July 14, 2011

Ram Jethmalani and Others vs Union of India (The Tax haven Case)


One of the other cases exulting the Constitutionalism and refuting the inaction of the government on the matter of crime as violation of constitutional values and constitutionalism. The petition was forwarded by some eminent professional like Mr. Ram Jethmalani, Mr. Gopal Sharman, Jaybala Vaida, Mr. KPS Gill, Prof. BB Dutta, and Mr. Subhash Kashyap. The petition came to the Court on the basis of news flooded in newspapers and tabloid about the inaction of the Government to bring back the tainted money deposited in the foreign Banks and Tax Havens.

Petitioner contended that the money deposited in the foreign banks can be used for unlawful purposes. The petitioner also alleged that the money deposited is owned by some of the prominent and influential people of India as the efforts made to bring back the same is intervened at different times which is only possible by high level intervention. The petitioner giving the example of reversal of RBI decision on providing license to UBS group for retail banking license in 2008 further tried to convince the Court of the involvement of influential persons from corporate and political arena.

Petitioner also questioned the inaction on the part of government in reveling the documents related to Hasan Ali when it itself has claimed a tax amount of Rs. 70000 Crores pending from his side. The similar case is for Tapuria where no action is taken despite the fact that the Government has claimed thousands Crores of Rupees not paid as tax.

From the petitoner's side, it was requested to constitute Special Investigation Team (SIT) headed by one or two judges of Supreme Court to look into the matter which was opposed by the Government of India.
The Bench of Justice Sudershan Reddy J and Surender Singh Nijjar J expresses dismay over the attitude of Government of India and virtually smashed the arguments placed by her. The Government pleaded that these are the matters of international diplomacy and takes its due course and thus are in complex in nature. In the particular issue of the account in the German Banks and Liechtenstein, the petitioner alleged that the countries offered to provide the name of the account holder but the Government chose to assume that they could have asked. Government on the matter contended that the under the DTAA they are proscribed to reveal the name of the persons holding the account and further that it would be against their right of privacy under Article 21 of the Constitution.

The Court interpreting the DTAA between India and Germany declined the argument placed by the Government. Further the Article 26 of the agreement specifically put exception to the disclosure to any Court Proceedings. Court stated that though India is not the party to Vienna Convention of Law of Treaties, it has adopted the general principles of the rule interpretation in practice. Referring to the Article 31 of the Convention, the Court stated that the treaty is to be interpreted to maximum welfare and in good faith. Court further stated that the Article 26 of the DTAA puts secrecy clause for the purpose of the agreement i.e. in the matter related to the DTAA, however, the purpose for which the present matter is concerned doesn’t even remotely touch the implications of secrecy clause.

Court cautioned the drafting of the treaties as it is mostly done by the diplomats than lawyers. The Court said that the treaties is to be interpreted keeping this notion in view that these are interpreted by the diplomats. It is important to take note that the treaties are to be given general meaning “as to the lawyer to to the layman alike”. However since these are drafted by the diplomats, it I to be taken care that none of the words remain redundant in the constitutional perspective.

Praising the contribution of Germany in modern Constitutionalism, especially for the concept of Basic Structure Doctrine of the Constitution of India which is borrowed from the German Constitution, the court said that the Germany would be aware of the fact that such clause, if used in the way Union of India is asserting would lead to setting aside the constitutional imperatives.

Court further stated that in the cases where state has most of the information put in boxes, the state can’t take advantage of adversarial system of common law. In the cases of Fundamental Rights, the state must put all the relevant information before the Court despite adversarial system doesn’t put a burden on it to do so.
The apex Court drew the relation between the Article 32(1) and Article 19(1) (a) and said that the withholding the information from the Court is restraining the right of expression of the petitioner.

Right to Privacy:
In the matter of assertion of the Union of India that the disclosing the name of the account holder would violate the right to privacy, Court accepted the assertion. Court, recognizing that the right to privacy is an important part of the Article 21 can only be taken out by law. Since being the account holder of the said bank is not an illegal act, the concern individuals have their right intact and can’t be violated. Court further held that it wouldn’t make any exception in this regard as the bits may be read to create further exception in future which is not good for democracy.

The decision is insightful and dealt with the constitutional values and principles. This decision can be placed on the same side as Nandini Sunder in regard to the emphasis on the Constitutional Principles and values. However, both the decision criticized the private investment and suggested policy remake which is beyond understanding of separation of powers.

The precedence set in these decisions is not concern of immediate future, but as the Supreme Court itself noted, these kind of exceptions, in regard to any fundamental concept could “bit by bit could eviscerate” the main value.

"Again reserving my opinion in the matter of observation in regard to the policy and indirect suggestions to legislature by Supreme Court of India when law is already in place by legislature, the decision is worth reading".

No comments: