through ungratified treaties. [vide para 2 supra, & pp. 56-57 i nfra at pp. 45-47].

(iv) The Respondents, in their view, ignores our Constitution but espoused the thesis of Sir R. Phillimore in The Parlement Belge (1870), 4 P.D. The Respondents believe that whenever the people's rights are affected, this is done after getting some implementing legislation passed by Parliament. The Respondents refuse to grasp that the content and province of people's rights and legally protected interests in our present-day democratic polity are much wider and richer than what they were the Tudors, or before we framed our Constitution. The logical corollaries of the Respondent's view would be to deny to recognize the people's rights and interest to live under a democratic polity with entrenched fundamental rights; to live in a sovereign country with Rule of Law subject to the exclusive supervision of our High Courts and the Supreme Court; to be citizens of this Republic with its distinct constitutional mission outlined in the Preamble to our Constitution, and the Directive Principles of State Policy. This Petitioner would readily agree that the Directives do not grant legal rights, but they surely admit our just and equitable expectations. The Executive can try to achieve this even in varying measures, but it is constitutionally incompetent to forgo directly or indirectly, or even by bringing about such paradigmatic change which would make them otiose, redundant or shelved into oblivion.

14. Instead of beating about then bush the Respondents should agree the the following proposition leaving it to the Courts to see if this great Constitutional imperative is violated in a given situation. In rough and ready way this proposition may run thus

“ As all the organs of our polity are the creatures of our Constitution, they all are bound to conform to the constitutional limitations. As such the Executive Government can never transgress them whether it acts in the domestic sphere or at the international plane .

(iii) The Need for the Judicial Declaration of the Law governing the exercise of Treaty-Making under our Constitution.

15. It is submitted that it would be in great public interest that this Hon'ble Court declares the law of Treaty-Making within the parameters of our Constitution. This has not been done till now; and this needs to be declared in this phase of Economic Globalization, Pax Mercatus, and the neo-liberal paradigm shift in the global and trans-national economic management. This Petitioner has made his comprehensive submissions in the Writ Petition and in the Part II of this Written Submission: but he would quote from the Declaration by the 3 former Judges [Justice V.R. Krishna Iyer, former Judge of the Supreme Court of India; Justice P.B. Sawant, former Judge of the Supreme Court of India; and Justice H. Suresh, former Judge of the Bombay High Court] as he believes it is an exact quintessential statement under our Constitution: to quote what they say---

“…. Articles 73 and 253 and entries 6, 13, & 14 in the Union List of the Constitution refer to the powers of the Executive. Article 73, among other things, states that, “…the executive power of the Union shall extend (a) to the matters with respect to which Parliament has powers to make laws, and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement.” This means that the matters n which Parliament has no powers to make laws are also matters on which the Union Government cannot exercise its executive power. It also means, conversely, that the Union Government cannot exercise its executive powers beyond the legislative powers of the Union. Both these propositions have an underlying assumption that, before the Union Government exercises the executive power, there is a law enacted by the Parliament on the subject concerned. Some argue that the provisions of Article 73(1)(a) gives power to the Executive to act on subjects within the jurisdiction of Parliament, even if the Parliament does not make a law on those subjects. This is both a distortion and a perversion of the said provision and a subversion of Parliament's supreme control over the Executive. If this interpretation is accepted then the Union Executive can act on all subjects on which Parliament has to make law, without there being any law made by Parliament. You can thus do away with Parliament and the Parliament's duties to make laws. We will then have a lawless Government. Democracy presumes there should be a rule of law and all Executive actions will be supported by law and that there shall be no arbitrary action by any authority, including the Union Executive. It may also be necessary in that connection to remember that it is for this very reason that when Parliament is not in session and, therefore, unable to enact a law, that the power is given to the President to issue an ordinance (which is a law), so that the Executive may act according to its provisions. These ordinances are to be placed before the Parliament within six weeks of its reassembly, and if Parliament approves they become law. The Constitution-makers were, therefore, clear in their mind that the Executive cannot act without the authority of law and it has no power independent of law and it has no power independent of law made by Parliament.”

(iv) PERISH THE THOUGHT

Reductio ad absurdum

16. Reductio ad absurdum also known as an apagogical argument , is a type of logical argument where one assumes a claim for the sake of argument and derives an absurd or ridiculous outcome, and then concludes that the original claim must have been wrong as it led to an absurd result. If the Respondents' view is allowed to prevail, both our democratic polity and the Constitution may get suverted through the Treaty-Making Power. We feel aghast when we think of what has already happened, and may also happen with out Constition as a mere scarecrow [22] .

(v) The Issues Raised

17. That this Petitioner has sought Remedies from this Hon'ble Court by raising certain concrete issues pro bono publico . This Writ Petition seeks remedy under Art 226 of the Constitution of India praying:

(i) that it be declared that the Central Government was constitutionally incompetent to sign/ratify/adopt the Uruguay Round Final Act which affects our lives in many material ways, and even subverts our Constitution;

(ii) that the provisions relating to Mutual Agreement Procedure (MAP) be held ultra vires and without a statutory foundation, and that, as a matter of express consequence, the Instruction and the Rules ( vide para 12 infra ) pertaining to them bad for being ultra vires and violative of Articles 14, 19, and 21 of the Constitution;

(iii) that it be held that it was wrong to bypass our Parliament in treating –making process having deep and long-lasting domestic impact on the lives of our people; and

(iv) that the Double Taxation Avoidance Agreements entered into by the Central Government be held domestically inoperative on account of the fact that that our Executive lacked competence to enter into such Agreements, and also on account of the violations of the aforesaid Fundamental Rights;

(v) that this Hon'ble Court may declare the valid principles governing treaty-making; with a direction that it is high time that Parliament should frame law in exercise of its legislative power determining the zones:

(a) where the agreements are routine and administrative which can be done at the executive level;

(b) where treaties can be made through Parliamentary ratification, or through legislative enactment as has been done in the USA in the case of Agreements with wide domestic and commercial impact ; and

(c) where a treaty affects the structure of our polity and the basic structure of our Constitution it be ratified by Parliament/ adopted by the Executive after obtaining a specific mandate from our people through a referendum ( as was done in the U.K. through the Referendum Act 1975).

(v) Synoptic Statement of the Writ Petition

18.1 That this writ petition brings certain matters to the attention of the Hon'ble Court to vindicate the Rule of Law and get the unlawful conduct of the administrative authority stopped; and seeks, in public interest , the issuance of appropriate directions, orders or writs in the nature of mandamus or declaration, or any other writ or order to the Central Government so that the executive acts, ultra vires the Constitution of India, and our law, are held inoperative; and are stopped forthwith. This is a public interest litigation (PIL) moved wholly pro bono publico .

18.2 This Petitioner seeks constitutional remedies by invoking this Hon'ble Court's powers/duties

(i) under Art. 226 of the Constitution of India as this Petitioner believes his Fundamental Rights under Articles 14 (both under its Old Doctrine and the New Doctrine), 19(1)(a), 21, and 29 of the Constitution of India have been violated by unlawful acts of the Executive-government;

(ii) under the inherent power of this Hon'ble Court to do complete justice;

(iii) under that high judicial grace which inevitably flows from the commitments under the judicial oath, prescribed in the Third Schedule to the Constitution of India to ‘uphold the Constitution' reading the reach of the oath as was read by Chief Justice Marshall in Marbury v. Madison [23] .

18.3. That the core question in this Writ Petition centres round the proposition that the Central Government has no extra-constitutional power to be exercised at international plane de hors the mandatory constitutional and statutory provisions, as even at the international plane it has no hip-pocket having unbridled power. This Petitioner has submitted in this Writ Petition, inter alia others, the following:

(i) That the obiter in Maganbhai, relying on Lord Atkin's distinction [24] between (1) the formation of a treaty, and (2) the performance of the obligations created by it, is correct under the British constitutional frame of reference, but is wholly incorrect and impermissible under our Constitution whereunder the Executive is a creature of the Constitution having only constitutionally conferred power: hence the obiter in Maganbhai on the point under reference is per incuriam as it goes counter to our Constitution;

(ii) That the correct perspective mandated under Constitution is accurately stated in the following words of Opeenheim who examined the issue under consideration from the observation-post of the Public International Law: to quote --

(iii) That the Treaty-Making Power is under the constitutional limitations whether a Treaty emanates from the exercise pf power within the domestic jurisdiction, or outside; whether it is negotiated/adopted/ratified in Delhi or Detroit, in Marrakesh or Port Louis;

(iv) That our Constitution does not grant the Executive power to destroy our constitutional polity by entering into Treaties like the Treaty of Versailles, which concluded the World War II, by putting Germany on mat under the spiky boots of the rapacious victors; or that like that the Treaty of Surrender which was signed by Japan in Tokyo Bay aboard the battleship USS Missouri after being trounced and pulverized after atomic bombardment in the World War II. Such treaties are beyond our Constitution,(in fact beyond the contemplation of the constitution of any civilized and self-respecting nation). Such treaties are done by a nation as a mere morbid fact of realpolitik to be hurled into winds the day that nation recovers its lost power and dignity.

(v) That the Executive government signed and ratified the Uruguay Round Final Act without taking the nation in confidence, without obtaining our Parliament's approval, and without conforming to the constitutional limitations as if the Executive was signing and ratifying a Treaty like the Treaty of Versailles, or the Treaty of Surrender. On proper analysis, the Final Act is no different from the Treaty of Surrender as it was done in complete defilement and defacement of our Constitution by subjugating the nation under a pactum de contrahendo to a regime under which (a) our Fundamental Rights have been violated; the constitutionally mandated objectives of the Government are substituted by the objectives articulated under the Uruguay Round Final Act; (c ) the legislative power has been shed off in favour of the WTO and other institutions arising from the cauldron of the Act as their overt and covert commands create a situation of fait accompli to coerce Parliament to enact law toeing such lines, and as also because the Executive makes a trespass on several legislative fields, yet not occupied by Parliamentary enactments, thereby precluding our Parliament to legislate in future on such fields as they would stand occupied by the WTO commands masquerading as the policies of the government implemented under Art 73 of the Constitution; (d) the judicial power has been illegally granted to foreign bodies, like the Disputes Settlement Body by reducing the reach even of our Supreme Court; (e) by commanding our domestic institutions, like Parliament and the Superior Courts to conform their laws to the obligations under the Uruguay Round Final Act; (f) by begetting constitutional amendments, and powers to amend the Constitution, to render it Market friendly even in matters which not even our Parliament can amend even in exercise of its constituent power; (g) riding roughshod on the profoundest principle of constitutional polity, of which the earliest masterly exposition was done by Chief Justice Marshall in Marbury [26] .

(vi) That this Petitioner agrees with the findings of in the Report of the Peoples' Commission on GATT (by V.R. Krishna Iyer, O. Chinnappa Reddy, D.A. Desai , the former Judges of the Supreme Court, and Rajinder Sachar, the former Chief Justice of Delhi High Court ) that our acceptance and ratification of the Uruguay Round Final Act was clearly unconstitutional.

18.4. That this Petitioner questions the constitutionality of our acceptance of the obligations under the World Trade Organization seeking a rule that the Final Act Embodying The Results of the Uruguay Round of Multilateral Trade Negotiations, the Final Round of the General Agreement on Tariffs and Trade, the Agreement Establishing the World Trade Organization, and our participation in the World Trade Organization as a member of that organization, is repugnant to the provisions of our Constitution and therefore, unconstitutional.

18.5. That this Petitioner has pleaded that there is the rigid constitutional and statutory limitations on the Central Government's power to enter into the Double Taxation Avoidance Agreements (popularly known as Tax Treaties), and he has shown how these Treaties, being done by the Executive under its Opaque System, are in breach of the mandatory constitutional and statutory limitations including the limitations placed by Articles 14, 19, and 21 of the Constitution.

18.6. That treaties in every civilized and democratic country world over is done with Parliamentary consent obtained after proper deliberations. This Petitioner, in Section IV of the Writ Petition, has examined the constitutional practice in the U.K, the U.S.A, Australia, Canada, South Africa and many other countries to prove his point. For even stronger reasons a Tax Treaty is legislated in the USA, Canada, Australia, and most other countries. Even in the U.K. a tax treaty is done through an Order-in-Council after the presentation of the resolution by the House of Commons to the Crown under a practice established by the Parliament Act 1911 on the model of which are framed a set of material provisions in our Constitution for keeping a close control on the revenue of the State.

18.7. That despite clear provisions under our Constitution, and what was stated in the Constituent Assembly, Treaties are done in our country by the Executive under an Opaque System. This state of affairs must end if our democracy and constitutional polity are to survive for the common people of India.

18.8. That the Executive's arbitrariness and remissness reached their climax in the Instruction No 12 of 2002 dated Nov. 1, 2002 [F. No. 480/3/2002- FTD] issued by Government of India, Department of Revenue (Foreign Tax Division) [Annex “A” ], and the Rules prescribed in Part IX-C of the Income-tax Rules, 1962 [Annex “B” ] which are ex facie in breach of Articles 14, 19, and 21 of the Constitution of India, and also are ultra vires the Income-tax Act, 1961.

18.9. That in this Writ Petition, the Petitioner raises, for the first time, the issues pertaining to our Government's Treaty-Making Power in this era of Economic Globalization; and he submits:

(a) That issue involving the Treaty-Making Power is coming up as the principal issue, for the first time as in no existing decision this Hon'ble Court ever examined the issue within our constitutional framework.

(b) That for the first time this Hon'ble Court is requested in this Writ Petition to declare the ambit and reach of the Treaty-Making power as conferred on the Executive by the Constitution and the law of India.

18.10. That this Petitioner brings to this Hon'ble Court's judicial consciousness the recommendations on Treaty-Making procedure as suggested by:

(i) the Constitutional Review Commission [27] ;

(ii) the Report of the Peoples' Commission on GATT ( consisting of V.R. Krishna Iyer, O. Chinnappa Reddy, D.A. Desai , the former Judges of the Supreme Court, and Rajinder Sachar, the former Chief Justice of Delhi High Court) [28] ;

(iii) the Report of the Peoples' Commission consisting of Shri I.K.Gujral, Prof

Yashpal, Shri B.L.Das, and Dr Yusuf Hamied.

(iv) Suggestions put forth by this Petitioner on the Treaty-Making Power [29] .

18.11. That the Petitioner submits before this Hon'ble Court his own suggestions for evaluation, and if approved, in whole or part or with appropriate modification, their judicial declaration while reflecting on the right Treaty-Making Procedure under our constitutional parameters.

18.12. That this Petitioner prays that this Hon'ble Court should:

(i) to declare the law that the Central Government must conform to the constitutional limitations holding that it has no hip-pocket to hold any reserve power to be exercised at an international plane;

(ii) to hold that to the extent the impugned Treaties violate mandatory constitutional limitations, the impugned Treaties, both in formation and implementation , are bad; and, hence, domestically inoperative; and/or

(iii) to declare the right constitutional perspective under a Treaty can be negotiated, adopted, and ratified under the our constitutional parameters which the Executive government can never transgress.

18.13. That this Petitioner submits that this Hon'ble Court has ample jurisdiction to consider all the issues aforementioned, and is competent

(i) to hold a Treaty domestically non-operative to the extent it is beyond the constitutional competence of a contracting party. (Lord McNair, The Law of Treaties , Chapter IV, p. 82; Starke, Introduction to International Law , pp, 77-78);

(ii) to direct the Central Government to take corrective and remedial actions even at international plane.

(iii) to direct the Executive to take steps/ initiatives for the framing law under entry 14 (‘Entering into treaties and agreements with any foreign countries and implementing of treaties, agreements and convention with foreign countries.') of the Union List of the Seventh Schedule to the Constitution.

18.14. That this Writ Petition has not only drawn this Hon'ble Court's attention to the flagrant breaches of the Constitution and the Rule of Law, but has also respectfully solicited that this Hon'ble Court to protect our polity and the Constitution from defilement as it is duty bound under oath to which, in Marbury v. Madison [30] , the Chief Justice Marshall refers in words which time cannot make stale; and are relevant under our polity till our Constitution, perish the thought, meets the fate of the Weimer Constitution.

[Part II].

Countering the Counter-Affidavit

[Reply to the Respondents' Counter Affidavit to show that they have made out no case]. The Reply to the Respondents Counter Affidavit is structured thus:

[Segment A]. Countering the Respondents' Preliminary Submissions pp. 18-32

[Segment B]. Treaty making power of the Union Executive pp. 32-49

[Segment C]. The Legality of entering into the WTO Agreement pp. 49-62

[Segment D]. Constitutional Validity of Sec. 90 &90A of the I.T. Act, 62-94

[Segment E]. The Validity of the MAP & the impugned Instructions do

[Segment F]. The Claim for Cost 94-95

Conclusion 95-97

Segment “A”

Countering the Respondents' Preliminary Submissions

19. The Respondents question this Hon'ble Court's jurisdiction to entertain the Petition under Article 226 of the Constitution of India as

(i) the treaty making power of the Executive is a policy decision which is not amenable to the Hon'ble Court's jurisdiction under Art. 226;

(ii) “no Fundamental Rights of the Petitioner or any other citizen have been violated by signing and ratifying the WTO Agreements”;

(iii) the Writ Petition deserves to be dismissed for Laches of Delay as it challenges in 2007 the Uruguay Round of GATT was concluded in Dec. 1994; and

(iv) the Article 253 and Article 246(1) read with Entry 14 of the List 1 of the 7 TH Schedule to the Const. empowers our Parliament to frame provisions as do the sections 90 and 90A of the Income-tax Act.

[As to (i) supra : This Court's Jurisdiction]

The Reach of Art 226 of the Constitution of India.

20. The jurisdiction of this Hon'ble Court to do justice is wide enough to grant Remedy against breaches (actual or threatened) of all legal rights: whether constitutional or legal, or entrenched as fundamental rights. The ambit and reach of Article 226 is wide enough to ensure that the Rule of Law is maintained and administrative or executive lawlessness is stopped. While appreciating the ambit and reach of rights within the meaning of Art 226, this Hon'ble Court should take into account the factors which this Petitioner has set forth in his W.P. at pp. 8-15. ‘This Petitioner's position in nutshell; and core legal propositions constituting legal perspective'. In short, our Constitution grants this Hon'ble Court of unlimited jurisdiction and the competence to examine the legality of the Executive Government's act, whether in our domestic realm or at the international plane. This creature of the Constitution, with granted power, operates as the State's authorized representative which, when transgresses the limitations of its authority, acts (to use the expression from the Administrative Law) ultra vires . This approach is justified (i) by the terms of our Constitution, the Principles of Public International Law and (ii) by the judicial decisions of most jurisdictions, including our own. Whilst the (i) would be the subject-matter of Part ‘B', the (ii) pertaining to the judicial approaches is illustrated by some of these decisions from different jurisdictions.

Precedents

(a) Under the British Jurisprudence

21. Under the British Jurisprudence the superior courts exercised jurisdiction that no treaty transgresses the constitutional limitations on the Crown's prerogative power to enter into a treaty [31] .

(a) The effect of the limitations on the treaty-making power was shown in In re Parlement Belge (1879) 4 P.D. 429 which held that it was wrong to grant immunity from arrest under International Law on a civilian ships other than war-ships as it could not be done through a treaty without obtaining the assent of Parliament. [In Maganbhai v. Union [32] our Supreme Court approved the observations of Sir R. Phillimore in the Parlement Belge case.]

(b) “In Walker v. Baird [1982]A.C. 491 (P.C.), where the commander of a British warship had taken possession of a lobster factory belonging to a British subject (under the law then in force) in Newfoundland, it was held no defence that the commander was acting under the orders of the Crown to implement a treaty with France.” [Hood Phillips, Const and Administrative Law 7 th ed p. 282]

© From a different observation-posts the Courts exercised jurisdiction to entertain petitions in scores of other Cases: viz. Attorney General for Canada v. Attorney General for Onterio [33] ; R. v. Secretary of State for Foreign Affairs, ex parte World Developed Movement Ltd [1995] 1 All er P 611; ; R. v. Secretary of State for Foreign and Commonwealth Affairs, ex parte Rees-Mog [34] [1994] 1 All ER 457

(d) Section 6(1) of the European Assembly Election Act 1978 requires that any increase in the powers of the European Parliament, the Crown cannot even ratify a treaty without Parliamentary approval.

(e) The ambit of the surviving Prerogative Power is determined by the statute and the law declared by the U.K.'s Superior Courts. Limitations on the Prerogative of the Crown are now well recognized. [35]

Deductions from In re Parlement Belge and Walker v. Baird in our context:

22. This Petitioner would make the following two points relevant to his Writ Petition:

(a) The British Courts decided issues in the aforesaid cases in the light of the imperative Rules and Principles of the UK's constitutional law. Those norms of the British organic law set limits to the exercise of Treaty-making power. The Courts exercised jurisdiction to see that such norms are not breached on any spacious plea. Our Constitution too subjects the Executive to constitutional limitations in matter of framing and implementing a Treaty: and our Constitution expects its Superior Courts to measure the acts of the Executive .

(b) Those decisions were given during the times of the British history which have undergone changes. Those days the concept of inviolable rights in the matter of Treaty-making was narrow. What happened at the international plane mattered little for the common people as such acts had seldom material effects in the domestic realm. Now things have radically changed. Keeping in view our own realities the following points are obvious:

(i) “We, the People” have created through the Constitution all the organs of the State to function as per the distribution of Sovereign Power as has been done through the Constitution. As a matter of last resort the acts and ways of all the organs are under the vigilance of ‘We, the People'.

(ii) The Province of Rights has become wider and wider under our Democratic Constitution. What they said in In re Parlement Belge and Walker v. Baird was enough in the context of the times and the facts. The principles they developed can without doubt grow into vibrant principles available to our courts to tame the Executive to the imperatives our Constitution, especially in these of predatory neo-liberalism triumphing under the corporate imperium . Our approach should be what Judge Manfred Lachs of the International Court of Justice said: [36]

“Whenever law is confronted with facts of nature or technology, its solution must rely on criteria derived from them. For law is intended to resolve problems posed by such facts and it is herein that the link between law and the realities of life is manifest. It is not legal theory which provides answers to such problems; all it does is to select and adapt the one which best serves its purposes, and integrate it within the framework of law [37] .”

(b) Under the U.S practice.

23. In the USA the courts are often poised ‘to decide whether in a standoff between a provision and a conflicting treaty, the constitution is impliedly amended pro tanto by the treaty, or the treaty is impliedly amended (or suspended) pro tanto by the constitution. There is no clear-cut case in American history of a treaty amending the constitution.' A careful study of the US decisions show some distinct phases in the story of the judicial control of the Executive in matters of Treaty-making which is conventionally said to be under the foreign affairs power of the Executive:

(i) The Era of diverse tunes. the Pre-Holmes Phase

Though in some cases uncertain notes were struck, the US Constitution was held to be much more than co-supreme with legislation or a treaty. In Doe v. Braden , 57 U.S. 635 (1853) the Court held the constitution superior to treaties: "the courts of justice have no right to annul or disregard any of its provisions, unless [the terms of the treaty] violate the Constitution of the United States." ‘In Power Authority of New York v. FPC , 247 F.2d 538 (2d Cir. 1957), a reservation attached by the Senate to a 1950 treaty with Canada was held invalid. The court observed that the reservation was properly not a part of the treaty but that if it were it would still be void as an attempt to circumvent constitutional procedures for enacting amendments to existing federal laws. The Supreme Court vacated the judgment on mootness grounds. 355 U.S. 64 (1957). In United States v. Guy W. Capps, Inc., 204 F.2d 655 (4th Cir. 1953), an executive agreement with Canada was held void as conflicting with existing legislation. The Supreme Court affirmed on nonconstitutional grounds. 348 U.S. 296 (1955).” [38]

(ii) The Era of Judicial restraint: The Phase of Justice Homes

In Missouri v. Holland [252 U.S. 416 (1920)] Justice Holmes observed: “Acts of Congress are the supreme law of the land only when made in pursuance of the Constitution, while treaties are declared to be so when made under the authority of the United States. It is open to question whether the authority of the United States means more than the formal acts prescribed to make the convention.” But he qualified his observation by stating:

“[w]e do not mean to imply that there are no qualifications to the treaty-making power . . . ,” 337

: “The treaty in question does not contravene any prohibitory words to be found in the Constitution.”

His observations were severely criticized in academia and at the Bar: leading to the introduction of the Bricker Amendment to ensure total supremacy over the Treaty-making power or its genus “the foreign affairs power”. This proponent of the Doctrine of Judicial Restraint was considered in in tune with times.

(iii) The Era of the Judicial Abdication:

United States v. Curtiss-Wright Export Corp ., 299 U.S. 304 , 318 (1936). No comment is called for as this decision is now merely an ignored fossil in the archive of the US Supreme Court.

(iv) The Era of Efforts to bring about a change in the Constitution to establish its supremacy: The Bricker Amendment (1951) in the 1950s proposed a change under which the international treaties and agreements could not get precedence over the United States Constitution.

(v) The Era of the Judicial creativity:the Problem solved: Reid v. Covert , 354 U.S. 1 (1957).

Reid v. Covert , ILR, 24 (1957), p. 549, in which the Supreme Court held the provisions of certain treaties unconstitutional (also Burdell v. Canadian Pacific Airlines Ltd, AJ, 63 (1969), p. 339); Seery v. US , ILR, 22 (1955), pp. 398, 403; Geisser v. U.S . (1975-77), ILR, 61, p. 443. [39] In Reid Justice Black observed:

“There is nothing in this language which intimates that treaties do not have to comply with the provisions of the Constitution. Nor is there anything in the debates which accompanied the drafting and ratification of the Constitution which even suggests such a result. These debates as well as the history that surrounds the adoption of the treaty provision in Article VI make it clear that the reason treaties were not limited to those made in ‘pursuance' of the Constitution was so that agreements made by the United States under the Articles of Confederation, including the important treaties which concluded the Revolutionary War, would remain in effect. It would be manifestly contrary to the objectives of those who created the Constitution, as well as those who were responsible for the Bill of Rights—let alone alien to our entire constitutional history and tradition—to construe Article VI as permitting the United States to exercise power under an international agreement without observing constitutional prohibitions. In effect, such construction would permit amendment of that document in a manner not sanctioned by Article V.”

This judicial creativity to control even the exercise of foreign affairs power led the US Supreme Court to deliver a Judgment in which the “Court's conclusion ultimately rests upon a single ground: Congress has not issued the Executive a "blank check." [Hamdi v. Rumsfeld, 542 U.S. 507, 536 (2004) (plurality opinion)'. Justice Breyer , with whom Justice Kennedy , Justice Souter, and Justice Ginsburg join, concurring.] The Court showed no appreciation for the the fact that the Congress and the President might well know more than they do about the security needs of the U.S. The Detainee Treatment Act, 2005, which included a provision that ‘no court, justice, or judge' has jurisdiction to hear application for habeas corpus from any prisioner detained at Guantanamo, could not stand in the way for exercising the power of Judicial Review. It rejected the view that it is the President, not the Court, who` has expertise to decide an issue of the type considered in Hamdan. United States v. Curtiss-Wright Export Corporation is referred only in the dissenting judgment. The general tenor of the Court's judgment strikes a note clearly different from that struck in Curtiss-Wright .

(c) The Indian Practice

24. It would be shown in Part ‘B' that our Constitution is unique in prescribing all Executive Powers affecting people's interest to the constitution's rigorous discipline. The Constitution has constituted the Superior Courts as the upholder of the Constitution. So how can the Executive Government question their jurisdiction when its dereliction, whether in the domestic realm or at the international plane, is questioned.

25. It is important to note what our Supreme Court did in the Berubari Reference [40] and Maganbhai Ishwarbhai Patel v. Union of India [41] is a clear assertion of jurisdiction to examine the constitutional validity of certain International Agreements. In Berubari the issue arose out of the Indo-Pakistan Agreement for the division of the Berubari Union and for the exchange of Cooch-Behar enclaves. The Court held that the Agreement could not be implemented without the amendment of the Constitution as it led to cession of a part of territory. The Court again assumed jurisdiction in Maganbhai Ishwarbhai Patel v. Union of India [42] which also considered the Executive's act at the international plane: holding that where there was no cession but only determination of boundaries no analogous amendment was called for. . These references are merely to underscore the fact that our courts do exercise jurisdiction even in matters pertaining to Treaties. The actual effect of these decisions, to what they are unargued obiter , hence declaring no law on Treaty-making under the parameters of our Constitution would be discussed in more appropriate context later in Part ‘B'.

The Role of the Courts to declare the norms of International Law

26. This Petitioner deems it a cardinal principle of our jurisprudence that Hon'ble Court is the ultimate decision-maker in the matter of what sort of norms (their ambit and reach also) of International Law are expected to be given effect within the constraints and culture of polity as structured by our Constitution. “The modern rule”. Stephension LJ quoted the illuminating comment of Lord Alverstone CJ, in West Rand Centrla Gold Mining Co v R [43] :

The views of Lord Alverstone CJ echo in the observations of Lord Atkin said in Chung Ch Cheung v. R [1938] 4 All ER 786 at 790 :

“….so far at any rate as the courts of this country are concerned, international law has no validity save in so far as its principles are accepted and adopted by our own domestic law”.

And of Cockburn CJ said in R. Keyn (1876) 2 EX.D. 63 at 202:

[Discussed in detail by Shiva Kant Jha in Final Act of WTO: Abuse of Treaty Making Power discussed in Annex ‘C' to the Writ Petition pp. 148-185.]

The plea invoking the Doctrine of Restraint is misconceived

27. The Respondents have submitted that entering into a treaty or agreement by the Executive is “ a policy decision of the Government and it is not appropriate for the ….jurisdiction under Art. 226 of the Constitution of India to disturb such decision ”.

The view asserted is totally misconceived, and is untenable. It is well established:

(a) that the Executive's policy decisions which conflict with the mandatory constitutional norms and commands are pro tanto non est ; and the courts are competent to grant remedies against such transgressions;

(b) that where the policy decisions neither transgress constitutional limitations, not trespass on an individual's legally protected interests, the Executive has a wider scope for operation, but no exercise of power is immune from the judicial control if it is exercised arbitrarily and in bad faith; and

(c ) that the Set of Policy Decisions consists is a Set with two sub-sets intersecting interse . Whatever comes within the realm of constitutional policy prevails ipso jure over the other.

28. That the days are gone when the Treaties had effects primarily at the International Plane alone. Now, especially in this phase of Economic Globalization, Treaties are having impact on the diverse realms, both domestic and international.

29. That, it is submitted, our Judiciary has adopted a functional approach in assessing where it should intervene and where it should not. Guidance in the matter is given by the words of Judicial oath itself: which brings to mind what the Chief Justice Marshall said in Marbury v. Madison [44] as to the effect of the judge's oath ( said in words which time cannot make stale till our Constitution meets the fate of the Weimer Constitution):

“How immoral to impose on them, if they were to be used as the instrument, and the knowing instruments, for violating what they swear to support!”… Why does a judge swear to discharge his duties agreeably to the constitution of the United States, if that constitution forms no rule for his government? If such were the real state of things, this is worse than solemn mockery. To prescribe, or to take oath, becomes equally a crime.”

Role of Judiciary in Treaty-making: [45]

30. “The National Commission to Review the Working of the Constitution: a Consultation Paper on T reaty-Making Power under our Constitution” holds that our Superior Courts possesses jurisdiction to examine if a treaty transgresses the limitations imposed by our Constitution, and to declare law of Treaty-making in conformity with our Constitution: to quote--

‘……And the fact of the matter is that once the Executive Government enters into a treaty, it would be, ordinarily speaking, quite embarrassing for the Parliament to reject the treaty – more so in view of the provisions of the Vienna Convention on the making of Treaties which though not yet ratified by India (according to the information given by the concerned Ministries) indicates certain consequences flowing from the conclusion of a treaty. Theoretically speaking, however, it is always open to the Parliament to disapprove a treaty entered into by the Executive whereupon the treaty will have to effect whatever. Moreover, if any treaty or agreement violates any of the provisions of the Constitution, it would be totally incompetent and ineffective and even the Vienna Convention would not stand in the way, as explained hereinafter.' [46]

31. The power of Judicial Review and the Rule of Law are the most fundamental of all the basic features of our Constitution. Under no circumstances the executive, even through an international treaty, detract from these. Our courts are under constitutional duty to protect them. Our Supreme Court observed:

“For, as we pointed out in Baker v. Carr (1962 (369 ) US 186), supra , “(d)eciding whether a matter has in any measure been committed by the Constitution to another branch of Government, or whatever the action of that branch exceeds whatever authority has been committed is itself a delicate exercise in constitutional interpretation, and is a responsibility of this Court as ultimate interpreter of the Constitution.” [47]

This function of our superior courts is what our Supreme Court said with golden resonance:

“that the Constitution is suprema lex, the paramount law of the land, and there is no department or branch of Government above or beyond it. Every organ of Government, be it the executive or the legislature or the judiciary, derives its authority from the Constitution and it has to act within the limits of its authority. No one howsoever highly placed and no authority howsoever lofty can claim that it shall be the sole judge of the extent of its power under the Constitution or whether its action is within the confines of such power laid down by the Constitution. This Court is the ultimate interpreter of the Constitution and to this Court is assigned the delicate task of determining what is the power conferred on each branch of Government, whether it is limited, and if so, what are the limits and whether any action of that branch transgresses such limits. It is for this Court to uphold the constitutional values and to enforce the constitutional limitations. That is the essence of the rule of law.” [48]

The Respondents themselves admit the Court's Jurisdiction

32. The Respondents in their Counter Affidavit have admitted that the Treaty-making power must conform to our Constitution: to quote

“All executive and legislative measures would obviously conform to the constitutional provisions.” [page 57 of the CA .]

Once the Respondents admit that the Treaty-making power must be exercised in conformity with our Constitution, the jurisdiction of our Superior Courts cannot be questioned as they alone can construe the provisions and declare on the issues pertaining to the constitution competence of the Union to enter into a Treaty. Lord Diplock observed in Black-Clawson [(1975) A.C. 591 at 629:

‘Parliament, under our Constitution, is sovereign only in respect of what it expresses by the words used in the legislation it has passed.”

33. It is the Court's constitutional duty to see that the government functions in accordance with the Constitution, and to construe its provisions to declare the legitimate province for the exercise of power, and also to prescribe the parameters for the exercise of such powers. Precisely it was this inherent and unalienable jurisdiction of the Court that the Chief Justice Marshall had in his mind when he had said in Marbury v. Madison [49] . It also deserves to be noted that wherever our Constitution intends to exclude the jurisdiction of the court, it says so in clear terms: vide the pattern illustrated by Art 363 and Art 13 (4).

[As to (ii): Petitioner's Locus standi; He need not be owner of rights as in the adversarial litigations .]

Locus standi is enough: not real party in interest

34. The Respondents object to the Petitioner's locus standi: a strange plea by a democratic government to make bidden to function pro bono publico treating every citizen as a legitimate and necessary stakeholder. This Petitioner had explained his locus standi in the Writ Petition itself: to quote--

‘ 5.That the Petitioner, belonging to a family that produced some distinguished freedom fighters; he too had made sacrifice in the Struggle for India's Independence. He is a public-spirited taxpayer having Permanent Account No ACGPJ 5126 Q who served the nation as a member of the Indian Revenue Service for more than 34 years, and retired with credit superannuating in March 1998 from the post of the Chief Commissioner of Income-tax. The Petitioner considers it his fundamental duty to bring to the notice of the Hon'ble Court through this Petition the gross illegality and unreasonableness of the aforementioned Instruction and the Rules; and the remissness on the part of the Central Government in discharge of certain public duties: a pursuit justified by the judicial observations in R v Inland Revenue Comrs[1982] 2 All ER 378 at 388 ; National Federation of Self-Employed and Small Businesses Ltd[1981] 2 All ER 93 HL ; S.P. Gupta & Ors v President of India & Ors (AIR 1982 SC 149); Vestey v Inland Revenue Comrs (1977)3 AII ER 1073 at 1079, (1998) Ch 177 at 197-198; R. v. Secretary of State for Foreign and Commonwealth Affairs, ex parte Rees-Mog [1994] 1 All ER 457 ; Ratlam v. Shri Vardichan; Pillo Mody v. Maharashtra [H.M.Servai, Constitutional Law of India 4 th ed. Vol I , 1381-2]; and under persuasion from Art 20 of the Constitution of the Federal Republic of Germany laying down a general principle of democratic polity under a government under constitutional limitations. In R. v. Secretary of State for Foreign Affairs, ex parte World Developed Movement Ltd [1995] 1 All ER p. 611the QBD granted locus standi in a PIL recognizing the importance of vindicating rule of law, the importance of the issue raised, the likely absence of any other challenger, the nature of the breach of duty against which relief was sought and the prominent role of the applicant.

6. That this Hon'ble Court had granted him a locus standi to move a PIL in Shiva Kant Jha & Anr v. Union of India (2002) 256 ITR 563 (Del.). : recording words of appreciation which are for this petitioner a joy forever: per S.B. Sinha, C.J

“We would however like to make an observation that the Central Govt. will be well advised to consider the question raised by Shri Shiva Kant Jha who has done a noble job in bring into focus as to how the Govt. of India had been losing crores and crores of rupees by allowing opaque system to operate.”

This Petitioner is discharging his public duty keeping in mind what Lord Diplock said in National Federation of Self-Employed and Small Businesses Ltd[1981] 2 All ER 93 HL

“It would, in my view, be a grave lacuna in our system of public law if a pressure group, like the federation, or even a single public-spirited taxpayer, were prevented by out-dated technical rules of locus standi from bringing the matter to the attention of the Court to vindicate the rule of law and get the unlawful conduct stopped….”

Justice Bhagwati, in S.P. Gupta & Ors v President of India & Ors (AIR 1982 SC 149), observed:

“We would, therefore, hold that any member of the public having sufficient interest can maintain an action for judicial redress for public injury arising from breach of public duty or from violation of some provision of the Constitution or the law and seek enforcement of such public duty and observance of such constitutional or legal provision. This is absolutely essential for maintaining the rule of law, furthering the cause of justice and accelerating the pace of realization of the constitutional objective.”

It is submitted that this Petitioner has no other interest; hence, he not launching an Adversarial litigation……”

35 That this Petitioner's interest is analogous to that of Rees-Mogg. In R. v. Secretary of State for Foreign and Commonwealth Affairs, ex parte Rees-Mog [50] the Queen's Bench Division granted locus standi to Lord Rees-Mogg on the sole ground that he brought “ the proceedings because of his sincere concern for constitutional issues.”

36. That in the past this Petitioner had challenged the CBDT's Circular 789 of April 13, 2000, this Hon'ble High Court granted him a locus standi with words of appreciation in its Judgment (in Shiva Kant Jha & Anr v. Union of Indi 256 ITR 563 Del.) : , and his locus standi was maintained by the Hon'ble Supreme Court on the UoI's SLP [Union Of India And Another V. Azadi Bachao Andolan & Shiva Kant Jha 263ITR 706 -SC].

Rights which are sought to be enforced.

37. The Respondents have submitted that “No Fundamental Rights of the Petitioner or any other citizen have been violated by signing and ratifying the WTO Agreement.”

38. The Respondents objection is misconceived. It is submitted:

(i) The Writ Petition under Art 226 has its ambit of control wider than that of Art 32 as it provides Remedy against any transgression of legal right, be that a mere constitutional or legal right, or the entrenched fundamental rights set forth in Part III of the Constitution.

(ii) The Respondents have missed that the Petition before the Hon'ble Court is a PIL where there is no lis, , and where this Petitioner is neither an ‘adverse party', nor an ‘aggrieved party' in the conventional sense, nor an ‘indispensable party', nor an ‘interested party', nor a necessary party, and not “real party in interest”. In fact his selfish self has absolutely no interest in the outcome of this Case as he has no professional, political, pecuniary, or interests of this sort or that. He has brought a public cause to the “matter to the attention of the Court to vindicate the rule of law and get the unlawful conduct stopped” ( to say in the words of Lord Diplock in Inland Revenue Comrs v National Federation of Self- Employed and Small Businesses Ltd quoted with approval by our Supreme Court in S. P Gupta & Ors.v. President of India & Ors) . This Petitioner honestly believes that this Petition presents a cause before the Hon'ble Court in the nation's interest; and his Duty is to assist the Hon'ble Court to the extent of his ability.

(iii) The Respondents have failed to see the distinction inter se the concepts of locus standi and of “ real party in interest ”. This Petitioner quotes from Charles Alan Wright, The Law of Federal Courts at p. 490 (5 th ed) quoted in Black's Law Dictionary (7 th ed) p. 1145 to underscore this point:

“The concept of real party in interest should not be confused with the concept of standing. The standing question arises in the realm of public law, when governmental action is attacked on the ground that it violates private rights or some constitutional principle…..Unfortunately , …..confusion between standing one the one hand and real party in interest or capacity on the other has been increasing.”

(iv) Without prejudice what he has stated above, he deems it appropriate to say that on the first principles too he, as representing the people of this Republic, has legal rights which he can assert before this Hon'ble Court. Keeping in view Salmond's analysis of legal right [51] , this Petitioner submits that he seeks constitutional Remedy for the protection of certain legally protected interests and claims of which the person of inherence is ‘We, the People'. The ingredients of legal rights are thus spelt out:

(a) The Person of Inherence of right : All of us who constitute “We, the People” are the Persons of Inherence of the rights ensuing to us per personam and in rem under our Constitution;

(b) The Persons of Incidence : Every organ of the State, and its every public functionary and wielder of power is bound by the correlative duty of varying efficacy and content.

© The content of a legal right : All the omissions and commissions mandated/required under our Constitution to achieve the constitutional mission under the framework of polity and parameters as set up by “We, the People” in the Constitution.

(d) The object of the right : the act or omission relating to some thing (in the widest sense of that word): The duty is to maintain the rule of law, and not to act in the manner subversive to our Constitution.

(e) The Title to a right : the reasons for vesting a right: It is the good luck to be a citizen of a democratic republic where the Constitution is yet not wholly defiled as was the Weimer Constitution, and where the Judiciary permits us to approach it with hope, though often faltering, often flickering.

[As to (iii):Laches of Delay]

39. That the objection on the count of the Laches of Delay is misconceived. “Acquiescence for no length of time can legalize a clear usurpation of power” for as Dixon J observed, “time does not run in favour of the validity of legislation ” [1] [H.M. Seervai , Const. Law 4 th ed p.181 quoting Wynes, Legislative,Executive and Judicial Powers in Australia 5 th ed p. 21 and fn 86].

40. That in Shiva Kant Jha & Anr v. Union of Indi this Hon'ble Court had entertained a Writ Petition which had questioned certain aspects of the Indo-Mauritius Double Taxation Avoidance Convention made in 1983 in the context of CBDT Circular No 333 dated April 2,1982, and also questioned specifically the Circular 789 of 2000 said to be implementing that Convention. The Respondents plea, analogous to the plea now being advanced by the Respondents before this Hon'ble Court, was rejected.

41.That this Petitioner believes that the citizens of this Republic have the inalienable right to question the Executive's transgression of legal competence and violations of the law and the Constitution; and no estoppels can be posed to oust him from his inherent right to hold his government to the law of the land. This Petitioner believes that this Right remains ever fresh: ever fresh and ever available to every generation. If this does not be so the Rule of Law would get wrecked through the stratagem and strategy of the Executive for which absolute power is still delicious as it was in the days of the Stuarts.

[As to (iv): The Effect of Articles 253 and 246]

42. This point in the Respondents' threshold objections would be evaluated in the more appropriate context in Part ‘B' where the ambit of the Central Government's Treaty-making Power would be briefly stated to show how the Respondents' have presented to this Hon'ble Court a gamut of misconceived ideas.

Segment “B”

TREATY MAKING POWER OF THE UNION EXECUTIVE

43. That this Petitioner states that the Respondents' contentions apropos the Central Government's Treaty-making power do not accord well with our Constitution. and many points go beyond its constitutional competence. For responding more specifically to the points made out in the Respondents' Counter-Affidavit, this Petitioner in this Reply intends submitting under the following Sections with specific headings:

(i) The Petitioner's Submissions in the Writ Petition not countered by the Respondents in the Counter Affidavit;

(ii) The Constitutional Provisions Examined in brief;

(iii) The Petitioner examines the Respondents' submission to show how they are wholly misconceived; and

(i)

The Petitioner's Submissions in the Writ Petition not countered by the Respondents in the Counter Affidavit

44. That this Petitioner has stated compressively the Law governing Treaty-making in the Writ Petition, and more elaborately in the Annexure ‘C' at pp. 148-185 of the Writ Petition . The core propositions according well with our Constitution were summarized at pp. 8-15 of the Writ Petition under the caption ( AN ESSENTIAL DIGRESSION: ‘This Petitioner's position in nutshell; and core legal propositions constituting legal perspective' ); and also appended towards the end of the Synopsis of the Writ Petition on record. As this Petitioner's perspectives are determined by these core propositions, they have been quoted in para 11 supra at pp. 6-10 . But this Petitioner hastens to mention at the threshold that these propositions have neither been faced nor controverted in the Respondents' Counter-Affidavit.

(ii)

The Constitutional Provisions Examined in brief;

45. The sole factor in judicial consideration should be what Our Constitution says .

Frankfurter J (quoted with approval in Bengal Immunity AIR1955 SC 661 at 671 para

13) rightly said:

….“the ultimate touchstone of constitutionality is the Constitution itself and not what we [court] have said about it”

And the same effect was Chief Justice Marshall's seminal 1819 dictum that “the Court

must never forget that it is a Constitution it is expounding.” [52] Hence the terms of the

Constitution can be the best guide.

46. Our Constitution organizes and distributes the whole of the State power through its well-knit structure leaving the Executive with no hip-pocket with reserve power outside the ken of the Constitution . This deduction is amply borne out by the provisions of our Constitution viz.:

(i) Art. 53(1) The Executive power of the Union shall be vested in the President and

shall be exercised by him either directly or through officers subordinate to him in

accordance with the Constitution. And Art. 73 extends the executive power of the

Union.” Subject to the provisions of this constitution….”. Art. 245 is again made

“ Subject to the provisions of this Constitution….” . ) Art. 372 prescribes:

“Notwithstanding the repeal by this Constitution of the enactments referred

to in article 395 but subject to the other provisions of this Constitution, all the law in

force in the territory of India immediately before the commencement of the Constitution

shall continue in force therein until altered or repealed or amended by a competent

Legislature or other competent authority.” The expression “accordance with” means in

“conformity with”. “Subject to” and ‘notwithstandinganything' are inconsistent. The Executive can exercise this power only till the Parliament has not framed law invoking powers under the Entries 13-16 of the Union List [53] in the 7 th Schedule to the Constitution. The Executive is itself a constitutional creature with granted powers under a Constitution. It is said that the framers of the American Constitution had intended to undo the plea advanced for the Crown who had the pretense to call itself an unlimited government ( “L'Etat,c'est moi” ). The Attorney-General, addressing the court in the Five Knights' Case ( one of the state trials of Stuart England ) for the Crown asked, “Shall any say, The King cannot do this? No, we may only say, He will not do this.” [54] But our Constitution is bolder still: it says what the Executive can never do. They had in their consciousness, it is felt, that if without restraint, the Executive may undo the Constitution itself through its Treaty-making power. [In this fear has come true: to be stated later].

(ii) Provisions of entries 13 and 14 of the 7 th Schedule, conferring enabling Parliament

not only to frame law implementing a treaty but also in the matter of formation of a treaty

thus making a departure from the view of Lord Atkin in Attorney General for Canada v.

Attorney General for Onterio [55] quoted in Maganbhai . The concept of the vested power under Art 53 of our Constitution stands modified by the entries under the 7 th Schedule to the Constitution as the sovereign power of framing law is vested in our Parliament leaving to the Executive only that much power which it, at a particular point of time, has chosen let it exercise. “No question under our Constitution can crop up as it cropped up under the Constitution of Australia under which the executive power is vested in President in words so wide as to suggest that it can be unconstitutional for the Parliament to interfere with the exercise of the executive power vested in the Executive under section 61 of the Constitution. . It bears repetition to say that under our Constitution, treaty-making power is not vested in the Executive or the President – as has been done in some other Constitutions. It is squarely placed within the domain of the Parliament. Theoretically speaking, Parliament can by making a law prohibit the Executive to enter into a particular treaty or a particular kind of treaties; similarly, it can also direct the Executive to enter into a particular treaty or may disapprove or reject a treaty signed and/or ratified by the Executive. It is a different matter that Parliament has not chosen to make a law in that behalf, leaving the Executive totally free to exercise this power in an unfettered and, if I may say so, in an unguided fashion.” [56] In effect, Article 73 authorizes the ambit of the exercise of the Treaty-making power; whereas this power, both to form a Treaty and to implement it, is vested in Parliament only.

Art 253: what it means.

47. Art 253 runs as under:

“Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.”

It empowers the Parliament to make any law, for the whole or any part of the territory of India, for the purposes specified in the Article. “ Conferment of this power on the Parliament is evidently in line with the power conferred upon it by Entries 13 and 14 of List I. The opening words of the Article “Notwithstanding anything in the foregoing provisions of this Chapter” mean that this power is available to Parliament notwithstanding the division of power between the Centre and States effected by Article 246 read with the Seventh Schedule.” It might have been so provided as not to allow the situation of conflict which had arisen in Canada and was settle by Attorney General for Canada vs. Attorney General for Ontario (1937 A.C. 326 = AIR 1937 P.C…..). A close reading of Articles 253 and 73 suggest on the terms of their text the following:

(a) Whereas Entry 14 of the Union List refers to Parliament's legislative competence to frame law both pertaining to the formation and implementation of a Treaty, Article 253 contemplates only implementation , not f ormation , of a Treaty. The act of implementation is a distinct and posterior to the act of formation .

(b) Art. 253 contemplates Parliament's “ power to make any law ….” for implementation of a treaty, Art. 73 contemplates merely the frontiers of the province of the Executive power. The Article does not deal with formation or implementation of a Treaty. But as the Executive power is exercised only in accordance and subject to the Constitution, even the formation of a Treaty is within the constitutional limitations.

(c ) Wherever power is granted to create a thing, it is done in a different phraseology. Art 246 says: “ Parliament may make laws…….”. Section 90 of the Income-tax Act, 1961 empowers the Central Government thus:

“ (1) The Central Government may enter into an agreement with the Government of any country outside India…..”.

Article 73 of the Constitution does not say:

“to the formation of an Agreement in respect of the matters with respect to which Parliament has power to make laws”.

(d) Lord Atkin's view in Attorney General for Canada v. Attorney General of Ontario holding the formation and i mplementation as two acts, the former being an exclusive exercise of the Executive power at the International plane, and the latter needing legislation does not survive as our Constitution contemplates both under its legislative competence (Entry 14 of the Union List of the Const.). Our Freedom-Fighters. at work in our Constituent Assembly) could not have forgotten how disastrous were the Treaties like the Treaty of Allahabad , or the Treaty of Severs .

(e) The word “implementation”, as used in Art. 253 is now to be read in a generic way, rather in the technical sense as it was understood in olden days when we were not a democratic republic under the Constitution which subjects all the organs of the State to its rigorous control. When Lord Atkin used this expression in Attorney General for Canada v. Attorney General of Ontario , the exercise of foreign affairs powers had not much impact on the citizenry. Acts at the international plane were the preserve of the high chancelleries hardly of much concern to the common people. This point gets revealed from the fact that the World War I was declared by the UK. by the prerogative power of the King alone people smarting under the the nation that the War was to be a brief affair at the international plane. But things in the Globalised economy of days have changed so much so the most Treaties have tremendous impact on the lives of people. There is now a clear mismatch between the national, political and the global economic structure [57] . The line which divided the international from domestic has virtually vanished. Besides, people under our Constitution must in our interest hold the Executive under vigilance. Even conclusion of a Treaty generates great consequences for the nation. [58] Do the following do not affect our rights and interests?

(a) The outsourcing of judicial powers to the foreign fora depriving our Judiciary of any say thus going back to the East India Company's diarchy and two judicial systems; [59]

(b) The outsourcing of the legislative powers to the international institutions, viz the WTO;

(d) The subversion of the Income-tax Act by depriving the lawful jurisdiction of the statutory authorities by providing the resolution of DTAA tax disputes under the MAP procedure, and also providing when such disputes can be taken to the Council for Trade in Services : [60] and thereafter paving the way to the ICJ, and then to the Security Council (then, perish the thought, to the cruise missiles) .

Hence it is appropriate to apply what Dr Wynes called “generic interpretation:

“…..'generic interpretation' ….asserts no more than that new developments of the same subject and new means of executing an unchanging power do arise from time to time are capable of control and exercise by the appropriate organ to which the power has been committed…. while the power remains the same : its extent and ambit may grow with the progress of history”

And that history has acquired a new cusp is clear as has been highlighted by

No provisions for limitations on national sovereign powers in the interests of

international cooperation

(f) In the present context, it is worthwhile to notice that our Constitution has made no express provision for limitations on national sovereign powers in the interests of international cooperation as have been done in the constitutions of many other countries:. [61] eg.

(a) Art 24(1) of the Basic Law of the Federal Republic of Germany;

(b)Art 92 of the Constitution of the Netherlands;

(d) Art 20 of the Danish Constitution;

(e)Art 25 bis of the Belgian Constitution;

(f) Art 49bis of the Luxembourg Constitution;

(g) Art 93 of the Norwegian Constitution…;

(h)Art 28(2) and (3) of the Greek Constitution.

The British view of the Law of Treaty stands overridden by the provisions of our Constitution, vide Art 53, 73, 245, 372 (read with Art 395)

The Peoples' Commission Report on GATT

(g) The Peoples' Commission Report on GATT by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon'ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon'ble Chief Justice of Delhi High Court) makes out a good point when it says:

“Article 253 and 73 (1) (b) both deal with an expost facto situation, that is, a consequential situation arising out of an international treaty, agreement or convention already entered into….”

(h) The Peoples' Commission Report on GATT by V R Krisna Iyer, O Chinappa Reddy, D A Desai, (all the former Hon'ble Judges of the Supreme Court); and Rajinder Sachar (the then Hon'ble Chief Justice of Delhi High Court) explains the correct constitutional position in our country thus:

“It is true that Article 253 enables Parliament to make laws for implementing any treaty agreement or convention with any other country or countries or any decision made at international conferences, associations or other bodies and Article 73 (1) (b) provides for the executive power of the Union in respect of the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement.

Article 253 and 73 (1) (b) both deal with an expost facto situation, that is, a consequential situation arising out of an international treaty, agreement or convention already entered into. They confer the necessary legislative and executive power to implement such treaty, agreement, etc. however made but must be one made according to the Constitution and not contrary to the Constitution. For example, the Union Government cannot barter away the sovereignty of the people of India by entering into a treaty making India a vassal of another country and then invoke Articles 253 and 73 (1) (b) to implement the treaty. Such a treaty would be void ab initio being repugnant to the basic features of the Constitution, namely, the sovereignty of the people.

Thus, an international treaty or agreement entered into by the Union Government in exercise of its executive power, without the concurrence of the States, with respect to matters covered by Entries in List II of the Seventh Schedule, offends the Indian Constitutional Federalism, a basic feature of the Constitution of India and is therefore void ab initio. The Final Act (of Uruguay Round) is one of that nature. This is our prima facie opinion on the question whether the Final Act is repugnant to the Federal nature of the Constitution and we strongly urge the Union Government to do nothing which abridges that principle.” [62]

(i) That para 17 of the Writ Petition (vide para 18C) ends with a seminal constitutional proposition : “Does our Constitution permit the Executive to form and ratify such treaties without even Parliamentary deliberations on the actual and final draft of a treaty ? This Hon'ble Court should declare the ambit of the limitations under which the Executive government can tread on the thin crust of lava.” This Petitioner's stand gets support from the following view of some distinguished former Judges of our Superior Courts [Justice V.R. Krishna Iyer, former Judge of the Supreme Court of India; Justice P.B. Sawant, former Judge of the Supreme Court of India; and Justice H. Suresh, former Judge of the Bombay High Court]: to quote---

“1. The Executive has no power to enter into any agreement, either with a foreign government or a foreign organization, which is binding on the nation. The agreement will be binding only when it is ratified by Parliament…There is no provision in the Constitution which gives such authority to the executive. We have a written Constitution and, therefore, we must have a written provision in the Constitution which gives such authority to the Executive.

2. Articles 73 and 253 and entries 6, 13, & 14 in the Union List of the Constitution refer to the powers of the Executive. Article 73, among other things, states that, “…the executive power of the Union shall extend (a) to the matters with respect to which Parliament has powers to make laws, and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement.” This means that the matters n which Parliament has no powers to make laws are also matters on which the Union Government cannot exercise its executive power. It also means, conversely, that the Union Government cannot exercise its executive powers beyond the legislative powers of the Union. Both these propositions have an underlying assumption that, before the Union Government exercises the executive power, there is a law enacted by the Parliament on the subject concerned . Some argue that the provisions of Article 73(1)(a) gives power to the Executive to act on subjects within the jurisdiction of Parliament, even if the Parliament does not make a law on those subjects. This is both a distortion and a perversion of the said provision and a subversion of Parliament's supreme control over the Executive. If this interpretation is accepted then the Union Executive can act on all subjects on which Parliament has to make law, without there being any law made by Parliament. You can thus do away with Parliament and the Parliament's duties to make laws. We will then have a lawless Government. Democracy presumes there should be a rule of law and all Executive actions will be supported by law and that there shall be no arbitrary action by any authority, including the Union Executive. It may also be necessary in that connection to remember that it is for this very reason that when Parliament is not in session and, therefore, unable to enact a law, that the power is given to the President to issue an ordinance (which is a law), so that the Executive may act according to its provisions. These ordinances are to be placed before the Parliament within six weeks of its reassembly, and if Parliament approves they become law. The Constitution-makers were, therefore, clear in their mind that the Executive cannot act without the authority of law and it has no power independent of law and it has no power independent of law made by Parliament.”[italics supplied]

(j) One more point highlighted under our Constitution which supports the view of the three for former Judges quoted above. In the United States the Uruguay Round Final Act was adopted by an Act of the Congress. It was in pursuance to the legal opinion of Walter Dellinger, Assistant Attorney General.

“We remain persuaded that, in deciding not to submit the Uruguay Round Agreements to the Senate for the concurrence of two-thirds of the Senators present, the President is acting in a wholly proper and constitutional manner. Like other recent trade agreements, including NAFTA, the United States-Canada Free Trade Agreement, the United States-Israel Free Trade Agreement and the Tokyo Round Agreement, the Uruguay Round Agreements may constitutionally be executed by the President and approved and implemented by Act of Congress.”

It was so said and done in the context of the following provisions:

(i) The Constitution of the USA vests the legislative, the executive, and the judicial powers in the three distinct organs of the State illustrating what is called the Doctrine of the Separation of Powers.

(ii) Art. I(7)(3) grants the legislature powers to regulate Commerce with foreign Nations. And the President has, per Art II(2)(2) “to make Treaties…”.

It is wrong to say that our Constitution rejects the Doctrine of the Separation of Powers. Our Supreme Court in Kesavananda's Case (AIR 1973 SC1461) determined certain features of our Constitution constituting basic structure,; these are—

(1) Supremacy of the Constitution;

(2) Republican and Democratic form of Government;

(3) Secular character of the Constitution.

(4) Separation of powers between the legislature the executive and the judiciary

(5) Federal character of the Constitution.

Even in England now the Separation of Powers are admitted to a great extent. By and large we share the common law tradition. In Att-Gen v BBC [1980] 3 All ER 161 at 181 Lord Scarman recognizes that under the common law tradition, whether in the U.K. (with an unwritten constitution) or Australia (with a written constitution), the judicial power is a species of sovereign power [of the State]:

‘…. Though the United Kingdom has no written constitution comparable with that of Australia, both are common law countries, and in both judicial powers is an exercise of sovereign power. I would identify a court in (or ‘of') law, i.e. a court of judicature, as a body established by law to exercise either generally or subject to defined limits, the judicial power of the state…”.

What follows from these, in the context of the point under consideration, is a vital

Question of our Constitutional law not yet decided. Under our Constitution, even assuming that the power to enter into a Treaty is the Executive Act, it canot deprive Parliament from exercising powers under Entry 41 of the Union List: :Trade and commerce with foreign countries, import and exports….” This precisely the reason for sustaining the view of the three former Judges already quoted in extensor saying:

“Some argue that the provisions of Article 73(1)(a) gives power to the Executive to act on subjects within the jurisdiction of Parliament, even if the Parliament does not make a law on those subjects. This is both a distortion and a perversion of the said provision and a subversion of Parliament's supreme control over the Executive. If this interpretation is accepted then the Union Executive can act on all subjects on which Parliament has to make law, without there being any law made by Parliament. You can thus do away with Parliament and the Parliament's duties to make laws.”

Theoretically it can be argued that our Parliament is competent to legislate even on topics

occupied under the Treaties. But we cannot evade the realities under which Parliament is

often up against a fait accompli , and often becomes a hapless creature turned docile and

caged under the realities of our times.

(k) It is true that Shah J. in his separate but concurrent opinion in Maganbhai observed :

“The effect of Article 253 is that if a treaty, agreement or convention with a foreign State deals with a subject within the competence of the State Legislature, the Parliament alone has, notwithstanding Article 246(3), the power to make laws to implement the treaty, agreement or convention or any decision

made at any international conference, association or other body. In terms, the Article deals with legislative power; thereby power is conferred upon the Parliament which it may not otherwise possess. But it does not seek to circumscribe the extent of the power conferred by Article 73. If, in consequence of the exercise of executive power, rights of the citizen or others are restricted or infringed, or laws are modified, the exercise of power must be supported by legislation : where there is no such restriction, infringement of the right or modification of the laws, the executive is competent to exercise the power.”

It is most respectfully submitted that as the aforementioned observation is obiter . The

Supreme Court did not consider the following relevant points:

(a) The point to be seen is whether the Executive is free from all constitutional limitations when it signs and ratifies a Treaty. If it is even then subject to constitutional limitations, any departure by it from the peremptory constitutional norm affecting competence, would surely render the Treaty ultra vires .

(b) As the exercises of all legislative power, and all executive power are subject to constitutional limitations, the exercise of such powers, with reference to Art. 253 would clearly be subject to constitutional limitations.

(c) If a treaty or Agreement at any international deliberative forum is done in breach of fundamental constitutional limitations, such a Treaty or Agreement is ab initio void: it dies at its nativity itself. Hence nothing survives to be given an effect under Art. 253 of the Constitution. The logical principle that nothing comes out of nothing ( ex nihilo nihil fit ) applies.

(d) In Ajaib Singh v. Punjab AIR 1952 Punj 309 (321) [reversed on other points in, by State of Punjab v. Ajaib Singh AIR 1953 SC 664] held that despite Art. 253, other provisions of the Constitution , such as Fundamental Rights, cannot be violated in making laws. Again, no cession of Indian territory can be made without amendment to the Constitution. [63]

(e) Assuming arguendo that a Treaty or Agreement is valid, yet the Executive power would not extend to implement it by invoking Art. 253 the Constitution, as it cannot be contemplated that it was ever contemplated that the federal features can be knocked down by side winds.

The observations of Justice Shah are all obiter dicta neither needed to decide the case, nor argued at all by the counsels. It is submitted that the observations do not declare any law, and, hence, has no effect being just an opinion of an expert.

The Illusion of our Executive & the Reality of our Constitution

48. That the Respondents seem to labour under an illusion. They think that once what they consider the sources of power of Treaty-making are found in Article 73 and 265, they, like King Arthur and his Knights can do anything and everything through this power. They see the founts of Power, but refuse to acknowledge the constitutional limitations subject to which alone the Power can be exercised. They refuse to read the trends of our times, they refuse to acknowledge that the Executive government is neither the State, nor the State's plenipotentiary.

TO CONCLUDE

49. In India, exercise of all powers, executive or legislative, are under constitutional limitations: the Executive has no reserve and absolute power at the external plane. Our Constitution has not granted the executive any ‘exclusive' power to enter into a treaty or agreement. Our Constitution subjects the executive power of treaty making to the following two limitations:

(i) It must not contravene our fundamental rights, and must not breach the basic features.

(ii) It must satisfy the existence of the condition precedents in exercise of power under Art 253, i.e. there must exist an agreement done by the executive without transgressing constitutional limitations.

It is worth mentioning a third condition also: the agreement, which Art 253 contemplates, must not be bad on account of an evident taint of coercion, and other unconscionable features. [There are good grounds to think that the Uruguay Round Final Act is both coercive and unconscionable. This point would come up in Part ….. of this Reply.

CONSTITUTIONAL LIMITATIONS

50. That as the Respondents assertions in the Counter-Affidavit are conflicting and ambiguous at times it is worthwhile to submit that our Constitution places Treaty-making power under strict constitutional control.

51. The decision by Justice Homes in Missouri v. Holland [64] is important not merely because of the oft-quoted observation that a treaty could be struck sometimes by what he called ‘ “some invisible radiation from the general terms of the Tenth Amendment” but for reasons of fundamental importance in construing the issue under our constitutional frame-work. Justice Holmes kept in view that under the U S Constitution there was no prohibitory provisions. He said;

“The treaty in question does not contravene any prohibitory words to be found in the Constitution.'

Our Constitution vests the executive power in the President (Art 53) but subjects that to

constitutional limitations whereas Art II of the U S Constitution does not declare this sort

of restriction in so many words. It is a unique feature of our Constitution that it keeps on

drumming into everyone's ears that the powers must be exercised subject to the

Constitutional mandate (viz Art 53, 73, 246 ….)

52. Moreover, if any treaty or agreement violates any of the provisions of the Constitution, it would be totally incompetent and ineffective and even the Vienna Convention would not stand in the way, as explained hereinafter………. It bears repetition to say that under our Constitution, treaty-making power is not vested in the Executive or the President – as has been done in some other Constitutions. [65] Oppenheim's states in his International Law :

“Constitutional restrictions: It is well established as a rule of customary international law that the validity of a treaty may be open to question if it has been concluded in violation of the constitutional laws of one of the states party to it, since the state's organs and representatives must have exceeded their powers in concluding such a treaty.. Such constitutional restrictions take various forms. Thus, under Article 2(2) of the Constitution of the United States the President can only ratify treaties – as distinguished form so-called executive agreements – with the advice and consent of the Senate, given by two-thirds of the senators present. Again, although by Article 52 of the French Constitution of 1958 the President exercises the treaty –making power. Article 53 requires that certain treaties, such as commercial treaties and treaties concerning international organizations or involving the state in financial obligations or which modify a law, require ratification or approval by means of a legislative act of the French Parliament. For the United Kingdom, constitutional restrictions do not play a prominent part in the conclusion of treaties.

While the general rule clearly suggests that invalidity is the consequence of concluding a treaty in violation of constitutional restrictions, there has been much discussion of the extent to which such a rule is to be applied. While the principle of the invalidity of acts done in excess of authority must be given due-and probably decisive –weight, there are clearly difficulties in requiring a state to go behind the ostensible authority of another state's representative to conclude a treaty, or form an opinion as to a possibly controversial question of another state's constitutional law; and to allow any violation of any constitutional restriction to invalidate a treaty could jeopardise the security of international transactions. Article 45 of the Vienna Convention – probably reflecting rules of customary international law – allows a state (by way of exception) to invoke non-observance of its internal law as a basis for invalidating its consent to be bound by the treaty only if the rule of internal law relates to competence to conclude treaties, if it is a rule of fundamental importance, and if the violation is manifest, i.e objectively evident to any state conducting itself in the matter in accordance with normal practice and in good faith .” [66]

53. That Art 46 of the Vienna Convention on the Law of Treaties deals with the provisions of internal law regarding competence to conclude treaties: it says-

“1. A State may not invoke the fact that its consent to be bound by a treaty has been expressed in violation of a provision of its internal law regarding competence to conclude treaties as invalidating its consent unless that violation was manifest and concerned a rule of its internal law of fundamental importance.

2. A violation is manifest if it would be objectively evident to any State conducting itself in the matter in accordance with normal practice and in good faith.”

In this Writ Petition this Petitioner intends to bring to this Hon'ble Court some gross breaches of “manifest and concerned a rule of its internal law of fundamental importance”.

54. The Report of the Peoples' Commission on GATT by V.R. Krishna Iyer, O. Chinnappa Reddy, D.A. Desai and Rajinder Sachar (Ch. 7 of the Report) gives a graphic account of the constitutional limitations on Treaty-Making Power: to quote—

“The limitations on the exercise of the Treaty-making power flow from certain principles which are fundamental to constitutional governance of India. The first is the general principle of accountability which requires government to account to the people for every exercise of power through the aegis of institutions set up by or under the Constitution. Such accountability may be through the law which lays down norms which discipline and govern the exercise of the power. Where no such law exists –and none exists to discipline the exercise of the treaty-making power – the government is not free to do what it likes. Where the government chooses to proceed without serious recourse to any form of accountability, other institutions of governance cannot stand idle by. Where Parliament is rendered powerless, other institutions must secure this accountability to such measure as may be deemed necessary. Where something is done in secret, simply breaking the veil of secrecy may be enough. It all depends on the facts and circumstances. The second principle which is fundamental to the rule of law is that no person's rights can be altered without reference to ‘law'. If the executive simply interfere with the exercise of rights or alter them in any way other than de minimus infringement, this would constitutionally improper and call for the interdiction of judicial process. The third set constraints flow from the basic structure of the Constitution. Although the basic structure doctrine was first enunciated to contain an over-extensive use of power to amend the Constitution, the principles underlying the basicstructure are also crucial aids to interpretation and factors to be borne in mind when considering the exercise of the executive power.”

55. No power can be outside our Constitution, since Parliament possesses the residuary power of legislation. [67] Hence all State powers are subject to constitutional limitations. Oppenheim in his International Law underscores this point: [68]

“A number of states in their constitutions have made express provision for limitations on national sovereign powers in the interests of international cooperation. [69] These provisions are to the effect that certain sovereign rights and powers of the state maybe limited in connection with international organizations, or maybe conferred upon or transferred to international organizations. This has particularly become necessary in some states whose constitution provides for certain rights and powers, for example the power to legislate, to be exercised only by organs of the state: by becoming a member of an international organization which can in some degree be said to be exercising such powers, the state, in the absence of a provision envisaging a transfer of those powers, could be said to be acting unconstitutionally and the resulting exercise of the powers by the organization could be said to be ineffective within the state. Although constitutional provisions of this kind assume particular importance in connection of membership of an organization such as the European Economic Community, those provisions have in some cases been made independently of such membership. Whether the transfer of such rights and powers is so extensive as to affect the continued existence of the state depends on the circumstances of the individual case, and perhaps in particular of the scope of the rights and powers transferred and on the revocability of the transfer. The most extensive transfer of this kind currently existing is that involved in membership of the European Communities, but the continued international statehood of its member states is not in question.”

THE RESPONDENTS' NOTIONS AS TO OPERATION OF TREATY-TERMS ON TRANSFORMATION ONLY HAS GONE WITH THE WINDS IN OUR TIMES

56. The Respondents assert that Treaty embodied in the Uruguay Round Final Act is not a self-executing Treaty: it can be given effect “through administrative procedures and where necessary, legislation.” At page 53 of the Counter Affidavit they say:

“In every case where implementation of the treaty by the executive would impinge on the rights of the citizens, Parliament would be required to pass a law. Since there has been no such impingement, no law has been required to be passed in this regard. Therefore, the executive has been well within its right to sign and ratify the Act leading to the establishment of the WTO.”

The whole legal view underlying such assertions are grossly wrong as this sort of view can be formed only on being under blinkers. Justice Cooke remarked in the New Zealand Court of Appeal in Tavita v. Minister of Immigration [70] that “a law [is] undergoing evolution”. The above assertions do not take into account the realities of our day. For the following reasons this view deserves to be rejected:

(i) The assertions are based on what Sir R. Phillimore observed in In re Parlement Belge (1879) 4 P.D. 429, which was quoted in the obiter observation by our Supreme Court in Maganbhai v. Union [71] . The anachronistic character of this view under our present-day democratic polity is evident. This Petitioner has explained the reasons in paras………at pp…….. vide “Deductions from In re Parlement Belge and Walker v. Baird in our context”.

(ii) The aforesaid view of t5he Respondents is founded on an anachronistic notion that mere negotiation and ratification of a Treaty can never t affect the rights and interests of subjects/citizens. This view was examined in detail by the High Court of Australia in Minister of State for Immigration and Ethnic Affairs v Ah Hin Teoh (1995) 183 CLR 273 , [1995] HCA 20 [coram: Mason CJ, Deane , Toohey , Gaudron & McHugh JJ.] . Per majority the Court held that ratification of an international convention can be a basis for the existence of a legitimate expectation . Ratification of a Treaty is not a mere grandstanding on the international stage. It does have effects on the rights/interests and legitimate expectations of the citizens. It was suggested “that the ratification by the Executive Government of a treaty, not incorporated by Parliament into domestic law, could give rise to a legitimate expectation that administrators would take the treaty's provisions into account in exercising their powers…” [72] .. We already see in our country how the agenda under the WTO Agreement and all other agreements coming within its umbrella are being implemented by our Executive.

(iii) Under the neo-liberal paradigm established under the global economic architecture through the WTO and others there has been an enormous intrusion in the domestic field through the executive/administrative decisions affecting not only our polity but all the segments of economy and social management. The points bearing out the intrusions of this sort are set forth in the Grounds against the WTO Treaty [vide Writ Petition Grounds 9 to 51 at pp. 112 to 136] .

(iv) The Executive's subservience has now gone to the extent that our Parliament succumbs to the fait accompli brought about by ratification of a Treaty leaving Parliament a mere pathetic institution which may weep or cry but, in the end, must comply. To illustrate: let us see how helpless our Parliament felt when the Patents (Second Amendment Bill) was under consideration. Whilst Pranab Mukherjee excused the unequal treaty as it was begotten in an unequal world, Manoj Bhattacharya expressed the cry of his heart with an iron in his soul in Rajya Sabha [the long quotation is given in the Writ Petition para 77 at p. 74].

“One thing transpired, that there is an element of helplessness; they are trying to plead that we are in a helpless condition, that we cannot do it because we are already a member of the WTO, we are already committed we are already in the trap; and so we cannot come out of that trap, and for that only we have to effect these changes to the already existing very, very good and very, very progressive Indian Patents Law of 1970”.

(v) Our executive may through its commitments at the international plane, give rise to international customary law on a particular point; or may make our country party to a treaty having domestic or extra-domestic impact. It is possible to create situations wherefrom this country can never free itself.

(vi) Through the terms of a Treaty the Executive can encroach on any field of legislation making it impossible for Parliament to take its iniative even if it ever decides to do this.

(vii) The Respondents' view would bring about a gross constitutional subversion.

57. Joanna Harrington, in his paper on ‘The Role of Parliaments in Treaty-Making' [73] summarizes the ways in which Treaties affect public interest even when they are yet to be implemented: to quote—

“With respect to Westminster-style democracies, the analysis with the now trite statement that, at common law, a treaty does not automatically have domestic legal effect and thus Parliament , in theory, retains its role as the body with primary responsibility for law-making by enacting legislation to give a treaty domestic effect. But law-making by treaty does not always require the enactment of legislation, particularly if the treaty obligation can be implied within or carried out through the pre-existing law., and thus Parliament may not always have a role. Moreover, once ratified, treaties are clearly binding under international law and their legal character puts pressure on a state's domestic institutions to ensure compliance, as evidenced by the long-standing rule of statutory interpretation that presume conformity with international law, at least where an ambiguity can be found. Further evidence of the domestic effect of treaties can be seen in the courts in the form of judicial modification to the doctrine of legitimate expectation in Australia, [74] new rules on statutory interpretation in New Zealand [75] and new uses for the values of unimplemented treaties in Canada.”

58.And the said author is led to highlight (i) the democratic deficit in the treaty-making power, and (ii) the various measures in the U.K., Australia, and Canada to redress the deficit. He says:

“ Despite the fact that most treaties are in practice permanent law, made by one government with the ability to bind the next, the common law imposes no obligation on either the executive or the courts to secure or ensure the consent of the ultimate law-making authority in a Westminster-style democracy. The lack of Parliamentary involvement supports complaints that a democratic deficit exists in the treaty-making processIt also motivates reforms….in the treaty-making practiceof three comparable Commonwealth states: UK, Australia and Canada.” [76]

International Law vs. our Constitutional Law

59. Georg Schwarzenberger in A Manual of International Law (5 th ed.pp. 46-47) formulates certain core propositions to show the operative relationship between International Law and Constitutional Law. This exposition he has prefaced with a remarkable observation which deserves to be borne in mind. He says:

“The doctrine of the supremacy of international law over municipal law appeals to the amour proper of international lawyers and has its attractions de lege ferenda. In lex lata, it corresponds to reality on the –always consensual –level of international institutions, in particular international courts and tribunals.”

