July 27, 2011

GVK Industries v ITO : Morality of Nations and Constitutional Spirit, An Interpretation of Article 245 with Modern Jurisprudence. (1st March,2011)

Well, I am kind of late for posting this marvelous decision by the Supreme Court of India. Here are some of my observations while going through the decision.
The decision is rather heroic in one word than anything else. Not just the established jurisprudence, but the Apex Court of India spilled the morality of nations and the respect that self-determination has in eyes of the judiciary of this adolescent but yet matured democracy.
The two questions that Court posed in front were,
1. Is the Parliament constitutionally restricted from enacting legislation with respect to extra-territorial aspects or causes that do not have, nor expected to have any, direct or indirect, tangible or intangible impact(s) on, or effect(s) in, or consequences for: (a) the territory of India, or any part of India; or (b) the interests of, welfare of, wellbeing of, or security of inhabitants of India, and Indians?
2. Does the Parliament have the powers to legislate “for” any territory, other than the territory of India or any part of it?
Whereas the first question was decided in the affirmative the second question was answered in negation. Court partially overruled the Electronic Corporation of India Limited v. Commissioner of Income Tax and Another[1]. Sudershan Reddy J. writing the opinion observed the following important points.
Court walking extra mile divided the propositions put forwarded by the Attorney General and discussed the proposition of Attorney General in following parts.
a. Proposition that the legislature has competence to make laws which has impact on India
b. Which has no impact on India;
c. That the parliament will enact the law which will benefit the denizens of foreign territory and provide the justice to them (Court taking the view that the anything which doesn’t provide justice is not law). And since India is not established with the intent of being expansionary or imperialistic the law certainly will not be exploitative, and that leaves us with three combinations,
i. Law is beneficial to India and Foreign Territory
ii. Beneficial to Foreign territory but no effect on India;
iii. Beneficial to Foreign denizens but damages interest of India.
d. That the judiciary can’t invalidate the law on the basis of its extraterritorial effect.
Court observed that the each part of the Constitution has a topological spaces and the true meaning of a provision can be determined by the reading the language of other provisions in topological spaces. While interpreting the Article 245 of the Constitution, Court emphasized that the topological space frequented the clause “the whole or any part of the territory of India” Court held that the ECIL judgment wrongly interpreted that the law can be made through provocations or objects “in” or “within” territory of India. Emphasizing that the word “for” is used in Article 245, the provocations or objects might not be within or in the territory of India.
Court further giving the reference of interpretation of Constitution with changing times and further reference of terrorism and security of India answered the first proposition of Attorney General in affirmative i.e. the law with extra-territorial effect can be made if it has impact of such law is for benefit of India.
In answering the second question Court again fell back to the usage of word “for” in the Article 245 (1). The Court said that the Parliament is “ours” and there are two limitations that flow from the Article 245. First that the laws are made for the benefit of the people of India, and second, that no law can be made which has no nexus with the benefit of citizen of India.
No organ of the Indian State can be the repository of the collective powers of the people of India, unless that power is being used exclusively for the welfare of India. Incidentally, the said power may be used to protect, or enhance, the welfare of some other people, also; however, even that goal has to relate to, and be justified by, the fact that such an exercise of power ultimately results in a benefit – either moral, material, spiritual or in some other tangible or intangible manner – to the people who constitute India.
Giving the reference of Article 51 of the Constitution, together with Article 245 as interpreted Court held that such laws will be in derogatory of International Peace and Security. Court further declined that law is positive morality or Dicean in nature. Court observed that the written Constitution gives supremacy to the Constitution and its theme above all. In this way we have severed our links with British parliament where the Parliament have unlimited power to legislate.
Court observed that Article 245(2) is not the independent clause; it is in fact a dependent on the Clause (1) of Article 245. Further, Art. 245 enunciate the function of Legislature, executive and judiciary which is continued in the Article 245(2). If a law which couldn’t be invalidated on the grounds as stated by the Attorney General, the judiciary would lose its essential function of “invalidating” bad laws in foreign territory which is against basic structure doctrine of the Constitution. Article 245(2) is exception to the Article 245(1) only; otherwise it would give legislature an infinite field to function in foreign territory with judiciary stripped of its essential function of invalidating laws. Thus, interpreting harmoniously, Indian Parliament can’t make laws which have no nexus with the benefits of Indian Citizen.
This decision is not only important for the spirit of Indian Constitution, but also an inspiration for other countries on the constitutionalism and spirit of democratic constitution. One of the remarkable Constitution Bench decision with important and less discussed concept like Morality of Nation.

[1] 1989 2SCC 642.

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