‘ Amour proper' means “Respect for oneself” which easily turns into egoistically pursuit to aggrandize power and status. Schwarnenberger states:

(i) “To some extent, this proposition is also borne out by the practice of a considerable number of States. Thus, according to English law, international law is part of the law of the land. Similarly, in a good many written constitutions, the generally recognized rules of international law are given priority over conflicting rules of municipal law. This argument does not, however, bear being pressed too hard.”

(ii) “The automatic reception of international law into any of these systems of municipal law means international law as recognized and practiced by each of the countries concerned. Moreover, little doubt exists that if any United Kingdom statute were to run counter to international law, British courts would, in the first place, do their best to harmonise it with their own views of the United Kingdom's international obligations. If, however, such a construction proved impossible, they would be bound to give full effect to the statute.”

(iii) “Similarly, in the United States Constitution, treaties approved by the Senate are put on a par with the laws of the United States. This means no more than they override conflicting state law and prior federal legislation. Yet such treaties themselves-like rules of international customary law –may be nullified by subsequent federal legislation.”

(iv) “Finally, State organs operating under municipal law may apply what they imagine to be rules of international law. In fact, as on matters such as diplomatic immunity, prize law or war crimes, the rules of municipal law which they apply may or may not coincide with the governing rules of international law. In situations of this type the variant of the monist doctrine which reduces international law to the external branch of municipal public law attains a semblance of confirmation……”

None can contradict the course of history in the West which casts its shadow in our country too. On scanning the trends of times we can say: men always need some idiotic fiction in the name of which they can face one another. Once it was religion, then it was the States, and now the Market. This has led to a situation well captured in the following lines from Noam Chomsky's Hegemony or Survival (p. 13):

Condolezza Rice , explained the U S indifference to the ICJ decision in Nicargua case:

“ international court jurisdiction has “proven inappropriatefor the United States”.

It is essential that the government of the day must subject itself to the Constitution we have created as beyond it the government itself becomes non-existent. There much wisdom in the view of Oliver Gerstenberg who concludes his article thus: [77]

“The theory conceives of the relationship between national constitutional

law and international adjudication, moreover, outside the context of

a strict monism-dualism dichotomy. According to that dichotomy, international law is either an authoritative external body of law which directly penetrates the national legal order, or a corpus of foreign law which must be ªltered ªrst through the prism of national constitutional law. This Article argues instead that international adjudication should be conceived of as having a persuasive function and not an overriding one. International and constitutional norms should be understood as contextually competing rule-of-law values rather than as conºicting legal sources vying against one another.”

But it is for our Superior Courts to establish the relationship inter se International Law and our Constitution. And this is one of the points in this Writ Petition.

Segment “C”

THE LEGALITY OF ENTERING INTO THE WTO AGREEMENT

The Petitioner examines the Respondents' submission to show how they are wholly misconceived: and subversive of our Constitution.

THIS PETITIONER ON THE RESPONDENTS' PLEAS

60. The Respondents have contended [on pages 4 to 10 of the Counter Affidavit] the following points to establish their view of the Union's Treaty-making power:

1. That in the Age of Globalization every State enters into a Treaty “with the sole aim of overall development of economy. It is a device to harvests the gains of Globalization. The impugned Treaties promote such objectives. “The WTO has assumed a crucial role in today's international scenario.”

2. The WTO Agreement's Most Favoured Nation Treatment Principle is “beneficial to developing countries whose economic leverage is limited”.

3. “The Treaty challenged (in the petition) entered into by India is not in derogation or inconsistent with the provisions of the Constitution.”

4. The Union Executive has “complete power to enter into any Treaty and to ratify it”.(para 3) Articles 73, 246(1) and 253 of the Constitution of India..

5. The dictum of Justice Shah in his concurring Judgment in Maganbhai v. Union [78] has been quoted:

(a) to highlight Lord Atkin's dicum in Attorney General for Canada v. Attorney General of Ontario is cited in support of the Respondents' position (para 7 at p. 8); and

(b) to rely on Justice Shah's observation in Maganbhai v. Union [79] on the extent of the Union's power to enter into a Treaty, and the reach of Article 253 of the Constitution of India.

6. The power of entering into a Treaty is “ an inherent part of the Sovereign Power of the State ” [para 74-83 at pp 58-61].

7. The Executive is qua the State competent to represent the State in all matters international and may by agreement, convention or treaties incur obligations which in international law are binding upon the State. But the obligations…. are not by their own force binding upon Indian nationals.”

Comments in Reply:

1. To harvest the great benefits of Globalisation

61. As this justification of the impugned Treaties is shocking and meta-juristic, this Petitioner must counter it as a common citizen, not as a lawyer of any competence. Homes had said in his dissenting Opinion in Lochner v. New Yor: “The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics.” Our Constitution was not designed to implement the paradigm of the ‘Washington Consensus' which the WTO presents. We wonder how our Executive Government has felt that our Constitution presents the sub-text of the pleadings by Frederick von Hayek, Milton Friedman, Feldstein, Ben Bernanke , Alan Greenspan , et al, or the agenda of a Thatcher, Bush, IMF, WTO or their disciples in our country. The emotional panegyric of the WTO might have delighted much Pascal Limy, the Director General of the WTO, and the leaders of the G-20 Summit held only 3 days the filing of the Counter-Affidavit by the Respondents. It is evident to all that it was one more deception is being crafted to provide a shot in the arms of the crashing capitalism in its ramparts, and the tremendous amounts of bailouts (direct or dressed-up) [by depriving the existing and potential public resource foe people's welfare] to salvage the economic crooks for whom a lot is being pleaded day in and day out. Even in the citadel of capitalism (the USA) such companies as these have failed: Fannie Mae and Freddie Mac, AIG, Merrill Lynch and Citibank each with assets running in trillions of dollars. The retreat of the role of the government is now out of fasion: nationalization is overtaking. This handout of praise for the WTO that the Respondents have provided in the Counter-Affidavit is now trashed by the ghastly phenomenon of economic meltdown, growing poverty and inequality, and the lack of trust in the paradigm of growth which the WTO represents. The specious pleading is no good for the common men who shudder at the emerging two Indias in this phase of Economic Globalization when the political realm is subjugated to the economic realm led ruthlessly by, to borrow the words of Edmund Burke, "sophisters, economists, and calculators' working for a Sone ki Lanka . Thomas Balogh who in his The Irrelevance of Conventional Economics said: “The modern history of economic theory is a tale of evasions of reality.” The plea advance just illustrates what Galbraith has rightly said:

“Here another great constant in economic life: as between grave ultimate disaster and conserving reforms that might avoid it, the former is frequently preferred”. [80]

It Respondents' pleas for the WTO (an arch institution in the sinister company of the IMF and the World Bank) are still more shocking as our Government refuses to see what is the fallout of this economic paradigm. The Food and Agriculture Organisation released its report on Dec. 9, 1008 stating that another 40 million people have been pushed into hunger this year. [81] This Petitioner wouldn't like to flog this ex facie untenable and horrendous plea by the Government. Could the Respondents see the anger and pathos of such lines as these from Blake:

Some are born to Sweet delight,

Some are Born to Endless Night.

2. “The MFN terms of the WTO Treaty….”

62. That again is this point no less shocking yet made this way. Our Constitution is not meant to facilitate the Most-Favoured-Nation (MFN). This system was applied by the imperialists in the eary phase of our servitude to the British. Then too this system protected and promoted their trade and investment. The colonialists were accustomed to follow this approach in all the countries which had come under their sway. In China too somewhat similar situation was brought about after establishing their privileges including the Most-Favoured-Nation (MFN) which ensured trading equality. This was brought about through the Treaty of Nanking, the Treaty of Wanghia ( with the United States in 1844), and the Treaty of Whampoa (with France in 1844 ). Later on the colonial power obtained certain benefits of extraterritoriality also. This had the effect of exempting them “from the application or jurisdiction of local law or tribunals.”: precisely that is being done by Article XVI (4) of the Agreement Establishing the WTO which obligates :

“Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.”

Article XIV of the General Agreement on Trade in Services provides that domestic

law cannot derogate from the Treaty terms. Our Parliament must bend; our Superior Courts are bidden to forget what they have had dear themt, and now to learn from the creatures created by the Executive under the opaque system outside India to promote the interests of the corporate imperium . .

3. “ The Treaty challenged (in the petition) entered into by India is not in derogation or inconsistent with the provisions of the Constitution .”

63. It is good that the Respondents admit, as pointed out in para 13 supra at p. 10 , that the Treaty-making must conform to our Constitution.

The Respondents, as a consequence, asserts: “The Treaty challenged (in the petition) entered into by India is not in derogation or inconsistent with the provisions of the Constitution.”

64. In effect, the Respondents seem to admit:

(i) that the Union of India does not posses a hip-pocket of an unbridled power acts at the International plane; and

(ii) that transgression of the Constitution limitations would affect as a fatal flaw to the Union's competence to enter into a Treaty;

It is heartening that the Union seem to assert the above thereby bringing its position close even to Hamdi v. Rumsfeld, 542 U.S. 507, 536 (2004 where the US Supreme Court,s “conclusion ultimately rests upon a single ground: Congress has not issued the Executive a "blank check”. The Union of India, to say the obvious, is bound by our Supreme Court's declaration of law in Raja Ram Pal vs. Hon'ble Speaker, Lok Sabha & Ors (Case No.W. P.(civil)1of 2006):

‘That the Constitution is the Supreme lex in this Country is beyond the pale of any controversy. All organs of the State derive their authority, jurisdiction and powers from the Constitution and owe allegiance to it. This includes this Court also which represents the judicial organ. In the celebrated case of Kesavananda Bharati v. State of Kerala [(1973) 4 SCC 225], this Court found certain basic features of the Constitution that include, besides supremacy of the Constitution, the republican and democratic form of Government, and the separation of powers between the Legislature, the Executive and the Judiciary. The principle of supremacy of the Constitution has been reiterated by this Court post Kesavananda Bharati …..”

But there are reasons to doubt the good faith of the Respondents for the following two reasons: the Respondents

(i) assert that in framing a Treaty the Union of India exercises “ an inherent part of the Sovereign Power of the State ” (para 7 at p. 8 of the Counter-Affidavit), [also at p. 47];

(ii) assert that the Treaty-making power is a political and policy decision; and

(iii) assert that the Tax Treaty provisions can even override the Income-tax Act, 1963 which has been framed in terms of Article 265 of the Constitution.

All the above propositions are incorrect under our law and Constitution. Some of these points have already been touched, and some of them would be set forth later in Parts ‘D' & ‘E'. i nfra .

4. The Union Executive has “complete power to enter into any Treaty and to ratify it”. Articles 73, 246(1) and 253 of the Constitution of India..

65. This Petitioner submits with all humility that the Respondents are entirely wrong in comprehending the import of Articles 73, 246(1) and 253. The correct constitutional position has been stated in Part ‘B' of this Reply to the Counter-Affidavit.

The dictum of Lord Atkin's dicum in Attorney General for Canada v. Attorney General of Ontario is cited in support of the Respondents' position quoted and relied by Justice Shah in his concurring Judgment in Maganbhai v. Union [82]

66. Lord Atkin in Attorney General for Canada v. Attorney General of Ontario [1937] A.C. 326 at 347 observed:

‘Unlike some other countries, the stipulations of a treaty duly ratified do not within the Empire, by virtue of the treaty alone, have the force of law. If the national executive, the government of the day, decide to incur the obligations of a treaty which involve alteration of law, they have to run the risk of obtaining the assent of Parliament to the necessary statute or statutes. To make themselves as secure as possible they will often in such cases before final ratification seek to obtain from Parliament an expression of approval….Parliament …… has a constitutional control over the executive; but it cannot be disputed that the creation of the obligations undertaken in treaties and the assent to their form and quality are the function of the executive alone. Once they are created , while they bind the State as against the other contracting parties, Parliament may refuse to perform them and so leave the State in default. In a unitary State whose Legislature possesses unlimited powers the problem is simple. Parliaments will either fulfill or not treaty obligations imposed upon the State by the executive . The nature of the obligations does not affect the complete authority of the Legislature to make them law if it so chooses.”'

67. The observations of Lord Atkin in Attorney General for Canada v. Attorney General for Onterio [83] , which emanated from Canada and , were quoted with approval both in the majority judgment delivered by Chief Justice Hidayatullah and in his concurring judgment by Justice Shah in Maganbhai v. Union of India [84] , should be read in the context of the facts of that case. Lord Atkin was stating law in the context of the British jurisprudence, and treaty practice. But he did say something which is of paramount importance for us whose Government is under constitutional limitations. He observed:

“But in a State where the Legislature does not possess absolute authority: in a federal State where legislative authority is limited by a constitutional document, or is divided up between different legislatures in accordance with the classes of subject matter submitted for legislation, the problem is complex . The obligations imposed by treaty may have to be performed, if at all, by several legislatures: and the executive have the task of obtaining the legislative assent not of the one Parliament to whom they may be responsible: but possibly of several Parliaments to whom they stand in no direct relation. The question is not how is the obligation formed, that is the function of the executive: but how is the obligation to be performed and that depends upon the authority of the competent legislature or legislatures. ” [italics supplied]

68. The Privy Council in this case stated two things:

(a) The Privy Council stated the typical British approach in this case emanating from the Canadian jurisdiction as the Preamble to the British North America Act, 1867 stated that :

“Whereas the Provinces of Canada, Nova Scotia, and New Brunswick have expressed their Desire to be federally united into One Dominion under the Crown of the Crown of the United Kingdom of Great Britain and Ireland, with a Constitution similar in Principle to that of the United Kingdom;”

Art. 9 stated :

‘The Executive Government and Authority of and over Canada is hereby declared to continue and be vested in the Queen.”

(b)The Privy Council held that legislation implementing an international convention was void as it contravened Sections 91 and 92 of the British North America Act, 1867.

69. Lord Atkin's distinction between (1) the formation , and (2) the performance of the obligations created under a treaty is correct and well understandable under the British constitution. Under the British Constitution the Crown is not a creature of the constitution, it is, of course, an integral part of the constitution. The British constitutional history is an expanded metaphor of the struggle conducted over centuries in the name of people against the absolute power of the Crown. Even this day there is nothing wrong in saying that the Crown has all the powers conceivable except that which it lost to Parliament and the Courts in course of the country's grand and majestic constitutional history. It is, hence, understandable to think that the Crown has certain inherited and inherent powers. Treaty is done in exercise of prerogative power by the Crown as it concerns the Crown's foreign affairs. The exercise of this power was not of much consequence till the beginning of the 20 th century. The Crown had all the conceivable power at the international plane as it had not been tamed by any constitutional mandate. Hence the formation of a treaty at international plane was wholly in the Executive's province. In India the Executive possesses no extra-constitutional power. As a creature of the Constitution it is subject both in the matter of the formation of a treaty and the performamce of obligation to the limitations placed by the Constitution and the law. Whether a member functions in Delhi, or Detroit, it must conform to the Rule of Law.

70. Even in the United Kingdom the predominant view, which has emerged, is that even the Prerogatives of the Crown are under limitations. Despite the specifics of the unwritten and evolutionary constitution of the U.K., the treaty-making power of the Crown is not without limits ( to be discussed later). In the U.K., seen in the historical perspective, the Crown had, once upon a time, all the powers conceivable. It lost many of such powers, in course of a grand constitutional history, to Parliament and the Courts so that people could enjoy the fruits of democracy under the Rule of Law. But it still retains powers which Parliament or the Courts have not chosen to deprive it of. We call this prerogative power. Under our Constitution no such cobwebs of the past survive. In the U.K the Crown is still the inheritor of inherent powers not yet deprived of; in India the Executive would sink or swim in terms of the Constitution. Limitations on the Prerogative of the Crown are now well recognized. Lord Denning observed in Laker Airways Ltd v. Department of Trade [85] :

“Much of modern thinking on the prerogative power of the executive stems from John Locke's treatise, True End of Civil Government, which I have read again with much profit, especially chapter 14 ‘Of Prerogative [86] ''

Quite recently the House of Lords set a limit to the war prerogative when it declared that, even in time of war, the property of the British subject cannot be requisitioned or demolished without making compensation to the owner of it: see Burmah Oil Co(Burma Trading ) Ltd v. Lord Advocate [87] . It has also circumscribed the treaty prerogative by holding that it cannot be used to violate the legal rights of a British subject, except on being liable for any damage he suffered: see Attorney-General v. Nissan [88] .

“ Seeing that the prerogative is a discretionary power to be exercised for the public good, it follows that its exercise can be examined by the courts just as any other discretionary power which is vested in the executive . At several times in our history, the executive have claimed that a discretion given by the prerogative is unfettered: just as they have claimed that a discretion given by a statute or by regulation is unfettered. On some occasions the judges have upheld these claims of the executive, notably in R. v. Hapden, Ship Money Case [89] , and in one or two cases during the Second World War, and soon after it, but the judges have not done so of late. The two outstanding case are Padfield v. Minister of Agriculture, Fisheries and Food [90] , and Secretary of State for Education and Science v. Metropolitan Borough of Tameside [91] , where the House of Lords have shown that when discretionary powers are entrusted to the executive by statute, the courts can examine the exercise of those powers, so as to see that they are used properly, and not improperly or mistakenly. By mistakenly, I mean under the influence of a misdirection in fact or in law. Likewise, it seems to me that, when discretionary powers are entrusted to the executive by the prerogative—in pursuance of the treaty-making power—the courts can examine the exercise of them so as to see that they are not improperly or mistakenly."

The dictum of Justice Shah in Maganbhai v. Union [92] on the extent of the Union's power to enter into a Treaty, and the reach of Article 253 of the Constitution of India. (para 7 at p. 8)

71. The treaty-making power, as such, was not raised in that case. The dispute about the boundary between India and Pakistan in the Rann of Kutch, which had led to an armed conflict, was brought to an end by referring the dispute to an International Tribunal, by whose award both countries agreed to be bound. The issue was decided in view of the International Award. The observations on the treaty-making power were casual as the issue did not turn on Treaty-Making power. H.M. Seervai brings out the core of the case as reflected in the decision of the Supreme Court in this Case thus [93] :

“The Petitioners did not dispute that the the Union Government could enter into a covenant to be bound by the decision of an International Tribunal, and that its award would be binding on India; they merely contended that a constitutional amendment was necessary, since the award affected the territorial limits of India.” The Judgment itselself says in para 19 : “It may be pointed out that none of the petitioners contends that the Award should be rejected. This is as it should be. India was voluntarily a party to an agreement pledging its honour to respect the Award.”

Two points are worth noting:

(i) Neither the issues of constitutional limitations nor the governing principles of public international law were presented before the Hon'ble Court, nor were these even noticed by the Court.

(ii) The decision in Maganbhai can stand even if the judicial extraversion on the treaty-making power made therein is respectfully ignored: hence the observations on India's Treaty-making power is mere obiter absolutely not needed for the actual decision in that Case..

(iii) The observations of Lord Atkin in Attorney General for Canada v. Attorney General for Onterio [94] were quoted with approval both in the majority judgment delivered by Chief Justice Hidayatullah and in his concurring judgment by Justice Shah in Maganbhai v. Union of India [95] without taking into account the provisions of our Constitution, and without any relevance to the point for decision.

72. This Petitioner considers Justice Shah's dictum as not declaring the law as it is no part of the ratio of the Case, nor its presence in or omission from the Judgment has any bearing on the actual decision of the Case. This view of the Petitioner is formed by the adoption of the standard technique for determining the ratio of a case. [96]

73. In Naresh Shridhar Mirajkar and Ors. v. State of Maharashtra and Anr. a Bench of nine learned Judges of the Supreme Court, per Gajendragadkar CJI ( for himself, and for Wanchoo, Mudholkar , Sikri and Ramaswami, JJ,), drew out the right perspective in the following words:

“ Often enough, in dealing with the very narrow point raised by a writ petition wider arguments are urged before the Court, but the Court should always be careful not to cover ground which is strictly not relevant for the purpose of deciding the petition before it. Obiter observations and discussion of problems not directly involved in any proceeding should be avoided by courts in dealing with all matters brought before them, but this requirement is becomes almost compulsive when the Court is dealing with constitutional matters.”

It is a casual obiter when a judicial observation is on point:

(i) not needed for the actual decision of the court on the issue presented: and

(ii) not subjected to the white-heat of forensic argument on such issues.

The dicta are casual if they pertain to point not calling for decision and not argued before the court. In Mohandas Issardas v. A. N. Sattanathan 56 Bom L.R. 1156] Chagla C.J. held that the observation s of Bhagwati J. that the maximum penalty which customs officers could inflict was Rs 1000 were casual observations which were not correct, and not binding on any court. This view was confirmed by the Supreme Court in Ranchhoddas Atmaram v. Union [97] where this Hon'ble Court held that the observations in three of its decisions were not binding as “the question was never required to be decided in any of the cases and could not, therefore have been, or be treated as decided by this Court. Salmond has aptly said:

“For the fundamental notion is that the law should result from being applied to live issues raised between actual parties and argued on both sides…” [98]

In Orissa v. Sudhansu Sekhar Misra [99] this Hon'ble Court cited with approval the following observations of the Earl of Halsbury L.C.:

“A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and every observation found therein nor what logically follows from the various observations made in it.”

That Salmond has aptly said:

“For the fundamental notion is that the law should result from being applied to live issues raised between actual parties and argued on both sides…” [100]

6. The power of entering into a Treaty is “an inherent part of the Sovereign Power of the State ”

74. Our Constitution conceives the total field of Sovereignty ( internal and external both), and the Constitution regulates it and controls it.

75. The Respondents assert that the power of entering into a treaty is an inherent part of the Sovereign power. The view is not correct. The Executive under the Constitution of India is a creature of the Constitution, and, by way of constitutional logic, possesses no “inherent” sovereign power. David M. Levitan in his article on “The Foreign Relations Power: An Analysis of Mr. Justice Sutherland's Theory” [101] examines whether under the U.S Constitution there is any inherent power. The first and the concluding paragraphs of the article deserve attention as we share the parameters of a written constitution with the United States:

“The United States has now joined the other nations of the world in a broad program of international co-operation. Since this country is governed under a written constitution, as interpreted by the courts, examination of the scope of authority of the national government in the field of foreign affairs is appropriate. Questions of constitutional competence have already been raised. The most recent authoritative and complete exposition of the legal scope of the foreign relations power is to be found in Mr. Justice Sutherland's opinion in the case of United States v. Curtiss-Wright Export Corporation. Mr.Justice Sutherland wholly relied on the Curtiss-Wright decision in his opinion in United States v. Pink . It constitutes for the present the official legal view on the external powers of the federal government, and is, therefore, worthy of careful analysis. The analysis of the legal meaning of the opinion in turn suggests an examination of the origin and validity of the theory on which Mr.Justice Sutherland rests his decision—the rationale of the opinion.

“Regarding the “inherent” powers doctrine, it is well to add, that though the existence of such powers has sometimes been referred to by the courts and by writers on public law, there is little justification for the perpetuation of such a theory. Its introduction was contrary to the spirit of a written constitution. Whether or not a written constitution is the most desirable basis for a government, as long as we live under such a document there appears little room for a theory of “inherent” powers. Instead a liberal and broad interpretation of such provisions of the Constitution as the general welfare clause is more in harmony with our philosophy that the Constitution limits governmental authority. The argument that the interpretation and reinterpretation of constitutional phrases in the light of modern conditions makes little more than a fiction out of the notion that we are living under the Constitution, will not be denied. Our government should continue to evolve to meet the ever-changing needs of the people within the framework of the general philosophy of a supreme Constitution with some specific prohibitions. The Sutherland doctrine, however, makes shambles out of the very idea of a constitutionally limited government. It destroys even the symbol.”

76. The assertion by the Respondents do not conform to our Constitution whereunder if any organ of the government transgresses constitutional limitations it acts ultra vires. Arbitrary power and the rule of the Constitution cannot both exist together. They are antagonistic and incompatible forces; and one or the other must of necessity perish whenever they are brought in conflict [102] . This view is based on a mandatory norm recognized by international law as would be evident from what Oppenheim states in his International Law :

Lord McNair states legal position in the same way. But the first point in his “Conclusion” deserves a specific notice because of its contextual relevance: to quote—

“A treaty which is made on behalf of a State by an organ not competent to conclude treaties or that kind of treaty, or which fails to comply with any relevant constitutional requirements, such a consequent of a legislative organ, is, subject to what follows, not binding upon that State….” [103]

“In International Law, nations are assumed to know where the treaty-making power resides, as well as the internal limitations on that power. [104] J. Mervyn Jones in his article on “Constitutional Limitations on Treaty-making Power” examines the effect of constitutional limitations. [105] Two important English writers support the view that constitutional limitations are completely effective under international law [106] . It is time to give democratic orientation to international law. [107]

77. It would be contrary to our Constitution to grant the Executive “extra-constitutional powers”. David M. Levitan has put it felicitously when he observed: “Government just was not thought to have any “hip-pocket” unaccountable powers”. [108] . Levitan observes:

“The most significant aspect of the Curtiss-Wright decision is that it gave authoritative and respectable status to the doctrine that the national government possesses powers completely outside of those in any way assigned to it by the Constitution. Generally speaking, this means that the doctrine that the United States is a constitutionally limited federal state applies only to purely domestic matters and that general limitations arising out of the nature of the American system are not applicable in the field of foreign affairs. There is even considerable basis for interpreting the Curtiss-Wright decision to mean that there are no substantive limitations on the scope of the foreign relations power; that is, since it is an “extra-constitutional” power, extra-constitutional acts cannot be un-constitutional. Though Mr. Justice Sutherland does include a warning that the government could not exercise the power in manner specifically prohibited by the Constitution – “a power which…like every other governmental power must be exercised in subordination to the applicable provisions of the Constitution” – this limitation appears to affect only the procedural aspects of treaty making. The significance of Mr. Justice Sutherland's interpretation of the nature and scope of the external powers of the national government is found not so much in its novelty or practicable application as in its sharp departure from the accepted canons of constitutional interpretation and assumptions as to the nature of the American system of government.”

78. The theory of inherent sovereign power is anachronistic. Examining the concept of Sovereignty Oppenheim observes:

“The problem of sovereignty in the 20 th Century. The concept of sovereignty was introduced and developed in political theory in the context of the power of the ruler of the state over everything within the state. Sovereignty was, in other words, primarily a matter of internal constitutional power and authority, conceived as the highest, underived power within the state with exclusive competence therein.”

79. Under our constitutional framework the question of inherent power does not arise. The right question is: whether the government possessed the legal power to do what it has done. All wielders of public power under our Constitution, as also under the U.S. Constitution, are the donees of power with a closely structured grammar of constitutional discipline governing its exercise [surely only for public good]. This shade of the blue in the meaning of this word, inherent , finds expression in the usage we find in J.A. Michener: “The little building has an inherent poetry that could not have sprung entirely from the hands of an architect.” The Executive under our Constitution has no inherent power that had once upon a time been claimed, to their misfortune, by the Stuarts in England, Chancellor Bismarck in Germany before the First World War, and Hitler on the wreck of the Weimer Constitution during the interregnum between the two World Wars. The Executive's this proclivity was noted by Hidayatullah J [as he then was] when he warned that the executive ‘can use the legislature as a means of securing in the laws which it desires” and cited the example of Hitler in Germany [109] . Denial of inherent power to the Executive is designed to achieve an important constitutional mission thus described in The New Encyclopedia Britannica [110] :

“The limits to the right of the public authority to impose taxes are set by the power that is qualified to do so under constitutional law. In a democratic system this power is the legislature, not the executive or the judiciary. The constitutions of some countries may allow the executive to impose temporary quasi-legislative measures in time of emergency, however, and under certain circumstances the executive may be given power to alter provisions within limits set by the legislature. The legality of taxation has been asserted by constitutional texts in many countries, including the United States, France, Brazil, and Sweden. In Great Britain, which has no written constitution, taxation is also a prerogative of the legislature. The historical origins of this principle are identical with those of political liberty and representative government – the right of the citizens.”

80. The theory of inherent power emanating from Sovereignty is on account of not noticing a fundamental difference between the British Constitution and the Indian (or the U.S. Constitution). In the U.K., seen in the historical perspective, the Crown had, once upon a time, all the powers conceivable. It lost many of such powers, in course of its grand constitutional history, to Parliament and the Courts so that people could enjoy the fruits of democracy under the Rule of Law. But it still retains powers, which Parliament or the Courts have not chosen to deprive it of. We call this “prerogative power”. Under our Constitution no such cobwebs of the past survive. In the U.K the Crown is still the inheritor of inherent powers not yet deprived of; in India the Executive would sink or swim in terms of the Constitution.

81. Modern International Law and International Institutions have made great strides towards making the countries of the world good neighbours [111] . Human rights have received wide recognition even at the international plane. Our world is said to have shrunk to become a global village. In this sort of a world invocation to sovereignty is meaningless.

It is respectfully submitted that Treaties are framed under different legal protocols. Treaties like the Treaty of Vienna, or the Treaty of Versailles may be made after trampling down the Constitutions of the vanquished states. Such treaties are instances of the exercise of Sovereign power .

7. The Executive is qua the State competent to represent the State in all matters international and may by agreement, convention or treaties incur obligations which in international law are binding upon the State. But the obligations…. are not by their own force binding upon Indian nationals.”

82. The Respondents are right in stating in the Counter Affidavit that the Executive is competent to represent the State at the International level. “In general it seems that the Crown makes treaties as the authorized representative of the nation” : Keir & Kawson, Cases in Const Law p.160. But the Representative of the State can run the risk of acting without capacity if it goes in breach of the constitutional limitations on its capacity. Oppenheim observes [1] :

The Representative of the State cannot go counter to the State's organic law. If it feels so strongly to enter into a Treaty it should get the law amended, or obtain the authority of the ‘We, the People' even by a referendum [see Annex ‘C' at pp. 184-185 of the Writ Petition]. When the Executive government asserts its authority to represent the State, it must not arrogate to itself an unbridled power when the Executive claimed to be the State: “L'Etat,c'est moi” [the State, it is I] .

Louis XIV, who said so, turned wise on his death-bed to say: " Je m'en vais, mais l'État demeurera toujours. " ("I depart, but the State shall always remain").

83. It is true that the Vienna Convention on the Law of Treaties says in Article 27 that the parties “may not invoke the provisions of its internal law as justification for its failure to perform a treaty. This rule is without prejudice to Art. 46.

Explaing the import of Art. 27 the Year Book of International Law Commission (1968) says [112] :

‘One point is certain: article 27 of the Vienna Convention pertains more to the regime of international responsibility than to the law of treaties……. Another equally certain point is that article 27 contemplates only valid treaties which have been properly concluded. Where that is not the case, invalidity and not international responsibility is involved.”

The People of Turkey denied the validity of the Treaty of Sevres (1920). Treaty put to an end “of Turkish freedom: sentence of death was passed on Turkey as an independent nation.” [113] This Treaty had been signed by the Supreme Executive: the Head of the State, the Sultan. The Treaty of Versailles (1919) was undone by the German people even by wrecking its Weimer Constitution.

CONSTITUTIONAL VALIDITY OF SECTIONS 90 &90A OF

THE I.T. ACT, 1961 &

THE VALIDITY OF THE MAP PROVISIONS & THE IMPUGNED INSTRUCTIONS

Section (a)

84. Over pp. 19 to 51 of the Counter-Affidavit, the Respondents have stated their case in support of Sections 90, and 90A, and the Mutual Agreement Procedure as implemented by the impugned Rule and Instruction. A close examination of the Counter-Affidavit reveals the following 17 points of assertions. The Respondents' cumbersome exposition, most often repetitive, are subsumed in the 17 propositions. [C.-A.. 21-22]. Each point is under a sub-heading to be used again in the Segment ‘B' in synergy with the point as mentioned seriatim in Segment ‘A'.

The validity of classification

(I) The Government has power to bring about classification of the asseesees inter se the beneficiaries of the Tax Treaties and the others. A statute cannot be attacked on the ground that it taxes some persons or objects and not others [Khyberbari Tea Company Ltd v. Assam (AIR 1964 SC 925); Perriera vs Municipal Corporation of Greater Bombay (1972) 1 SCC70, 79;]. R.K. Garg vs UoI [(1981) 4 SCC 675 relied on].

DTAA for mutual trade and investment

(II). The DTAA are “ are also entered into with other countries for developing mutual trade and investment. As the existing law it not cover this purpose, a new clause was inserted in Section 90 vide the Finance Act, 2003.” [C-A. p. 22].

The raison d'tre of Section 90(3) of the I.T. Act

(III) As certain terms in DTAA were not defined either in the DTAA or the Act, sub-section 90(3) was inserted “to address the resultant problem of differing interpretation of such terms”.

Propriety of Delegation u/s 90 of the Act

(IV) . There is no excessive delegation as sufficient guidance to the authorities have been given.[A.N. Parasuraman vs Tamil Nadu (1980) 4 SCC 63; Babu Ram Jagdish Kumar vs Punjab (1979) 3 SCC 616; UoI vs Azadi Bachao Andolan (263 ITR 706).

Propriety of Delegation u/s 90A of the Act

(V) Section 90A of the Act gives sufficient guidance for the exercise of power. [C-A. p. 25]

The Theory of Adoption & Art. 73 of the Const.

(VI) Section 90A “was inserted by the Finance Act 2006 empowering the Central Government to adopt any agreement made between specified associations for double taxation relief, subject to conditions specified therein. This is in accordance with the powers vested with the Executive under Article 73 of the Constitution.” [C-A. p. 26].

MAP's statutory backing

(VII) The challenge …to the extent that the provisions to MAP is ultra vires and without statutory foundation is also not maintainable.” [C-A. p. 28].

Laying before Parliament

(IX) . Section 295(2)(h) empowers the Central Board of Direct Taxes to make rules providing procedure for giving effect to the terms of any agreement for granting relief in respect of double taxation…..”. [C-A. p. 29]. Thus MAP has a statutory backing.

MAP for speedy disposal

(X). “MAP has been provided for speedy disposal of cases where taxation is not in accordance with the DTAA.” [C-A. p. 35]

MAP & Fundamental Rights

(XI). The challenges under Articles 14, 19, and 21 of the Constitution to the Rule and MAP deserve to be rejected. [C-A. p, 36].

MAP for the treaty implementation

(XII). “Towards the end of 1990s it was noticed that although cases were resolved at the level of the competent authorities, there were were difficulties in getting the decisions implemented by the field officers as the concept of MAP was not well-known. [C-A. p. 36]

The power to enter into Agreement: Section 90 of the Act and Article 73 of the Const.

(XIII).”In exercise of power s conferred under section 90 of the Act, the Central Government has entered into DTAAs with various countries.” [C-A, 40]

The extent of Parliament's sanction

(XIV). The impugned Rule has Parliamentary sanction as it had been laid before it in view of the provisions of Section 296 of the Act. [C-A. pp. 41-42]

MAP ‘S adoption under Section 90(2)

(XV). The MAP “resolution is adopted under the DTAA read with Section 90(2) of the Act. Thus MAP is a special procedure arising out of Section 90.

Sovereign power

(XVI). “The power of entering into a treaty is an inherent part of the sovereign power. [C-A. p. 47]

Tax Treaty-making procedure

(XVII). In framing fiscal treaties different countries have different procedures. India it the domain of the Executive. [C-A. p. 48]

The DDTA overrides the Act

(XVIII). Under Section 90(2) an “assessee who is covered by the provisions of the DTAA is entitled to seek benefits thereunder, even if the provisions of the DTAA are inconsistent with the provisions of the Income-tax Act 1961. [C.A. p. 49] [UoI vs Azadi Bachao Andolan (2003) 263 ITR 706 SC; CIT vs Kulandgan (267 ITR 654 SC relied on,)

Section ‘b'

Comments in Reply:

(i) The validity of classification [point (I) of the C.A.]

85. That this Petitioner thinks that the Respondents failed to take into account the OBJECTIVE of the Income-tax Act, 1961. It deserves to be taken into as to appreciate the Petitioner's plea that the way our Executive understands Section 90 of the Act is wholly in breach of Article 14 of the Constitution of India. Right to Equality is judicially understood as an integral part of our Constitution's Basic Structure, and is universally considered in the civilizes jurisprudence a most fundamental of all the constitutional objectives. A Tax Treaty can entered into by the Government only if it does not transgress Art. 14. Ram Krishna Dalmia v. Justice S. R. Tendolkar , and many other cases suggest that the Art 14 of the Constitution contemplates valid ‘classification' which contemplates:

(i) the classification must be based on an intelligible differentia which

distinguishes those that are grouped together from others;

(i) the differentia must be reasonably related to the object of the statute; and

(ii) the differentia and the object are distinct and separate..

The Respondents totally ignores to see whether the classification inter se the non-residents entitled to Tax-treaty benefits, and all other tax-payers within the Act satisfy the aforementioned pre-requisites.

86. That as per the preamble and the scheme of the Income tax Act, 1961, the OBJECT of the Income-tax Act is to collect tax on income generated within the taxable territory of our country from the interstices and matrix of capital and labour of all the participations in the pursuits. Lord Hewart observed in Rex v. Special Commissioner (20TC 381 at 384) that the duties imposed upon the Commissioners of Income tax are “in the interest of the general body of tax payers, to see what the true assessment ought to be, and that process, a public process directed to public ends.” In view of the overarching object of the Act, all those who come within the purview of the Act are the assesses constituting a common class as they effect taxable events in the territory of India. In IRC v. Federation of Self-Employed , Lord Scarman explained the nature of the income-tax law thus:

“ But I do not accept that the principle of fairness in dealing with the affairs of taxpayers is a mere matter of desirable policy or moral obligation. Nor do I accept that the duty to collect ‘every part of inland revenue' is a duty owed exclusively to the Crown. Notwithstanding the Treasury case in 1872, I am persuaded that the modern case law recognizes a legal duty owed by the Revenue to the general body of the taxpayers to treat taxpayers fairly, to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise, to ensure that there are no favourites and no sacrificial victims. The duty has to be considered as one of several arising within the complex comprised in the care and management of a tax, every part of which it is their duty, if they can, to collect.

87. That this Petitioner agrees with the Respondents that the imposition can be done in accordance with the law. But the following two essential aspects cannot be ignored:

(i) what is the right import of Sections 90 or 90A of the Income-tax Act;

(ii) whether the meaning and ambit sought to be given to the provisions of these Sections are in conformity with our Constitution;

(iii) if their meaning and ambit cannot be so construed as to conform to our Constitution's imperatives, then the provisions to the extent they breach them deserve to be declared unconstitutional: hence non est; or read down.

88. Reliance on Khyberbari Tea Company Ltd v. Assam (AIR 1964 SC 925); Perriera vs Municipal Corporation of Greater Bombay (1972) 1 SCC70, 79;] and R.K. Garg vs UoI [(1981) 4 SCC 675 in support of the sort of classification inter se the assesses is totally misconceived:

(i) (a) Taxes as such constitute a genus of which the direct taxes and indirect taxes are species with differentia inter se. The correct approach is the species-specific approach. For certain purposes the genus is relevant. There cannot be taxation without a legislative warrant is a constitutional norm for the imposition of all taxes, whether direct taxes or indirect taxes or the latter's analogue which was under consideration in Khyberbari Tea Company Ltd v. Assam ; and Perriera vs Municipal Corporation of Greater Bombay. A classic exposition of this principle is by Hood Phillips [114] :

“It was supposed to have been settled by Magna Carta and by legislation in the reigns of Edward I and Edward III that taxation beyond the levying of customary feudal aids required the consent of Parliament……in particular the Commons….. This applied to at least to direct taxation. With regard to indirect taxation different considerations might apply. Down to the early 17 th century import duties , for example, were regarded rather as licences or concessions than as taxes and, further, royal prerogative relating to foreign affairs ---and hence the regulation of foreign trade in national interest….”

The thematic structure, the operational culture, the ambit of delegation of power to the Executive, and the zone of discretion granted to the Executive are marked different in the various branches of the common stock: “taxation”.

The classification sustained in R.K. Garg vs UoI [(1981) 4 SCC 675 has an

obvious rationale.The Majority view sustained it on the ground thus stated:

”The object of the Act being to unearth black money for being utilised for productive purposes with a view to effective social and economic planning, there has necessarily to be a classification between persons possessing black money and others and such classification cannot be regarded as arbitrary or irrational.”

(b) R.K. Garg vs UoI takes into account the conventional direct tax situation. ‘Black money' is black as it is derived from black deeds. Within this decision, the ‘black money' is black because legitimate tax incidence has been evaded. The purpose of the grant of amnesty was a pragmatic decision by Parliament to get some tax at least which stood evaded, and its administrative structure could not rake that in the Consolidated Fund for our nation's benefit.

Yet this decision merited criticism of Justice A.C Gupta in his dissenting judgment:

“27. To pass the test of reasonableness if it was enough that there should be a differentia which should have some connection with the object of the Act, then these observations made in Maneka Gandhi and Royappa would be so much wasted eloquence. The decisions of this Court insist that the differentia must be intelligible and the nexus rational, and the observations quoted above would seem to be appropriate only if we attach some significance to the words 'intelligible' and 'rational'. The question however remains: when is one justified in describing something as arbitrary or unreasonable?”

(c ) Art 265 of our Constitution says : “No tax shall be levied or collected except by authority of law.” Law refers to a valid law. In the context of Article 265 of the Constitution it means an Act of the Legislature. [115] The impact of the Parliament Act of 1911 enacted in the UK is clear on Articles 109 and 110 of a Constitution of India. Article 110 (1) provides definitions of Money Bills which includes a Bill dealing with the imposition, abolition, remission, alternation, or regulation of any tax. This is what we get in the definition of Money Bill given in section 1 (2) of the Parliament Act 1911 with only one change that for “repeal” used in the UK Act, Article 110 (1) (a) uses the expression “abolition.” On this point our Constitution prefers the comprehensive definition of the terms pertaining to taxation than the Government of India Act, 1935 used in its section 37. Article 109 of the Constitution of India deals with the special procedure in respect of Money Bills. The Parliament Act, 1911 of the UK put an end to the power of the House of Lords to amend or reject a Money Bill. After this act they can cause delay for a period no more than a month. Under our Constitution a Money Bill originates only in the House of the People. The Council of States has no competence to reject or amend a Money Bill : only suggestion can be made which the House of the People may accept or may not accept. But this must be within 14 days of the receipt of Bill otherwise the Bill is deemed to have been passed by both Houses at the expiration of period of fourteen days from the date of the receipt of the Bill. The Government of India Act 1935 did not draw up distinction between Money Bills and other Financial Bills. It is clear that our constitutional provisions are closely affiliated to the provisions of the United Kingdom's Parliament Act 1911. The Constitutional provisions in our country establish full and exclusive authority of our Parliament in matters of taxation. In effect the full and exclusive authority in matters of taxation is of the House of the People, as it is in the United Kingdom.

Power to grant Exemption under the Income-tax Act is always a legislative act.

(d) That even grant of exemption is a legislative act. It is a constitutional principle of highest importance that neither we can be taxed through an executive fiat, nor untaxed through an executive concession. To tax or grant exemption form the two facets of the same thing. It was aptly stated by the Rajasthan High Court in H.R.& G. Industries v. State of Rajasthan ( A I R 1964 Raj. 205 at 213) :

“It is well established that the power to exempt from tax is a sovereign power and no State can fetter its own much less the future legislative authority of its successor. See Associated Stone Industries Kotah v. Union of India ILR (1958) 8 Raj 700 and Maharaja Shree Umed Mills Ltd v. Union of India ILR (1959) 9 Raj. 984”

(a) Exemption cannot be granted through an executive act. Under the Income-tax Act 1961 no executive authority has been granted such power. When Section 119 (2 ) ( c ) empowers the CBDT to relax statutory provisions to relieve genuine hardship, it prescribes under the Proviso : “that the Central Government shall cause every order under this clause to be laid before each House of Parliament.” Wherever the Income tax Act grants exemptions it does specifically, viz . Sections 10, 293A, 294A. There is a great constitutional principle at work under the culture of income-tax law: We are neither to be taxed nor untaxed through an executive act.

(ii) ( DTAA for mutual trade and investment [Point II in the C.A.]

89. The Respondents assert that the DTAAs “are also entered into with other countries for developing mutual trade and investment. As the existing law it not cover this purpose, a new clause was inserted in Section 90 vide the Finance Act, 2003.” The Respondents have noticed the the provisions of Section 90, [116] of the Income-tax Act, and the insertions made by the Finance Act 2003 substituted the following clause (a) for the existing clause (a) in sub-Section (1) of Section 90 of the Income-tax Act, 1961:

“(a) for the granting of relief in respect of---

(i) income on which have been paid both income-tax under this Act and income-tax in that country; or

(ii) income-tax chargeable under this Act and under the corresponding law in force in that country to promote mutual economic relations, trade and investment, or……”

The Finance Act 2003 also inserted sub-Section (3 ) which runs thus:

“ Any term used but not defined in this Act or in the agreement referred in sub-section 90 (1) shall, unless the context otherwise requires, and is not inconsistent with the provisos of this Act or agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette.

For the immediate purpose, only these changes made in Sec. 90(1) are material. In this the following have been missed by the Respondents:

1. The Respondents failed to notice that the insertions made in 90(1) authorizing a Tax Treaty “to promote mutual economic relations, trade and investment….” was made by the Finance Act 2003 with effect from 1st April, 2004, and hence, applicable in relation to the assessment year 2004-05 and subsequent years.

2. The changes brought about by the Finance Act 2003 mentioned above were not retrospective. Hence all the Double Taxation Avoidance Agreements done prior the insertions by the Finance Act 2003, to the extent they provide for ‘trade' and ‘investment' were beyond the statutory competence, and they were entered into without the authority of law. Thus the Executive Government transgreed its Treaty-making competence, clearly offending Art 265 a fortiorari.

(iii) The raison d'tre of Section 90(3) of the I.T. Act [Point III in the C.A.]

90. The Respondents assert that as “certain terms in DTAA were not defined either in the DTAA or the Act, sub-section 90(3) was inserted “to address the resultant problem of differing interpretation of such terms”.

Comments in Reply:

(a) This sort of statutory authorization is a clear trespass on the domain of the Judiciary. Whether a taxable transaction accords with the terms of a treaty is a matter of interpretation which is a judicial function . Lord Diplock in Black-Clawson Ltd [(1975) 591 at 638 aptly observed:

“In construing it the court must give effect to the words of the statute would be reasonably understood to mean by those whose conduct it regulates…..Parliament, under our Constitution, is sovereign only in respect of what it expresses by words used in the legislation it has passed.”

If such a thing is allowed the Rule of Law would get battered, and one of the Basic Features would get damage.

(b) The amorphous words with unsettled meaning would frustrate operation within the judicially determined frontiers for delegated legislation. The Executive can easily effect semantic widening and distortions on the sole authority to which Lord Atkin referred in his famous dissent in Liversidge v Anderson [117] :

“I know of only one authority which might justify the suggested method of construction. ‘When I use a word' Humpty Dumpty said in rather scornful tone, ‘it means just what I chose to mean, neither more nor less'. ‘The question is,' said Alice ‘Whether you can make words mean different things'. ‘The question is,' said Hampty Dumpty, ‘who is to be the master ---that is all.”

(c ) The policy of the Income-tax Act is to explain with precision the meaning of words used in the statute so that the imposition of tax or exoneration from its charge should be in clear terms. This is the reason why non-legal terms are defined. This is done to preclude any arbitrary perception on the part of the taxpayers or tax-gatherers. To illustrate: the term “infrastructure facility” is used in Section 80-1A of the Income-tax Act. This is a general term with a settled meaning: it means “the basic structural foundations of an enterprise”. Yet Section 80-1A of the Act defines it in the Explanation to Section 80-1A(4). Section 90(1) grants certain powers to the Central Government. If the power is given in words, the sweep of whose meaning endows the executive a limitless power is not clear, then the amplitude of the grant such would be unreasonable and arbitrary.

(d) Nobody now can comprehend fairly , or draw the precise frontiers of the terms used in the substituted Section 90(1): the terms are--- “to promote mutual economic relations, trade and investment”. The word “mutual” has been defined by the New Shorter Oxford Dictionary to mean “of a feeling, action, etc : experienced, expressed, or performed by each of the parties concerned towards or with regard to the other ; reciprocal” The word ‘economic' means, in its primary sense, “concerned with economics and with the organization of money, industry, and trade of a country, reign, or social group.' [118] ‘Relations' means : “ Relations are contacts between different people or groups of people and the way in which they behave towards each other, for example how they communicate or cooperate”. ‘Economic relations' does not suggest the same to the champions of economic statism and the proponents of economic liberalism. ‘Economic relations' means something to Monnet but much different to Hayek. Even in our country we have in plenty, shaping our economic polices, who are either the Monnetists or the Hayekians. ‘Economic relations' in the post-Betton Woods have undergone a remarkable change, for good or bad we know not. The words ‘trade' and ‘investment' have acquired tremendously wide meaning after the Uruguay Round of Final Act which set up the WTO, and of which India is a member. In TRIMs (Trade Related Investment Measures) they insisted on discussing the trade effects of investment measures. The widening dimensions of ‘economic relations' revealed in macro economic polices in the present economic architecture are such that the word TRADE has acquired a protean malleability it never had. The word “economic relations” is baffling when we think of the persons with whom we contemplate our ‘economic relations'. There are countries whose jurisprudence deserve to be called ‘civilized jurisprudence”, to borrow the expression from the Statute of the International Justice. But there are states in which everything is res commercium , even good faith is on selling counter.

(e) It is possible, with a little of sophistry, to bring anything within the growing trajectory of ‘economic relations' comes within this expression. These words used in Section 90(1) (a) bring to our mind what C.S Calverley said, “ And as to the meaning, it's what you please'. And W.S. Gilbert rightly said: “ The meaning doesn't matter if it's only a chatter of a transcendental kind.” Then, what is the predicate, what is the referent of these words which would guide the Executive in entering into the Agreements with other countries? What are the intelligible guidelines to the Executive for framing the terms of such Agreement? It is all fog, mist, and smog. Should we grant the Executive such limitless powers in open-ended terms? And that to within the jurisprudence of the income-tax law?

(f) This Petitioner submits that the terms in sub-section(3) raise an important constitutional question. Such provisions as in sub-Section (3) would create serious problems in judicial interpretation of terms which like Puck in Shakespeare's Midsummer Night's Dream can be made to put on even an ass's head. In the process of clarifying terms such meaning can be jetted into them that all, including lexicographers, courts, and ordinary citizens, would feel aghast and flabbergasted. The Petitioner submits that sub-Section (3) of section 90 offends common sense.

(g) The argument that the insertion was called for because of different and conflicting interpretation by the tax authorities is untrue: let the Respondents furnish a single instance in support of its wild assertion. The only purpose was to have uncanalised power most delicious for those who want to abuse that.

(iv) Propriety of Delegation u/s 90 of the Act [Point IV in the C.A,]

91 . There is no excessive delegation as sufficient guidance to the authorities have been given.[A.N. Parasuraman vs Tamil Nadu (1980) 4 SCC 63; Babu Ram Jagdish Kumar vs Punjab (1979) 3 SCC 616; UoI vs Azadi Bachao Andolan (263 ITR 706).

Comments in Reply:

(a) This Petitioner does not quarrel with what was said in the headnote of Parasuaman , as reported in the AIR.

This Petitioner submits that the words used in the Sections 90 and 90A are so amorphous, nebulous and malleable at will in meaning that they show a grant of impermissible delegated power to the Executive. Before these substitutions by the Finance Acts 2003 and 2006, the Section 90 was not using any word of such imprecise meaning. The possibility of divergent views of the words before such statutory changes was there but it was no more in width and depth than other words which keep on coming before our Courts for interpretation, or construction.

(b) This Petitioner submits that the Respondents have totally misunderstood the observations in UoI vs Azadi Bachao Andolan, quoted in extenso at pp. 24-25 of the Counter-Affidavit. The Respondents failed to notice the following points:

(i) In UoI vs Azadi Bachao Andolan the D.B. of two Hon'ble Judges nowehere considered the question of ultra vires within the parameter of our Constitution. At best, the observation in the case pertained to the delegation of power to enter into a tax treaty as granted by Section 90 of the Income-tax Act, 1961. The heart of matter of this case involved absolutely no constitutional question. The very first para in Azadi Bachao states the issue before the Court. [119]

(ii) The Section 90(1) was before the Hon'ble Court because 90(3) and 90A was yet to be framed. Section 90(1) as it stood at that time did not contain a single word of amourphous nature: the Section had used words with stable meaning which had already received judicial construction. So much so that the concept of “double taxation” stood defined in the Shorter Oxford and Black's Law Dictionary even, As the trajectory for reflections was entirely different when Azadi Bachao was decided, the Respondents made mistake in relying on such observations.

(iii) As the issue before the Hon'ble Court was not to evaluate it on our Constitution's anvil, the Hon'ble Court was right to the extent it goes. But in this present question it is the Constitutional question that matters most. Even if what the Court says in Azadi is taken to the law, that is bases on the import of Section 90(1) as it then stood. Even in that context the question still survive for judicial determination: whether the delegation of power under Section 90(1), as it stood then, had granted to the Executive power to tax or untax per its decision taken in an opaque administrative system. In the Writ Petition even the constitutional propriety of Section 90(1), as it stood then, is under consideration as, in this Petitioner's view, this sort of even legislative delegation is as it contravenes Art. 265 of the Constitution, besides transgressing other constitutional limitations discussed by the Petitioner in the Writ Petition.

(iv) It is a constitutional principle of highest importance that neither we can be taxed through an executive fiat, nor untaxed through an executive concession. This Petitioner has already referred to the observations in H.R.& G. Industries v. State of Rajasthan ( A I R 1964 Raj. 205 at 213) that “It is well established that the power to exempt from tax is a sovereign power ……..”

(v) This Petitioner submits that the Respondents have not responded to this Petitioner's submissions in para 39 to 49 (pp. 42-47) of the Writ Petition.

(v) Propriety of Delegation u/s 90A of the Act [Point V in the C.A.]

92. The Respondents says that Section 90A of the Act gives sufficient guidance for the exercise of power, but this insight is denied to me. This Petitioner has stated his case in para 49- 50 (at pp. 47-50) of the Writ Petition which the Respondents have unfairly ignored.

This Hon'ble Court may appreciate this Petitioner's plea keeping in view

“…The fact, is, however, that nobody on earth can be trusted with power without restraint. It is ‘of an encroaching nature', and its encroachments, more often than not, are for the sake of what are sincerely believed to be good, and indeed necessary, objects.” [120] C. K. Allen

“As has been seen, the courts are to-day resistant to the whole notion of uncontrollable power and this is the best security against another lapse.” (Prof. Wade [121] )

(vi) The Theory of Adoption & Art. 73 of the Const. [Point VI in the C.A.]

93. Section 90A “was inserted by the Finance Act 2006 empowering the Central Government to adopt any agreement made between specified associations for double taxation relief, subject to conditions specified therein. This is in accordance with the powers vested with the Executive under Article 73 of the Constitution.” [C-A. p. 26].

(i) The text of Section 90A is quoted in para 49 of the Writ Petition [page 47-48]. This theory of Adoption, as spelt out in Section 90A is shockingly unreasonable: hence it is in breach of the Doctrine of Equality, and subversive of Judicial Review, Rule of Law, and the established principles of International Law in tune with our Constitution. Hence, in effect, it offends our Constitution and democracy in various ways: to mention a few---

(a). It is strange why the agreements between these private entities bask under the regime of bilateral Treaty between two States. Under the Income-tax Jurisprudence the sovereign foreign governments are never taxed unless they undertake commercial operations for profit. It is understandable as the general norms in the comity of nations. But why should the private persons conducting taxable events be granted tax exemption both the State of Residence, and the State of Source. K. Srinivasan, Double Taxation Avoidance Agreement,( p. 4.153 ) is correct in stating:

“It is necessary to add that since every DTAA draws its authority or sanction from section 90, it is only if section 90 is attracted that the question of the terms of the DTAA prevailing against the letter of the law will arise. Section 90 becomes relevant only where some item of income derived by an assessee is taxed both in India and the treaty country. An essential condition for not charging tax on an income otherwise liable to tax in India is that is has already suffered or will suffer tax in the treaty country if exempted in India. The Revenue authorities in India are, therefore, entitled to satisfy themselves that the income in question has not been subjected to tax in the treaty country before waiving the Indian tax that is legitimately leviable on it.”

Now the things are made worst by allowing the private operators to derive Treaty benefits through proxy. The supervision which is to be kept by the Government would be meaningless as in this phase of Economic Globalisation, the Executive Government is now a government sponsored by the Corporate imperium which has established a Rule of Market ( Pax Mercatus

(b) These adopted Agreements would ipso jure be a subversion of the Income-tax Act by depriving the lawful jurisdiction of the statutory authorities by providing the resolution of DTAA tax disputes under the MAP procedure; and also providing when such disputes can be taken to the Council for Trade in Services: and thereafter paving the way to the ICJ, and then to the Security Council (then, perish the thought, to the cruise missiles) . This is again an attempt to establish two systems of judicial administration: one for us and the other for the foreigners and masqueraders of all sorts. Grounds 42-47 in the Writ Petition are directed to the subversion of the role of our Judiciary and the Rule of law . David Korten rightly calls the Disputes Settlement Body of the WTO as “the World's Highest Judicial and Legislative Body” [122] . Now in terms of Section 90A even the private economic gladiators, by not only the Law of Nationality but also the provisions of MAP, read with Art. XII(3) of General Agreement on Trade in Services, can adopt foreign fora thereby precluding our Courts of their constitutional jurisdiction.

(c ) This would promote a dense opaque system under public administration of this country as it can facilitate an infamous Arthur Anderson (India) to agree to the no less infamous WorldCom of the USA to bring Indian taxation to zero, and to frustrate all efforts at investigation and tax-recovery.

(d) Section 90A is as much exposed to the criticism on the count of impermissible delegation as is Section 90 of the Act.

(e) This Petitioner submits that the Respondents have not responded to this Petitioner's submissions in para 40-51 (pp. 48-51) of the Writ Petition.

(ii) The Respondents are incorrect in stating that this Section 90A “is in accordance with the powers vested with the Executive under Article 73 of the Constitution.” The Respondents should have appreciated that

“….in our Constitution the power to legislate in respect of a general subject of legislation does not carry with itthe power to impose a tax in respect of it. For the scheme of our legislative Lists I and II shows that general subjects of legislation and the subject matter of taxes have been provided separately.” [123]

Article 265 of the Constitution

94. Articles 21, 31(1) (as it originally was), and 265 of our Constitution deserve to be noticed:

Art. 21: “No person shall be deprived of life and personal liberty save by the authority of law.”

Art. 31(1): “No person shall be deprived of his property save by the authority of law.”

Art. 265: “No tax shall be levied or collected except by the authority of law.”

Justice Shah in M.P. v. Bharat Singh [124] in which he said “every act done by Government or by its officers must , if it operate to the prejudice of any person be supported by some legislative authority.” This fundamental constitutional principle was felicitously set forth in Eshgabayi Eleko v. Govt. of Nigeria [125] [14] : per Lord Atkin--

“In accordance with the British jurisprudence no member of the executive can I interfere with the liberty and property of a British subject except on the condition that he can support the legality of his action before a court of justice .” ( Emphasis supplied.)

The Lists provide a catalogue of diverse subject matters for legislation (Art. 246). Entry 82 of the Union List provides the subject –matter which led to the Income-tax Act, 1962. The following points naturally follows:

(a) No law of Income-tax could have been framed under Entry 82 of the Union List unless the Constitution gives s specific power (as under Art. 265) to enact a legislation;

(b) Without Art. 265, even the Executive Government could have imposes taxes by exercising power under Article 73 read with Art. 253 of the Constitution.

(c) The law of Income-tax framed in pursuance to power under Article 265 must conform to the Constitutional limitations as the power of enactment under Art. 246 is subject to the Constitution.

Hence the Tax Treaties cannot be framed under Article 73 of the Constitution. Such Treaties can be done only under Section 90 or 90A read with Article 265 of the Constitution of India.

(vii) MAP's statutory backing [Point VII of the C.A.]

95. The challenge …to the extent that the provisions to MAP is ultra vires and without statutory foundation is also not maintainable.” [C-A. p. 28].

Comments in Reply:

The Respondents are not correct in asserting that MAP has a statutory backing. This is so for the following reasons:

(a) The Tax Treaties are never brought before Parliament, as is done in the U.K., the U.S.A. and many other countries [126] . They are pure and simple administrative acts done under the opaque system.

(b) It is not possible to draw a statutory authority from Section 90(1) as there is not a single word therein which can be interpreted as the statutory source for provisions like MAP.

(c ) Nor it is possible to draw this authority for MAP for the “implementation” as used in Section 90(1). The Concise Oxford defines its legal sense as: “performance of an obligation”. Under International Public Law the ‘implementation' is used as compliance with such statutory and constitutional provisions which are essential for a Treaty's domestic operation. This authority granted by Section 90(1) can not be stretched to provide an authority for the framing MAP as

(i) MAP subverts the statutory and constitutional control of tax determination;

(ii) MAP subverts the statutory jurisdiction to exercise their jurisdiction as per the Income-tax Act, 1961;

(iii) MAP transgresses constitutional limitations ( as imposed by the Fundamental Rights and the Basic Structure of our Constitution) on the Central Government's Treaty-making power;

(iv) The points (i to iii) find support from a recent decision of the Constitution Bench of our Constitution in Commissioner of Central Excise, Bolpur Vs M/s Ratan Melting & Wire Industries [2008-TIOL-194-SC-CX-CB]

(d) Nor this authority to frame MAP can be derived from Section 90 (2) of the Act. Section 90 (2) of the Income-tax Act contemplates the transmission of the statutory benefits (on account of some statutory change) to the beneficiaries of a tax treaty. It does not contemplate the reverse: that is, transmission of benefits ab extra and de hors the Act by overriding its provisions. The object of section 90 (2) as inserted by the Finance (No. 2) Act, 1991, is to grant the benefit of the Income tax Act as operative within domestic jurisdiction to even those who are beneficiaries under DTAA so that they are not deprived of the benefits to which other taxpayers would be entitled. It makes the statute prevail to the benefit of the treaty beneficiaries who without Section 90(2) could not have got that. [The object of sub-section (2) to section was inserted by the Finance Act (No. 2) Act, 1991 was brought out in the Board's Circular No 621 of December 19, 1991 (quoted at page 879 Chaturvedi & Pithisaria's Income Tax Law, 4 th ed.Vol. 7)]. [127]

(e) What is the import of “implementation” is also the import of such expressions as “ that it is expedient that those arrangements should have effect” occurring in Section 778 of the British Income and Corporation Tax Act, as the authorization do much more is conferred in Section 791 granting powers to make Regulations section 788

“The Board may from time to time make regulations generally for carrying out the provisions of section 788 or any arrangements having effect thereunder, and may in particular by those regulations provide…….”

The MAP provisions in the Tax Treaties concluded by Britain and the USA are broadly the same as in our Tax Treaties, because these countries have drawn on the OECD models of the tax treaties. In Britain, the government found it appropriate to provide MAP with a statutory foundation. Under the non obstante clause of Section 778 (3) of the British I.C.T.A. 1988 grants the MAP provisions an override on the Act. In India there is no such provision. Yet when in the United Kingdom it was considered expedient to incorporate the provisions pertaining to the Mutual Agreement Procedure it was felt that it could not be done without a specific statutory mand for so doing. It is for this purpose that Section 815 AA was introduced which inserted a new Section 815AA into the British Taxes Act [128] .

(viii) Power under Rule 295(1)(h) of the IT Act [Point VIII in the C.A.]

96. Section 295(2)(h) empowers the Central Board of Direct Taxes to make rules providing procedure for giving effect to the terms of any agreement for granting relief in respect of double taxation…..”. [C-A. p. 29]. Thus MAP has a statutory backing.

Comments in Reply:

(i) The Rules can be framed by the CBDT “for carrying out the puroses of this Act”, subversion of the statutory and constitutional control can never be “for the purposes of the Act”.

(ii) Section 295(h) contemplates a procedure to give effect to the terms the Agreement which is within the province of Section 90 of the Act. MAP in itself is outside this ambit. It may be in a Tax Treaty, but for it a statutory foundation has to be provided specifically and ab extra .

(iii) As the Rule framed under Section 295 in exercise of power granted to the CBDT, but for that reason alone it does not become an integral part of the statute.

(ix) MAP for speedy disposal [Point IX in the C.A.]

97. “MAP has been provided for speedy disposal of cases where taxation is not in accordance with the DTAA.” [C-A. p. 35]

Comments in Reply:

The assertion is not borne out of facts. Besides it is not relevant.

(x) MAP & Fundamental Rights[Point X in the C.A.]

98. The challenges under Articles 14, 19, and 21 of the Constitution to the Rule and MAP deserve to be rejected. [C-A. p, 36].

Comments in Reply:

The Petitioner has discussed in detail his challenges under Articles 14, 19, and 21, of the Constitution vide Writ Petition pages 92 to 112; Grounds I.i to 7B

(xi) MAP for the treaty implementation [Point XI in the C.A.]

99. “Towards the end of 1990s it was noticed that although cases were resolved at the level of the competent authorities, there were difficulties in getting the decisions implemented by the field officers as the concept of MAP was not well-known. [C-A. p. 36].

Comments in Reply:

(i) More candid comment would have been that after 1990s neo-liberal paradigm of economic management was established in terms of the Globalised economic architecture under corporate imperim and the global economic architecture; and MAP was provided to provide an alternative forum under an opaque system for the their benefits.

(ii) Nothing ever came in public domain which can bear out what the Respondents say.

(xii) Section 90: Art. 73 [Point XII in the C.A.]

100. The power to enter into Agreement: Section 90 of the Act and Article 73 of the Const.

Comments in Reply:

Vide para at p. above concluding---

“ Hence the Tax Treaties cannot be framed under Article 73 of the Constitution. Such Treaties can be done only under Section 90 or 90A read with Article 265 of the Constitution of India.” Even our Supreme Court in Azadi Bachao Andolan observed: “The treaty making power under article 73 is confined only to such matters as would not fall within the province of article 265.

(xiii) Treaty-making procedure [Point XIII in the C.A.]

101. ”In exercise of power s conferred under section 90 of the Act, the Central Government has entered into DTAAs with various countries.” [C-A, 40]

Comments in Reply:

The right perspective is to examine the competence of the Central Government within the parameters and on the terms of our Constitution. This may lead to reading down the provisions of Sections 90 and 90A, and if reading down is not possible to save them on constitutiona grounds, they may run the risk of being declared ultra vires .

(xiv) The extent of Parliament's sanction [Point XIV in the C.A.]

102. The impugned Rule has Parliamentary sanction as it had been laid before it in view of the provisions of Section 296 of the Act. [C-A. pp. 41-42]

Comments in Reply :

The Respondents in asserting that mere laying of the impugned Rules before the Parliament provides them a statutory backing, or by implications, its approval. Section 295 that the Rules be placed before Parliament; but that account they do not acquire the status of a statute. [Bharat Hari vs CWT [1994] 207 ITR 1 (S.C.)

(xv) Sovereign power [Point XV in the C.A.]

103. “The power of entering into a treaty is an inherent part of the sovereign power . [C-A. p. 47]

Comments in Reply:

The Respondents are not correct in their view for reasons already set forth:

vide para p. 37 of this Written Submissions

vide paras 74-83 supra; pp 58-61 above; and

W.P . paras 19A pp. 27-28D; Annex ‘C'.

(xvi) Different Procedures for Treaty-making[Point XVI in the C.A.]

104. In framing fiscal treaties different countries have different procedures. India it the domain of the Executive. [C-A. p. 48]

Comments in Reply;

(i) This Respondent agrees that Treaty-making procedures are country-specific. The points to be seen are what can be done in this open democracy having a polity under which the organs of the State are the constitutional creations with granted power bound not to transgress the constitutional limitations.

(xvii) The DDTA overrides the Act [Point XVII in the C.A.]

Under Section 90(2) an “assessee who is covered by the provisions of the DTAA is entitled to seek benefits thereunder, even if the provisions of the DTAA are inconsistent with the provisions of the Income-tax Act 1961. [C.A. p. 49] [UoI vs Azadi Bachao Andolan (2003) 263 ITR 706 SC; CIT vs Kulandgan (267 ITR 654 SC relied on,)

Whether a Tax Treaty can override the Statute

105.This issue under the perspective of our Constitution is being raised before this Hon'ble

Court for the first time. It offends the Rule of Law and the Constitution to say that it can override the statute. The conditions of Parliament's legislative supremacy in India can never be modified by any act of the Executive. The Executive cannot claim the Dispensing Power which the Stuarts had claimed once upon a time, and Hobbes had theorized in his monstrous Leviathan. A variant of this was exercised by Chancellor Bismarck before the First World War, and by Hitler on the wreck of the Weimer Constitution in the interregnum between the two World Wars.There is nothing anywhere in the Constitution of India or the Income-tax Act to support this sort of override. A conclusion so momentous, so devastating, and so dangerous to democratic polity must not be drawn from mere wool. It goes against the very grain of our Constitution and Rule of Law.

106. This Hon'ble Court may consider the issue in the perspective of a PIL, and not get persuaded by certain dicta here and there in some judicial decisions. In none of such cases the issue had been joined to be contested on the constitutional grounds. In Rupa Ashok Hurra vs. Ashok Hurra & Anr [(2002 (4) S.C.C.388), our Supreme Court had observed:

“13. It is, however, true that in Supreme Court Bar Association v. Union of India and another (1998 (4) SCC 409), a Constitution Bench and in M. S. Ahlwat v. State of Haryana and another (2000 (1) SCC 278) a three-Judge Bench, and in other cases different Benches quashed the earlier judgments/orders of this Court in an application filed under Art. 32 of the Constitution. But in those cases no one joined issue with regard to the maintainability of the writ petition under Art. 32 of the Constitution. Therefore, those cases cannot be read as authority for the proposition that a writ of certiorari under Art. 32 would lie to challenge an earlier final judgment of this Court.”

In fact this issue had not been joined for forensic context in any of the decisions where obiter observations on ‘Treaty override' was made: hence such dicta be allowed to remain confined to the facts of those cases. Our Superior Court is yet to declare the law on the point.

107. There is nothing in the Income-tax Act 1961, or in any other law of our country to grant the terms of a tax treaty a priority or an overriding effect over the Statute. To the extent a tax treaty conforms to the limitations of Section 90 (1), its terms pro tanto have an overriding effect. But this overriding is accorded by the Sections 4 and 5; it is not on account of any fount of power in the treaty per se . In whichever country a tax treaty is given an overriding effect it is so provided by the supreme legislation . This would be clear from the following:

(a) Under Section 788 (3) of the United Kingdom's Income and Corporation Taxes Act 1988 it is specifically provided through a non obstante clause [129] .

(b) Section 4(2) if the International Tax Agreements ACT, 1953 OF Australia provides:

“(2) The provisions of this Act have effect notwithstanding anything inconsistent with those provisions contained in Assessment ACT (other than sections 160AO or Part IV of the ACT) or in any Act imposing Australian tax.'

(c) In Canada, the Acts introducing each treaty into domestic law also provide that the treaty will prevail over domestic law Thus section 5 of the Income Tax Conventions Implementation Act , 1986 provides:

“ (1) Subject to subsection (2), in the event of any inconsistency between the provisions of this Part or the Agreement and the provisions of any other law, the provisions of this Part and the Agreement prevail to the extent of the inconsistency.

“In the event of any inconsistency between the provisions of the Agreement and the provisions of the Income Tax Conventions Interpretation Act, the provisions of this Act prevail to the extent of the inconsistency.”

( d ) In Germany s. 2 of the General Tax Code provides:

“Treaties with other States as defined by Art. 59 para 2 (1) of the Basic Law take precedence over national tax laws if the treaties have been incorporated properly into applicable national law.”

(e) In France the Constitution of the Fifth Republic provides in Art 55

Title VI:

“Art. 55 Duly ratified or approved treaties or agreements shall, upon their publication, override laws, subject, for each agreement or treaty, to its application by other party.”

(f) The United States Constitution provides in Article VI, cl. 2, that:

* * all Treaties made, or which shall be made, under Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

Thus, all treaties made under the authority of the United States are to be the supreme law of the land and superior to domestic tax laws.

(g) In Belgium according to the Cour de Cassation : May 27, 1971, Etat Belge C. ‘Fromagerie Franco-Suisse Le Ski” S.A. (1971) Pas., I, 886. The Belgian Constitution is silent on this point but case law establishes that a treaty approved by the Belgian Parliament and having direct effect prevails over existing and subsequent domestic legislation.

(h) “In other countries, treaties have a superior status to domestic legislation: in some they are regarded as special law ( lex specialis ). [as in Spain]. The issue of conflict then falls upon the maxim ‘ lex posterior generalis non derogat legi priori speciali' ( a subsequent general law does not override a prior special law). Tax conventions are given special status , for example, in Germany, France, the Netherlands, Japan, and Belgium. [130]

( i ) That the Constitution of India does not permit limitations on India's Sovereign power in favour of any international organization or treaty though it is so in several constitutions in the world . [viz. Belgium (Art 25bis ), Denmark (Art 20), Italy (Art 11), the Netherlands (Art 92), Spain (Art 93), the Federal Republic of Germany (Art 24)……

108.Every great constitutional democracy gives priority to its law over executive acts. The U.S-India tax treaty too provides that the law of the land cannot be ridden roughshod. Even when in the U.S a treaty is the supreme law of the land it is not permitted to play truants with the domestic law. This aspect of the matter deserves to be stressed as the Hon'ble Supreme Court has held a treaty a function of sovereign power. It is to be noted that India's Commerce Minister by signing the Uruguay Round Final Act has virtually subjected the whole country to obligations of serious nature under the threat of international delinquency. Under this pactum de contrahendo there are provisions which would circle out the role of the courts including that of the Supreme Court by privatization of justice under the aegis of the WTO's Disputes Settlement Body. But the U.S.A by statutory provisions maintains the overriding effect of the law of the land. This Hon'ble Court may consider the following provision in Section 3512 of the U.S.Code dealing with “ Relationship of agreements to United States law and State law”:

“(a) Relationship of agreements to United States law (1) United States law to prevail in conflict. No provision of any of the Uruguay Round Agreements, nor the application of any such provision to any person or circumstance, that is inconsistent with any law of the United States shall have effect. (2) Construction Nothing in this Act shall be construed - (A) to amend or modify any law of the United States, including any law relating to - (i) the protection of human, animal, or plant life or health, (ii) the protection of the environment, or (iii) worker safety, or (b) to limit any authority conferred under any law of the United States, including section 2411 of this title, unless specifically provided for in this Act.” No great country allows its law to be bent or breached by an executive act. Parliamentary enactments cannot be overridden by the Executive fiat, as it has pathogenic effects destructive of the very fibre of a democracy. One more is drawn from the tax treaties themselves. The import of the following provisions in the Indo-US, and the Indo-UK tax treaties be examined; and critically compared with the corresponding provisions under the Indo-Mauritius DTAC: ( a ) Art. 25 of the Indo-U.S. Convention for Avoidance of Double Taxation: In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof ), the U.S. shall allow to a resident or citizen of the U.S. as a credit against the U.S. tax on income… ( b ) Art 24 of the Indo-UK Convention for Avoidance of Double Taxation (1) Subject to the provisions of the law of the United Kingdom regarding the allowances a credit against the United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle….. ( c ) Art 23 of the Indo-Mauritius DTAC (1)The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention. 109. In the United Kingdom too the position is the same ( despite the fact that a tax treaty is done after the approval by the House of Commons having an exclusive control over taxation, per the provisions of the Parliament Act 1911 ). But in India there is no Parliamentary supervision of the tax treaties. Public Opinion, which Sir Ivor Jennings considers the supreme pre-condition for the working of a democratic constitution, is neither vigilant nor well informed. Under the Indo-Mauritius DTAC all our laws (including our Constitution?) are subject to the tax treaties .

110. In the Common Law countries In the United Kingdom [Australia, Canada (except Quebec) the United States (except Louisiana)] traditional view is that an Agreement, whatever be name given, “once entered into domestic law (either automatically, after approval, or by transformation through legislation) has no higher status than any other law. The question of conflict may fall to be resolved, then, on the basis of the maxim “ lex posterior derogat legi priori ” ( a subsequent law overrides a prior law).” [131]

(a) A tax treaty is a self-executing treaty. “ Tax treaty rules assume that both contracting States tax according to their own law; unlike the rules of private international law, therefore, treaty rules do not lead to the application of foreign law.” [132] “The binding force of the treaty under international law is to be distinguished for its internal applicability. Internal applicability is a consequence only of treaties which-like tax treaties – are designed to be applied by domestic authorities in addition to obligating the States themselves, in other words, self-executing treaties.” [133] Tax treaty rules assume that both contracting State tax according to their own law, unlike the rules of Private International law ; therefore, treaty rules do not lead to the application of the foreign law.

(b) When a tax treaty is legislated as a whole investing all its provision with legislative force it has the force of a statute subject only to constitutional limitations, and radiation from the Fundamental Rights ( as in the U.S.A. or India) This common law view is manifested in Art. 231(4) of the South African Constitution:

“ (4) Any international agreement becomes law in the Republic when it is enacted into law by national legislation; but a self-executing provision of an agreement that has been approved by Parliament is law in the Republic unless it is inconsistent with the Constitution or an Act of Parliament”

(c) A Tax Treaty is sui generis because, whether it is done at the international level or any other level, it must conform to the statute as a tax treaty is done not under the Prerogative, or the executive power but under specific Parliamentary mandate..

(d) It is worthwhile to note that through a statute it is the sovereignty of Parliament, as invested into it by the Constitution, expressed. Through a treaty it may accept some auto-limitations as a mark of deference to the comity of nations and the rules of international law, but it remains sovereign nonetheless. This position has been succinctly brought out by Laws LJ. in Thoburn v Sunderland City Council [134] :

“[59] Whatever may be the position elsewhere, the law of England disallows any such assumption. Parliament cannot bind its successors by stipulating against repeal, wholly or partly, of the 1972 Act. It cannot stipulate as to the manner and form of any subsequent legislation. It cannot stipulate against implied repeal any more than it can stipulate against express repeal. Thus there is nothing in the 1972 Act which allows the Court of Justice, or any other institutions of the EU, to touch or qualify the conditions of Parliament's legislative supremacy in the United Kingdom. No because the legislature chose not allow it, because by our law it could not allow it. That being so, the legislative and judicial institutions of the EU cannot intrude upon those conditions. The British Parliament has not the authority to authorize any such thing. Being sovereign, it cannot abandon its sovereignty. Accordingly there are no circumstances in which the jurisprudence of the Court of Justice can elevate Community Law to a status within the corpus of English domestic law to which it could not aspire by any route of English law itself. This is, of course, the traditional doctrine of sovereignty. If is to be modified, it certainly cannot be done by the incorporation of external texts. The conditions of Parliament's legislative supremacy in the United Kingdom necessarily remain in the United Kingdom's hands. But the traditional doctrine has in my judgment been modified. It has been done by the common law, wholly consistently with constitutional principle.”

( e ) In a tax treaty, to which the statute does not give an override, can never

prevails on the statute. This point is clearly recognized in the leading case of Collco Dealings LTD v. IRC [135] wherein the supremacy of the domestic tax statute was recognized. Viscount Simonds aptly stated:

“But it is said in the first place that it is not entitled under an enactment but under an agreement ( which the appellant company, to add weight to argument, prefers to call a treaty ). This contention cannot be accepted. Its rights arise under the Act of Parliament which confirms the agreement and gives it the force of law.”

Neither Sections 4 and 5 nor the provision of Section 90 of the Income-tax ACT, 1961 could authorize this grant of override to a Tax Treaty. [136] The structure of Section 90(1) [137] of the Indian Income–tax Act and that of Section 788 of the British I.C.T.A. , 1988 [138] For rendering the terms of a tax treaty functional and operative both the British Act and the Indian Act provides an analogous protocol. The expression “it is expedient” in the British Act is semantically same as “as may be necessary” in the Indian Act. “Expedient” means” “Advantageous (in general or to a definite purpose); fit, proper, suitable to the circumstances of the case” [139] To “make such provisions as may be necessary for implementing the agreement” under the Indian Act is semantically analogous with “ then those arrangements shall have effect…” under the British Act. The word ‘implement” means, as the New Shorter Oxford Dictionary says, “put ( a decision or plan ) into effect”.

111. That Section 90 (2 ) of the Income-tax Act contemplates the transmission of the statutory benefits ( on account of some statutory change) to the beneficiaries of a tax treaty. It does not contemplate the reverse: that is, transmission of benefits ab extra and de hors the Act by overriding its provisions. The relevant provisions under the statutory provisions in the United Kingdom and India would show that a tax treaty can never override the statute. Under Section 778 (3) of the British I.C.T.A. 1988 specifically by enacting a non-obstante clause grants the provisions conforming to Section 788(1) an override on the Act. In India there is no such provision. When in the United Kingdom it was considered expedient to incorporate the provisions pertaining to the Mutual Agreement Procedure it was felt that it could not be done without a specific statutory mandate. The paragraph 20 which inserted a new Section 815AA into the British Taxes Act says:

“ 35. The paragraph provides statutory authority for the Inland Revenue to give effect to the solutions and agreements reached under the mutual agreement procedure …

36. Section 815AA (3) enables a consequential claim for relief to be made within twelve months of the notification of a solution or mutual agreement even if other time limits have expired.

37. New section 815AA applies so as to give effect to a solution or mutual agreement from the date of enactment (i.e. existing cases are covered0. The time limit for presenting a new case , following enactment, is six years after the end of the chargeable period to which the case relates or any any such longer period as may be specified in the relevant double taxation agreement.”

There is a recent legislative indication, which shows that our Parliament does not consider it proper that a tax treaty should override the Statute. If the DTAC could be in itself enough there could be no need to amend Section 90(1) of the Income-tax Act by Finance Act 2002. This negatives the view that a tax treaty can override the statute. Besides, this brings out one more point of great importance: our Parliament amended Section 90 to provide the Preamble to the Indo-Mauritius DTAC a statutory backing.

112. Sri K Srinivasan, the author of the Guide to Double Taxation Avoidance Agreements [140] has examined: whether a tax treaty can override the Income-tax Act. He has observes:

“ The doctrine of reciprocity in the tax treatment of their respective citizens by the Contracting States is written into sections 90 and 91 of the Act; and so is the necessity for the agreements into which the Government may enter with other countries, ensuring that they contain no provision which is repugnant to section 90' It is obvious that no treaty into which India enters can contain any term or clause repugnant to the laws of India: municipal law will prevail if there is any inconsistency, except to the extent that section 90 permits or else the Act will have to be amended to avoid the inconsistency”.

Dicta in Azadi Bachao and Kulandgan do not help the Respondents

113. The Respondents went wrong in relying on certain observations in Azadi Bachao Andolan [2003-(263)-ITR -0706 –SC] repeated in CIT vs P. Kulandagan Chettiar in support of their position. [141] But the Res pondents failed to take note of the following material points which render their reliance of such observations entirely erroneous and irrelevant. Some of reasons for thinking so are these;

(i) Azadi Bachao Andolan, which is followed in CIT vs P. Kulandagan Chettiar did not consider the issue of vires under the parameters of our Constitution. The issue under the judicial focus [142] in Azadi needed no consideration of this high constitutional issue. The Judgment makes this point clear when it says:

“ . Whether section 90 ought to have been placed on the statute book, is also not our concern. Section 90, which delegates powers to the Central Government, has not been challenged before us, and, therefore, we must proceed on the 33 footing that the section is constitutionally valid.”

(ii) The observations in Azadi Bachao Andolan is unconsidered obiter. Such observations do not lay down law. In Orissa v. Sudhansu Sekhar Misra [143] this Hon'ble Court cited with approval the following observations of the Earl of Halsbury L.C.:

(iii) Its repetition in Kulandgan too is better: hence cannot lay down

operative law.

(iv). This Pettioner further submits that Azadi Bacho can no longer stand comfortably with the recent decision of the Constitution Bench in Commissioner of Central Excise, Bolpur vs M/s Ratan Melting & Wire Industries [2008-TIOL-194-SC-CX-CB]: hence stand by implication overruled. It relied on Dhiren Chemical Industrie, and its view has not been approved. Azadi relied on certain observations in Dhiren Chemicals which stand explained in Ratan . In effect, it can be said that in Azadi the Court mistook the observations in Dhiren : hence went wrong in its legal perspective, and adopted an erroneous view as to the Board's competence in issuing circulars.In Azadi , the D.B. of two Hon'ble Judges felt that the maxim judicis est jus dicere, non dare pithily expounded the duty of the court. It felt that its duty was to decide what the law is, and to apply it; not to make it. This narrow perception of judicial role had an obvious bearing on the actual decision of the Court. Similar role perception in Assistant Commissioner of Income-tax v. Velliappa Textiles & Ors [(2003) 184 CTR Reports 193] was disapproved by the Constitution Bench in Standard Chartered Bank [2005] 275 ITR 81. In Standard , Justice B.N. Srikrishna, who was the author of the judgment in Azadi , in his dissenting Judgment acknowledged this in these telling words:

“ The interpretation suggested by the learned counsel arguing against the majority view taken in Velliappa , which has appealed to our learned brothers Balakrishnan, Dharmadhikari and Arun Kumar, JJ., would result in the Court carrying out a legislative exercise thinly disguised as a judicial act.”

(v) As so many erroneous ideas have been telescoped in the above paragraph they deserve to be taken up in separate paragraphs. This exercise has become essential as the heart of the judicial reasoning inheres in these ideas yoked together. It goes thus:

(a) Section 90 empowers the Central Government “to issue notification for the implementation of the terms of a double taxation agreement.”

(b) The provisions of such notified agreement “would operate even if inconsistent with the provisions of the Income-tax Act”.

But this is not what Section 90 of the Act says. The referent of the expression “provisions” is not the content ( the individual terms) of an Agreement but its referent is the expression “implementing”. The expression “make provision” has been thus explained in the New Shorter Oxford Dictionary :

“The action or an act of providing something; the fact or condition of being provided. Freq. In make provision , make prior arrangement or preparation ( for ), supply necessary resources ( for ).”

The Collins Cobuild Dictionary explains the expression “make provision”:

“If you make provision for something, you prepare for it by making arrangements e.g. They made provision for the defence of England…”

(vi) And what is to be implemented is an Agreement. And the Agreement is what is done under Section 90 in terms of Section 90 (1). In order to be valid it must not transgress the limitations on power put by the said Section. The case amounts to this: whether in exercise of power to avoid double taxation it is possible to bring about a situation of no-taxation, or even a nominal taxation. The word “implementation” in the Section refers to “ the agreement” ; but this in no way validates what goes counter to the terms of that Section. The trajectory of the word “implementing” cannot reasonably be widened as to include whatever the Executive wants even at the wreck of the law. The Central Government is empowered by Section 90 to perform the following two tasks:

(a) to enter into an agreement with the government of any country for the purposes specified in the Section 90; and

(b) to make preparation for giving effect to that Agreement

within the domestic jurisdiction.

Implementation means, to quote COD, “ Law performance of an obligation”. Creation of a tax treaty is a precedent act; its notification and implementation are the subsequent acts. In causing operative effect both are integral but they are separate and distinct events. We can not draw something from a source where it does not exist. The word implementation in the context of Art 253 means a legislative implementation, whereas in Sec.90 it means administrative implementation as what the Central Govt does u/s 90 of the Act is to enter into an international contract. In exercise of this power to implement the range of the permissible power should not be transgressed. “Notification” is the official information to the all concerned within the domestic jurisdiction that an agreement with X country has been entered into.

The UoI's volte face

(vii) It is interesting to note the volte face ( a total change of position) that our Government presented before the Court. In course of the writ proceeding in Azadi Bachao Andolan the Law Officers of the Government of India ( Mr. Salve, the then Solicitor-General, before the Delhi High Court; and Mr. Soli Sorabji, the then Attorney-General, before the Supreme Court) asserted that the circulars are binding even de hors the law, but in Ratan's Case the Union of India (represented by Mr.Mohan Parasaran, ASG) contended that the law, whether statutory or Judge-made, could not be modified or overridden or diluted by the circulars. It held: A circular which is contrary to the statutory provisions has really no existence in law. The Court held also that the exclusion of judicial control under the executive fiat is bound to offend brazenly our Constitution itself: and hence such circulars/instructions would be clearly non est . In view of all this how can the Tax Treaty, being wholly the Executive's act, override the statute, and exclude Judicial Review.

Segment “F”

The Claim for Cost

114. It is fair to notice that there is an important distinction between (i) the merits of the claim, and (ii) the merits of bringing the claim.. If leave to move for judicial review has been granted, [as it has been in the present Case], then ex hypothesi, the claim is arguable.

115. As Lord Scarman said in Reg. v. Inland Revenue Commissioners, Ex parte National Federation of Self-Employed and Small Businesses Ltd. [1982] A.C. 617, 653:
"The curb represented by the need for an applicant to show, when he seeks leave to apply, that he has such a case is an essential protection against abuse of legal process. It enables the court to prevent abuse by busybodies, cranks, and other mischief-makers. I do not see any further purpose served by the requirement for leave."
In Regina v. Child Poverty Action Group [999] 347 1 W.L.R. it was observed; ‘The case of New Zealand Maori Council v. Attorney-General of New Zealand [1994] 1 A.C. 466 may (I emphasise "may") be an example of one of those rare cases in which it would have been appropriate to make a pre-emptive costs order . First, it was obvious that the point raised was one of great public importance, since it potentially involved the very survival of the Maori language. Secondly, so far as the merits were concerned, it was clear, by the time the stage of an appeal to the Privy Council had been reached, that there was much to be said in favour of the point sought to be argued by the appellants. This was not least because Cooke P. had dissented in the Court of Appeal.

116. In the present Writ Petition the issues raised are, to say with utmost good faith, are truly ones of general public importance. In Regina v. Child Poverty Action Group it was also observed:

“The court must also have regard to the financial resources of the applicant and respondent, and the amount of costs likely to be in issue. It will be more likely to make an order where the respondent clearly has a superior capacity to bear the costs of the proceedings than the applicant, and where it is satisfied that, unless the order is made, the applicant will probably discontinue the proceedings, and will be acting reasonably in so doing.”

117. It is amazing that the Union of India, which deed not feel it appropriate to ask the Petitioner in Shiva Kant Jha & Anr v. Union of India (2002) 256 ITR 563 (Del.) to show materials to substantiate the loss to the nation which was found as a fact by this Hon'ble Court [vide para 15 at p. 11 supra], has now chosen to claim cost from a PIL Petitioner!

1118. This Petitioner has already submitted while dealing with his locus standi [paras 15 at p. 11] that his interest in this PIL is analogous to that of Rees-Mogg. In R. v. Secretary of State for Foreign and Commonwealth Affairs, ex parte Rees-Mog the Queen's Bench Division granted locus standi to Lord Rees-Mogg on the sole ground that he brought “ the proceedings because of his sincere concern for constitutional issues.” [144]

119. This Prayer by the Union of India even a citizen, who acts in utmost good faith, must act with iron in the soul. Centuries back a great Sanskrit poet expressed, with a pathetic ring, this conundrum of our existence in these lines which time has not turned stale:

Narpathitkarta dyeshtan yanti lokeh,
Janpadahit karta tyajeyte parthivendre,
It mahat virodhe vartamane samano,
Nripatijanapadanan durlabha karykartah.

[Satisfy the King to invite the people's wrath,

Work for the people but to incur the royal wrath,

Such workers are rare who can work for their common weal,

Even by existing precariously on the cusp of this conundrum.]

Now from the sublime to the pedestrian: the UoI's claim for cost against a PIL of this sort, is saddening, to say the least. This Petitioner has no interest other than Rees-Mog's who had also tried, and tried only pro bono publico .

Part III

CONCLUSION

120. This Petitioner has invoked this Hon'ble Court's jurisdiction under Art 226 of the Constitution as in his considered view this is the most appropriate way to remove the gruesome democratic deficit, and to save the Constitution and the Rule of Law from their doom. The Executive loves to possess a hip-pocket of uncontrolled power; and the lobbyists and hirelings are out to trap us to become a Sponsored State. Walter Bagehot considered in 1867 the ‘cabinet' as ‘the board of control chosen by the legislature”. This Petitioner understands that two bills to make the exercise of Treaty-Making Power are being moved in Parliament. This Petitioner, reading the scenario all around, feels that the Constitution Bill may not be passed, and the Bill for legislative enactment may not have fate better than what Mr. Baby's Private Member Bill had ( about which a reference has already been made in the Writ Petition). Writing Glimpses of World History in 1930s, Pandit Nehru had said (at p. 823):

“Only last month English liberal said:

‘Our representative Parliament is rapidly becoming merely the machinery of registration for the dictates of a governing caucus elected by an imperfect and badly working electoral machine.'

Parliament has ceased to be what it was , and commands no respect. Great powers are given to the executive heads to do what they consider necessary without further reference to Parliament.”

Things are not much different even in the days we live.

Hence, in this Petitioner's view our Superior Judiciary is the only forum to get the ills righted. And hence this Writ Petition wholly pro bono publico is moved.

121. This Petitioner submits that he craves for leave to answer further the issues that the Respondents have evaded/not answered in their Counter-Affidavit; and the leave to exfoliate, on materials, the Grounds set forth in the Writ Petition. [To avoid repetition, they have not been even paraphrased in this Written Submission]. Hence, in the end, it is most humbly prayed that the Hon'ble Court may grant the Prayers set forth in the Writ Petition. [145] .

111. This Petitioner craves leave to develop his case in support of his position in the Writ Petition and in this Written Submissions in course of hearing before the Hon'ble Court through his arguments, oral and written.

Shiva Kant Jha

Petitioner-in-person

New Delhi: Jan. 1, 2009

[1] George Williams, Hillary Charlesworth, The Fluid State pp. 36

[2] SEE Minister for Immigration and Ethnic Affairs vs. Teoh (1995) 183 CLR 273. …..

[3] See Tavita v. Minister of Immigration [1994] 2 NZLR 257 suggesting that ratified but unincorporated treaty obligations are mandatory relevant considerations in statutory interpretation. Subsequent cases, however, suggest a less enthusiastic approach see Puli'uvra v. Removal Review Authority (1996) 2 HRNZ 510.

[4] SEE Baker v. Canada (1999) 2 SCR 817, [69]-[71]. As noted in dissent, the proposed use of the underlying values of an unimplemented treaty was ‘ not in accordance with the Court's jurisprudence concerning the status of international law within the domestic legal system': at [79].

[5] For the practice in other states, see Stefan A. Riesenfeld and Frederick M. Abbott (eds), Parliamentary Participation in the Making and Operation of Treaties: A Comparative Study (1994); Amwerican Society of International Law , National Treaty Law and Practice (3 volumes).

[6] The Bricker movement was also a thinly disguised defence of States' rights, aimed at ending the use of treaty law to trump State law; as illustrated in Missouri's unsuccessful challenge to a federal law implementing the Migratory Bird Treaty Missouri v. Holland , 252 US 416 (1920)

[7] Other recent documents showing a paradigm shift in the British approach are:

(a) The Governance of Britain Presented to Parliament

by the Secretary of State for Justice and Lord Chancellor by Command of Her Majesty: July 2007;

(b) House of Commons Public Administration Select Committee Taming the Prerogative: Strengthening Ministerial Accountability to Parliament;

(c ) Oral statement by The Right Honourable Jack Straw MP, Lord Chancellor and Secretary of State for Justice: on draft Constitutional Renewal Bill and White Paper;

(d) HOUSE OF LORDS: HOUSE OF COMMONS

Joint Committee on the Draft Constitutional Renewal Bill,

Session 2007–08 Draft Constitutional Renewal

Bill Volume I: Report

[8] Joseph Paige, The Law Nobody Knows (1997)

[9] Oppenheim , International Law ( Peace) ibid p 1232 para 606

[10] Oppenheim , International Law ( Peace) pp. 125-126

[11] (1995) 128 ALR 353, (1995) 69 ALJR 423

[12] AIR 1969 SC 783

[13] “ India's criminal IPR enforcement regime remains weak, with improvements most needed in the areas of border enforcement against counterfeit and pirated goods, police action against pirates and counterfeiters, judicial dispositions resulting in convictions for copyright and trademark infringement, and imposition of deterrent sentences. The United States urges India to address these issues during the coming year and thereby strengthen its IPR regime. To that end, the United States welcomes deeper cooperation with India…” http://www.ustr.gov/Document_Library/Reports_Publications/2006/2006_Special_301_Review/Section_Index .html

[14] http://www.osec.doc.gov/ogc/occic/301.html

[15] (1995) 128 ALR 353, (1995) 69 ALJR 423

[16] AIR 1960 S C 845

[17] R. v. Secretary of State for Foreign and Commonwealth Affairs, ex parte Rees-Mog [1994] 1 All ER 457

[18] . AIR 1952 Punj. 309 at 319.; Vide Annex ‘C' printed pp 14-15 being an extract from Shiva Kant Jha's Final Act of WTO: Abuse of Treaty-Making Power; and also Shiva Kant Jha , Judicial Role in Globalised Economy pp 306-307 [pub. By Wadhwa & Co,]

[19] [1905] 2 KB 391

[20] . 2001 Britannica Book of the Year . 191.

[21] Shiva Kant Jha , Judicial Role in Globalised Economy p. 281 [pub. By Wadhwa & Co,]

[22] It would be appropriate to test the Respondents plea on the touchstone of the logical maxim: reductio ad absurdum. Black's Law Dictionary says that it is Latin for 'reduction to the absurd'; and it is "in logic, disproof of an argument by showing that it leads to a ridiculous conclusion".

1. Can the Executive, through treaty terms, saddle this nation with an obligation to conscript its young men and women to combat as the 'strategic partners' to sacrifice themselves for the ignoble cause of protecting the economic interests of the Pax Mercatus promoted and protected by corporate imperium ? What if "We, the People" are used this way?

2. Can the Executive, through its treaty-making power, introduce corporate zamindari more noxious to the dignity and culture of the common men to turn into slaves by gladly putting the organized rural culture into flame for a few chips to be looted again by the pretending benefactors, or for a few petty jobs which can turn them as serfs of the Third Estate?

3. Can the Executive through some special purpose vehicle, crafted under a treaty (like the Uruguay Round Final Act), reverse the entire gamut of agricultural restructuring as contemplated under our Constitution?

4. Can the Executive, through a treaty (like the Uruguay Round Final Act), establish any highest legislative or judicial body for India in some foreign land whose writ would run on the constitutional organs of the Republic of India?

5. Can our Supreme Court be turned under treaty terms a subordinate court with residuary jurisdiction, and to function as the executing court for the decisions at foreign fora?

6. Can through treaty terms the highest judicial power be outsourced to the Privy Council again, or some Al Qaeda corporation in the Bahamas or Honduras or Mauritius?

7. Can through treaty terms our President, or the Prime Minister be bidden to stand on the Bench at the command of George W. Bush or Candoleezza Rice , something analogous to what befell to the Indonesian President in recent years?

8. Can the Executive enter into some Understanding or Additional Protocol or an India-specific Agreement to send all our good-looking boys and girls to gladden those whose happiness can bring massive FDI, hot money to this country giving our people the satisfaction of having the best trajectory of industrial growth through the simple act of procreation?

9. Can the Executive, through some treaty terms promoting the trade and services under the WTO regime, stipulate that, as the old and the decrepit persons are not market-friendly, their organs be extracted and excavated for supply abroad, and their flesh be sold in flashy containers in foreign markets to augment foreign exchange reserve for the chosen few to follow rain-bow in foreign lands and cloud-castles? [Who can doubt this wisdom when the experts in trade and services have demonstrated, through statistics and graphs, that the deluxe segments of homo economicus are fast developing cannibalistic taste for the Third Estate chickens?]

10. Can the Executive, through terms, oblige our country become a dumping ground to conserve the fruits of noxious deeds on or underneath our soil to alter the conditions of our existence to turn us morons or sick for whom life would be more agonizing than death?

11. Can, through some treaty terms, all wealth be turned into digital money to be amassed in the cyberspace, with their beams in the opaque tax havens, or in the banking system which has become a willing instrument under the rogue financial system of our times?

13. Can, through terms, our Executive conduct secret alliances and diplomacy to get inducted into strategic unlimited partnership, thereby driving our country headlong on the road to perdition leaking us our final annihilation the Third World War?

15. Can the Executive, through treaty-terms, override our Constitution, asserting shamelessly that it has some pocket of unlimited arbitrary power at international plane, which can be implemented under domestic jurisdiction by dragging issues under the executive field,; and where Parliamentary authorization is needed for implementation, it can be got done through pressure, persuasion, coercion, propaganda, public relations exercise, or ......? What is wrong if through treaty-terms we make the Constitution of India subservient to " The Law of Free Monarchies " of James I, or if we make the world's hegemone say "I am now the World's Leviathan" mightier than Charles XIV of France who said: "I am the State" ( L'Etat,c'est moi) ?

16. Can through treaty terms the Executive transgress all constitution limitations on its treaty making, derived from the peremptory norms prescribed under Articles 53, 73, 245, 373 of the Constitution arrogating to itself powers to do away with the Constitution as the Executive would survive when all other organs perish?

17. Can our Parliament, which is so sensitive for its sovereignty, allow itself to be turned redundant by the administrative acts of the Executive promoting the agenda of the corporate oligarchy?

17. Can our Superior Courts shy away from upholding the Constitution when it is under oath to 'uphold' it come what may? Has not in Marbury v. Madison , the Chief Justice Marshall said in resonating words?:

"Why does a judge swear to discharge his duties agreeably to the constitution of the United States, if that constitution forms no rule for his government? If such were the real state of things, this is worse than solemn mockery. To prescribe, or to take oath, becomes equally a crime."

[23] 2 L Ed 60 (1803) “…Why does a judge swear to discharge his duties agreeably to the constitution of the United States, if that constitution forms no rule for his government? If such were the real state of things, this is worse than solemn mockery. To prescribe, or to take oath, becomes equally a crime.”

[24] Attorney General for Canada v. Attorney General for Onterio AIR 1937 PC 82

[25] Oppenheim's International Law – Vol.1 Part 2 & 4 pg.1288 – para 636;

[26] Vide footnote 248 at p. 232-233 of the Writ Petition

[27] Vide para 87 at pp 89-90 of the W.P.

[28] Vide paras 88 and 89 at pp. 90-91

[29] para 90 at pp. 91-94

[30] 2 L Ed 60 (1803)

[31] “There is no doubt that the Crown has full power to negotiate and conclude treaties with foreign states, and that, the making of a treaty being an act of State, treaty obligations cannot be enforced in a municipal court… Can the Crown bind the nation to perform any and every treaty which it makes? In general it seems that the Crown makes treaties as the authorized representative of the nation. There are, however, two limits to its capacity: it cannot legislate and it cannot tax without the concurrence of parliament.”

[32] AIR 1969 SC 783

[33] AIR 1937 PC 82

[34] [1994] 1 All ER 457

[35] Lord Denning observed in Laker Airways Ltd v. Department of Trade [35] [1977] 2 All ER 182 at 192-193.

[36] In the North Se Continental Shelf Case ICJ 1969, 3 at 222.

[37] J.G Starke's Introduction to International Law, 10 th ed. P. 178

[38] http://law.onecle.com/constitution/article-2/19-constitutional-limitations-on-treaty-power.html

[39] Oppenheim p. 77 fn 102

[40] AIR 1960 SC 845 Reference by The President of India under Article 143 (1) at 846

[41] AIR 1969 SC 783

[42] AIR 1969 SC 783

[43] [1905] 2 KB 391

[44] 2 L Ed 60 (1803)

[45] The National Commission to Review the Working of the Constitution: a Consultation Paper on T reaty-Making Power under our Constitution [This Consultation Paper on ‘Treaty making power under the Constitution' is based on a paper prepared by Shri P.M. Bakshi, Former Member, Law Commission of India.]

[46] The National Commission to Review the Working of the Constitution: a Consultation Paper on T reaty-Making Power under our Constitution [This Consultation Paper on ‘Treaty making power under the Constitution' is based on a paper prepared by Shri P.M. Bakshi, Former Member, Law Commission of India.]

[47] . Mrs. Sarojini Ramaswamir v. Union of India, AIR 1992 SC 2219 = 1992 AIR SCW 2683.

[48] . Ibid .

[49] 2 L Ed 60 (1803)

[50] [1994] 1 All ER 457

[51] Salmond, Jurisprudence 12 th ed p. 41

[52] Quoted in Pollack, Earl Warren: The Judge Who Changed America 209 (1979); referred by Dr

Bernard Schwartz in Some Makers of American Law (Tagore Law Lectures) p. 133

[53] “13. Participation in international conferences, Associations and other bodies and implementing of decisions made threat.

14. Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries.

15. War and peace.

16. Foreign jurisdiction.”

[54] 3 Howell's State Trials 45 (1627)

[55] AIR 1937 PC 82

[56] NATIONAL COMMISSION TO REVIEW THE WORKING OF THE CONSTITUTION: A Consultation Paper on TREATY-MAKING POWER UNDER OUR CONSTITUTION

[57] . “Clearly, the reality of globalization has outstripped the ability of the world population to understand its implications and the ability of governments to cope with its consequences. At the same time, the ceding of economic power to global actors and international institutions has outstripped the development of appropriate global political structures. As a result, probably many more years of public confusion and unfocused protests can be expected as the stable new global world order takes shape” 2001 Encyclopaedia Britannica , Book of the Year. p. 191.

[58]

[59] [59]

[60] Art. XII(3) of General Agreement on Trade in Services provides:

“A Member may not invoke Article XVII, either under this Article or Article XXIII, with respect to a measure of another Member that falls within the scope of an international agreement between them relating to the avoidance of double taxation. In case of disagreement between Members as to whether a measure falls within the scope of such an agreement between them, it shall be open to either Member to bring this matter before the Council for Trade in Services. [60] The Council shall refer the matter to arbitration. The decision of the arbitrator shall be final and binding on the Members.”

[61] ' Oppenheim fn 6 at p. 125

[62] The Report of Peoples' Commission on GATT p150

[63] Maganbhai v. UoI AIR 1969 SC 785 (798)

[64] 252 US 416, 64 L.Ed. 641 (1920)

[65] NATIONAL COMMISSION TO REVIEW THE WORKING OF THE CONSTITUTION: A Consultation Paper on TREATY-MAKING POWER UNDER OUR CONSTITUTION [This Consultation Paper on ‘Treaty making power under the Constitution' is based on a paper prepared by Shri P.M. Bakshi, Former Member, Law Commission of India.]

[66] Oppenheim, International Law – Vol.1 Part 2 & 4 pg.1288 – para 636;

[67] H. M. Seervai, Const Law Vol I p. 309

[68] 9 th ed pp. 125-126

[69] ‘Eg. Art 24(1) of the Basic Law of the Federal Republic of Germany; Art 92 of the Constitution of the Netherlands; Art 11 of the Italian Constitution; Art 20 of the Danish Constitution; Art 25 bis of the Belgian Constitution; Art 49bis of the Luxembourg Constitution; Art 93 of the Norwegian Constitution…; Art 28(2) and (3) of the Greek Constitution.' Oppen fn 6 at p. 125

[70] [1994] 2 NZLR 257 at 260 and 270

[71] AIR 1969 SC 783

[72] The Court observed:

"It follows that while Australia's ratification of [a] Convention does not go so far as to incorporate it into domestic law, it does have consequences for agencies of the executive government of the Commonwealth. It results in an expectation that those making administrative decisions in actions concerning children will take into account as a primary consideration the best interests of the children and that, if they intend not to do so, they will give the persons affected an opportunity to argue against such a course. ... The point is not that the delegate was obliged by the Convention to do so but that, had she done so, she might have been in a better position to meet the legitimate expectation to which the Convention gave rise."

[73] The Fluid State . ed. George Williams & Hilary Charlesworth , p.36

[http://books.google.com/books?id=XPC2fXdhB0kC&pg=PA41&lpg=PA41&dq=private+member+bill+on+treaty+making+procrdure&source=web&ots=yvjNz38ZqX&sig=pFL8drWzWJpxlFMd7muo3odb2-M&hl=en&sa=X&oi=book_result&resnum=1&ct=result#PPP1,M1]

[74] Minister for Immigration and Ethnic Affairs v. Teoh (1995)183 CLR 273

[75] Tavita v. Minister of Immigration [1994] 2 NZLR 257 suggesting that ratified but unincorporated treaty obligations are mandatory relevant considerations in statutory interpretation. Subsequent cases, however, suggesta less enthusiastic approach: see Puli'uvea v. Removal Review Authority (1996) 2 HRNZ 510

[76] The Fluid State p. 37

[77] Gráinne de Búrca, Oliver Gerstenberg; “The Denationalization of Constitutional Law”

in Harvard International Law Journal Volume 47, Number 1, Winter 2006 [http://www.harvardilj.org/print/69]

[78] AIR 1969 SC 783

[79] AIR 1969 SC 783

[80] John Kenneth Galbraith, A History of Economics, The Past as the Present . P. 236

[81] http://www.fao.org/news/story/en/item/8836/icode/

[82] AIR 1969 SC 783

[83] AIR 1937 PC 82

[84] AIR 1969 SC 783 (para 30 & 81)

[85] [1977] 2 All ER 182 AT 192-193

[86] 1764 Edn. Pp 239-348

[87] [1964] 2 All ER 348

[88] [1969] 1 All ER 629 at 637

[89] (1637) 3 State Tr 826

[90] [1968] 1 AllER 694

[91] [1976] 3 All ER 665

[92] AIR 1969 SC 783

[93] Const. Law of India p. 310

[94] AIR 1937 PC 82

[95] AIR 1969 SC 783 (para 30 & 81)

[96] Salmond in his Jurisprudence has mentioned the two methods for conducting analysis for ratio determination: one as recommended by Professor Wambaugh. This method is known as the

“The “reversal” test of Professor Wambaugh. It suggests that we should take proposition of law put forward by the judge, reverse or negate it, and then see if its reversal would have altered the actual decision. If so, then the proposition is the ratio or part of it; if reversal would have made no difference, it is not. In other words the ratio is a general rule without which the case would have been decided otherwise. [96] ”

On the other hand, Dr Goodhart stressed on the material facts of a particular case: this method of determining ratio has come to be known as the “material facts” test. The test suggested by Dr Goodhart runs as under:

“According to this, the ratio is to be determined by ascertaining the facts treated as material by the judge together with the decision on those facts... The “ material facts” test is also valuable in stressing that propositions of law are only authoritative in so far as they are relevant to facts in issue in a case: a judicial statement of law therefore must be read in the light of facts of the case. And of course in the light of issues raised in the pleadings.”

[97] . AIR 1961 SC 935.

[98] Salmond, Jurisprudence 12th ed

[99] . AIR 1968 SC 647 at 651.

[100] Salmond, Jurisprudence 12th ed

[101] . The Yale Law Journal Vol. 55 April, 1946, No. 3.

[102] . Southerland in Jones v. Securities and Exchange Commission , 298 U.S, 1,24, (1936).

[103] . McNair , pp. 76-77.

[104] . Seervai's Constitutional Law of India , Vol- I, pp. 306-307.

[105] . [1941] 35 American Journal of International Law , p. 462.

[106] . Hall and Oppenheim.

[107] . Schuckking and Wehberg refereed by Charles Fairman in his article 30 A.JIL 131.

[108] . The Yale Law Journal , Vol. 55 April, 1946, No 3 p. 480.

[109] . Golaknath v. Punjab , AIR 1967 SC 1643 at p.1698.

[110] . Vol.28 p.402.

[111] . Misuse of a tax treaty violates the Standard of Economic Good Neighbourliness. [G. Schwarzenberger in his Manual of International Law states (at p. 111)].

[112] Oppenheim p. 1249 fn 4

[113] Nehru, Glimpses of World History p. 701

[114] Hood Phillips' Constitutional and Administrative Law 7 th ed p. 45

[115] Maheshwari v. State of UP AIR 1957 All 282

[116] Section 90 before the insertion and substitution made by the Finance Act 2003, ran as

under :

“90 (1) The Central Government may enter into an agreement with the Government of any country outside India ---

(a) for the granting of relief in respect of income on which have been paid both income-tax under this Act and income-tax in that country, or

(b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that county, or

(c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country, or investigation of cases of such evasion or avoidance, or

(d) for recovery of income-tax under this Act and under the corresponding law in force in that country,

and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.

(2) Where the Central Government has entered into an agreement with the Government of any country outside India under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.”

[117] (1942) A.C. 206,at 245

[118] Collins Cobuild English Language Dictionary

[119] “These appeals by special leave arise out of the judgment of the Division Bench of the Delhi High Court allowing Civil Writ Petition (PIL) No. 5646 of 2000 and Civil Writ Petition No. 2802 of 2000 ([2002] 256 ITR 563). The High Court by its judgment impugned in these appeals 2 quashed and set aside Circular No. 789 dated April 13, 2000 ([2000] 243 ITR (St.) 57), issued by the Central Board of Direct Taxes (hereinafter referred to as "CBDT"), by which certain instructions were given to the Chief Commissioners/Directors General of Income-tax with regard to the assessment of cases in which the Indo-Mauritious Double Taxation Avoidance Convention, 1983 (hereinafter referred to as "DTAC"), applied. The High Court accepted the contention before it that the said circular is ultra vires the provisions of section 90 and section 119 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and also otherwise bad and illegal.”

[120] Allen, Law and Orders 3 rd ed. p. 297

[121] Administrative Law (4 th ed., 1977)

[122] David Korten, When Corporations Rule the World p. 174

[123] Seervai, Const. Law Vol.III p. 1392

[124] AIR 1967 SC 1170 at 1174

[125] [14] ( 1931 ) A.C. 662 at 670

[126] (a) US legal practice .

The United States Constitution provides in Article VI, cl. 2

Discussed in Aiken Industries, Inc. Commrs

(b) German Legal practice

“In Germany, a tax treaty is enacted in accordance with Art. 59 Abs. and Art 105 of the Grundgesetz (the Federal Constitution). [Klaus Vogel on Double Taxation Conventions , 3 rd ed. p. 24].

(c ) Canada : A tax treaty is by enactment viz. Canada-U.S. Tax Convention Act, 1984. discussed in Crown Forest Industries v. Canada

(d) Australia : Every tax treaty is enacted under International Tax Agreements Act 1953

(e) U.K .: A tax treaty is enacted through an Order in Council in accordance with Section 788 of the Income and Corporation Act 1988 which prescribes : “Before any Order in Council proposed to be made under this section is submitted to Her Majesty in Council, a draft of the Order shall be laid before the House of Commons, and the Order shall not be so submitted unless an Address is presented to Her Majesty by the House praying that the Order be made”.

(f) In other countries tax treaties are enacted . [Philip Baker F-1 to F-3]

(g) Treaty practice in different countries with different constitutional provisions materially differs. But one thing is common, They subject treaty making to an effective legislative supervision. Oppenhheim's International Law pp 52-86

[127] “Tax treaties generally contain a provision to the effect that the laws of the two Contracting States will govern the taxation of income in the respective State except when express provision to the contrary is made in the treaty. It may so happen that the tax treaty with a foreign country may contain a provision giving concessional treatment to any income as compared to the position under the Indian law existing at that point of time . However the Indian law may subsequently be amended, reducing the incidence of tax to a level lower than what has been provided in the tax treaty.

43.1 Since the tax treaties are intended to grant tax relief and not put residents of a contracting country at a disadvantage vis-a-vis other taxpayers, section 90 of the Income tax Act has been amended to clarify that any beneficial provision in the laws will not be denied to a resident of a contracting country merely because the corresponding provision in the tax treaty is less beneficial ”. (italics supplied)

[128] “815AA - Mutual agreement procedure and presentation of cases under arrangements .

(1) Where, under and for the purposes of arrangements made with the government of a territory outside the United Kingdom and having effect under section 788-

(a) a case is presented to the Board, or to an authority in that territory, by a person concerning his being taxed (whether in the United Kingdom or that territory) otherwise than in accordance with the arrangements; and
(b) the Board arrives at a solution to the case or makes a mutual agreement with an authority in that territory for the resolution of the case,

subsections (2) and (3) below have effect.
(2) The Board shall give effect to the solution or mutual agreement, notwithstanding anything in any enactment; and any such adjustment as is appropriate in consequence may be made (whether by way of discharge or repayment of tax, the allowance of credit against tax payable in the United Kingdom, the making of an assessment or otherwise).
(3) A claim for relief under any provision of the Tax Acts may be made in pursuance of the solution or mutual agreement at any time before the expiration of the period of 12 months following the notification of the solution or mutual agreement to the person affected, notwithstanding the expiration of the time limited by any other enactment for making the claim.
(4) Where arrangements having effect under section 788 include provision for a person to present a case to the Board concerning his being taxed otherwise than in accordance with the arrangements, subsections (5) and (6) below have effect.
(5) The presentation of any such case under and in accordance with the arrangements-

(a) does not constitute a claim for relief under the Tax Acts; and
(b) is accordingly not subject to section 42 of the Management Act or any other enactment relating to the making of such claims.

(6) Any such case must be presented before the expiration of-

(a) the period of 6 years following the end of the chargeable period to which the case relates; or
(b) such longer period as may be specified in the arrangements.”

[129] “(3)Subject to the provisions of this Part, the arrangements shall, notwithstanding anything in any enactment, have effect in relation to income tax and corporation tax in so far as they provide—

(a)for relief from income tax, or from corporation tax in respect of income or chargeable gains; or

(b)for charging the income arising from sources, or chargeable gains accruing on the disposal of assets, in the United Kingdom to persons not resident in the United Kingdom; or

(c)for determining the income or chargeable gains to be attributed—

(i)to persons not resident in the United Kingdom and their agencies, branches or establishments in the United Kingdom; or

(ii)to persons resident in the United Kingdom who have special relationships with persons not so resident; or

(d)for conferring on persons not resident in the United Kingdom the right to a tax credit under section 231 in respect of qualifying distributions made to them by companies which are so resident.”

[130] ibid p.

[131] Phillip Baker , ibid p.

[132] Klaus Vogel on Double Taxation Conventions p.20; Philip Baker pp.34-35; Art.23(1) of the Indo -Mauritius DTAC.

[133] Klaus Vogel on Double Taxation Conventions, p 20

[134] [2002] 4 ALL ER 183

[135] [1961] 1 All E R 762 at 765

[136] The import of “subject to the provisions” in these Sections had been examined in Commissioner Of Income-tax V. F. Y. Khambaty [1986-(159)-ITR -0203 -BOM] by the Bombay High Court [136] . It held that the expression 'subject to' in s. 5 does not connotes that other provision of the act override the provisions of section 5. It only denotes that income which is excluded from the Scope of total income by reason of any provision should be excluded for the purpose of s. 5. The Hon'ble High Court observed, per Kania J.:

“Therefore, what the use of the said expression shows is that in considering what is total income under section 5 , one has to exclude such income as is excluded from the scope of total income by reason of any other provision of the Income-tax Act and not that the other provisions of the Income-tax Act override the provisions of section 5 as suggested by Mr. Jetley .”

[137] Section 90(1) The Central Government may enter into an agreement with the government of any country outside in India………………and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.

[138] 788. —(1)If Her Majesty by Order in Council declares that arrangements specified in the Order have been made with the government of any territory outside the United Kingdom with a view to affording relief from double taxation in relation to—

(a)income tax,

(b)corporation tax in respect of income or chargeable gains, and

(c)any taxes of a similar character to those taxes imposed by the laws of that territory,

and that it is expedient that those arrangements should have effect, then those arrangements shall have effect in accordance with subsection (3) below.

[139] The New Shorter Oxford English Dictionary

[140] K Srinivasan ‘Tax treatment of Non-residents: Need for amendment to Income-tax Act” [2004] 58 CLA (MAG. ) 71

[141] “……….. the provisions of such an agreement with respect to cases to which they apply, would operate even if inconsistent with the provisions of the Income-tax Act. We approve of this reasoning in the decisions we have noticed. If it was not the intention of the legislature to make a departure from the general principle of chargeability to tax under section 4 and the general principle of ascertainment of total income under section 5 of the Act, then there was no purpose in making these sections “subject to the provisions “ of the Act.”

[142] “These appeals by special leave arise out of the judgment of the Division Bench of the Delhi High Court allowing Civil Writ Petition (PIL) No. 5646 of 2000 and Civil Writ Petition No. 2802 of 2000 ([2002] 256 ITR 563). The High Court by its judgment impugned in these appeals 2 quashed and set aside Circular No. 789 dated April 13, 2000 ([2000] 243 ITR (St.) 57), issued by the Central Board of Direct Taxes (hereinafter referred to as "CBDT"), by which certain instructions were given to the Chief Commissioners/Directors General of Income-tax with regard to the assessment of cases in which the Indo-Mauritious Double Taxation Avoidance Convention, 1983 (hereinafter referred to as "DTAC"), applied. The High Court accepted the contention before it that the said circular is ultra vires the provisions of section 90 and section 119 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and also otherwise bad and illegal.”

[143] . AIR 1968 SC 647 AT 651.

[144] The material facts of the Case were thus summarized in the first paragraph of the judgment by Lloyd LJ.:

“The applicant in these proceedings, the Rt Hon Lord Rees-Mogg, seeks, inter alia, a declaration that the United Kingdom may not lawfully ratify the Treaty on European Union including the Protocols and Final Act with Declarations (Maastricht, 7 February 1992; EC 3 (1992); Cm 1934). Mr Pannick QC advances three main arguments on his behalf. First, by ratifying the Protocol on Social Policy the government of the United Kingdom would be in breach of s 6 of the European Parliamentary Elections Act 1978. Secondly, by ratifying the protocol, the government would be altering the content of Community law, without parliamentary approval. Thirdly, by ratifying Title V of the Union Treaty, the government would be transferring part of the royal prerogative to community institutions without statutory authority, namely the power to conduct foreign and security policy.”

Locus standi of Lord Rees-Mogg was recognised for the following reasons (at p. 461 of the Report):

“There is no dispute as to the applicant's locus standi, and in the circumstances it is not appropriate to say anymore about it, save refer to the observations of Slade LJ in Ex p Smedley [1985] 1 All ER 589 at 595, [1985] QB 657 at 669. It is suggested by Mr Kentridge that these proceedings are no more than a continuation by other means of arguments ventilated in Parliament. Be that as it may, we accept without question that Lord Rees-Mogg brings the proceedings because of his sincere concern for constitutional issues. ” [Italics supplied]

[145] PRAYERS

“That under the circumstances aforementioned, and apropos GROUNDS set forth above in this Writ Petition, this Petitioner most humbly prays that this Hon'ble Court may be graciously pleased:

( a ) to quash the Instruction No. 12 of 2002 dated Nov. 1, 2002 [F. No. 480/3/2002-FTD Govt. of India, Ministry of Finance, Department of Revenue, ( Foreign Tax Division)], and the Rules in Part IX-C of the Income-tax Rules 1962 pertaining to MAP as they are ultra vires being ex facie in breach of fundamental rights Art 14, 19(1)(a), and 21 of the Constitution of India;

(b) to hold that the Agreements for the Avoidance of Double Taxation of Income-tax, entered into by the Central Government, are repugnant to the provisions of our Constitution, and the Income-tax Act, 1961: hence are ultra vires ;

(c ) to hold that the Tax Treaties, as presently being done, offend both Sections 90 of Income-tax Act, and the Petitioner's Fundamental Rights, esp. Art. 14, and other constitutional limitations;

(a) to hold that if the Tax Treaties , as presently made, are held in conformity with Section 90 of the said Act, then the Section 90 itself would crumble for being in breach of Article 14 of the Constitution on account of unreasonableness, arbitrariness, and patent illegality;

(e) to hold that the substitution and insertion in Section 90 of the Income-tax Act 1961 made by the Finance Act 2003; and Section 90A of the Income-tax Act, 1961, inserted by the Finance Act 2006 are ultra vire as being violative of Arts 14, 19, 21 and 265 of the Constitution of India; and also in breach of the judicially settled norms governing the reach and ambit of delegation of power. (vide paras 39- 50 at pp. 42-51; Grounds 7A-7B at p. 109) ;

(f) to hold the Final Act Embodying The Results of the Uruguay Round of Multilateral Trade Negotiations, the Final Round of the General Agreement on Tariffs and Trade, the Agreement Establishing the World Trade Organization, and our participation in the World Trade Organization, as a member of that organization, repugnant to the provisions of our Constitution and therefore, unconstitutional and, hence, domestically inoperative on account of being, in effect, “like a pact with the devil”;

(g) to order that the Central Government has no extra-constitutional power, or has no inherent sovereign power, which it can utilize at the international plane transgressing the limitations placed by our Constitution, as it has no extra-constitutional power in its hip-pocket;

(h) to declare that the Central Government's Treaty-Making Powers are subject to the constitutional limitations which operate both against the Executive, and Parliament;

(i) to hold that even the consensual acts in the form of a treaty, or an agreement, or convention, to which reference is made in Art 253 of the Constitution of India, must be valid within our constitutional parameters as subject to the constitutional limitations;

(j) to order that no exercise of the executive power ( whether through Instructions, Circulars, subordinate legislation or Agreements, understandings, announcements etc. in pursuance to the obligations under the Uruguay Round Final Act, and the Agreements done under the auspices of the WTO) can override the Constitution of India without adopting the right constitutional procedure;

(k) to declare that neither the Executive Government, nor our Parliament is competent to ignore or give up constitutional directives and commitments, even in exercise of Treaty-Making Power, without bringing about appropriate amendment to the Constitution of India;

(l) to direct that no functionary of the Central Government, acting as an administrator, or manager, or negotiator, or holder of full powers, or acting as plenipotentiary, or any other analogous capacity, is competent to transgress constitutional limitations whether they act within domestic jurisdiction, or at international plane;

(m) to declare that it would promote national interest better if those who negotiated (whether from India or in foreign jurisdictions) a Treaty, be prevented at least for five years before they accept an office of profit, or any other sort of assignment, in the organizations or institutions created under the terms of that Treaty, or having a dominant interest in such a Treaty;

(n) to order complete transparency in the negotiations and ratification of Treaties so that our Right to Know is not jeopardized, except in the rarest of Cases of the Treaties coming within a small segment where critical national defense, or security, is primarily involved, though even in such matters Petitions should lie to this Hon'ble Court to be considered by it in camera, or under such other procedure it deems fair and just to evolve with a view to balancing the competing public interests in transparency and national security;

(o) to direct our Executive Government to take immediate initiative so that our Parliament may frame law in exercise of power granted to it under Entry 14 in the Union List of the 7 TH Schedule to the Constitution of India as this step is needed in this phase of Economic Globalization;

(p) to declare the constitutional principles in conformity with which the Treaty-Making Procedure can be prescribed;

(q)to pass such order/orders, or directions/ guidelines (in terms of the plenitude of the constitutional power emanating from Art 226, or from the reach of the constitutional oath, or from any other legal and constitutional source) which the Hon'ble Court considers fit and proper in the interest of justice pro bono publico;

® (without prejudice to the aforementioned Prayers) to direct the Central Government to initiate the process of re-negotiations, modifications, revision etc so that the impugned treaties are made to conform to the imperative commands of our Constitution; and

(s) to declare that the Executive has no power to enter into any agreement, either with a foreign government or a foreign organization, which is binding on the nation without being ratified by Parliament;

(t) to declare that the Union Government cannot exercise its executive powers beyond the legislative powers of the Union because before the Union Government exercises the executive power, there must be a law enacted by the Parliament on the subject concerned;

(u) to declare the province of constitutional limitations under our Constitution, and to hold that any Agreement/ Treaty/ Understanding, or any consensual engagement of that sort, or belonging to that genus, if done in breach of the constitutional limitations, would have no effect in the territory of India;

(v) to permit this Petitioner to raise such other grounds, with the leave of this Hon'ble Court, which he may deem his duty to raise in course of the proceedings before the Court for the proper conduct of the matter.” [footnotes omitted]