Friday, April 4, 2014

Property tax based on Capital value is ……. ex-facie illegal … UNCONSTITUTIONAL ….

Brief background of transition from levying of property tax on Ratable value to Capital value:

1.      Vide Mah. Act 11 of 2009, the State of Maharashtra amended the Mumbai Municipal Corporation Act, 1888 (MMC Act) to enable BMC to levy property tax based on “capital value” of the properties as against the rateable value of the properties as provided for in the MMC Act, 1888, prior to the said amendment.

2.      One of the main objects of introducing / shifting to the capital value system was to remove the disparities in tax liabilities between old and new properties / buildings. The earlier method was based on RLR (Residential Letting Rates) / Annual Letting Value of the property.

3.      Under the earlier method, the tax was collected on the basis of rateable value fixed by BMC; and the rateable value was fixed from the date of first occupation, based on certain factors, such as location of the property, i.e. ward-wise and locality-wise; and rateable value of the Property remained unchanged once they were assessed and occupied (except in case of change of user); and rates were revised periodically. The Revised rates were applicable for newly developed properties once they were occupied, and this is the precise reason for disparity in tax liability of old properties and new properties, wherein the rateable value of old properties remained frozen once it was assessed, and the new properties were liable to pay taxes as per contemporary rateable value.

We now come to illegalities:

THE ILLEGALITY NO.1:
Irrational Classification in the 4th Proviso to section 140A:

The scheme of section 140A of MMC Act, 1888, may be closely looked into –

a)      The 4th proviso to impugned section 140A frustrate the mandate of Article 14 of the Constitution of India, i.e. to say, whereas Article 14 guarantees all persons the equality before the law, the said section confers exemption from increased payment of taxation, to all the residential unit holders having upto a 46.45 sq. mtr (500 sq. ft.) carpet area, irrespective of the capital value of the property concerned.

b)      The discrimination lies wherein (i) the properties having identical capital value, but some of the properties would not be subjected to increased tax liability and some of the properties would be subjected to increased tax liability; and (ii) where the capital value of the properties substantially differs, the properties bearing a very high capital value would not be subjected to increased tax liability, but properties bearing comparatively much lesser capital values would be subjected to increased tax liability.
 
c)      The Stamp Duty Ready Reckoner rates for the year 2010, which is taken as a base value for arriving at a Capital value of Residential properties, divides the entire Mumbai into 124 Zones and 575 Sub-Zones; and the base value of the properties situated therein in each of the zone and sub-zone varies from Rs.19,400/- per sq. mtr (Entry No.333) to Rs.3,79,400/- per sq. mtr (Entry No.75).


Illustration for situation (i)
The Residential properties situate in Sr. No. 4, at Zone 1 and at Sub-Zone 4, having a base value of Rs.92,400 per sq. mtr for residential units, in a RCC Building of 5 years, comprising 4 floors, having a built up area of 46.45 sq. mtr; the capital value would be –
Base Value (BV); User Category (UC); Nature & Type of Building (NTB); Age Factor (AF); Floor Factor (FF); Built up Area (BA)

BV X UC X NTB X AF X FF X BA = CV
92,400 X 1.00 X 1.00 X 1.00 X 1.00 X 46.45 = Rs.42,91,980=00

Similarly, properties situated in Sr. No. 26, at Zone 2 and at Sub-Zone 23, having a base value of Rs.84,900 per sq. mtr for residential units, in a RCC Building of 5 years, comprising 4 floors, having a built up area of 50.45 sq. mtr; the capital value would be – BV X UC X NTB X AF X FF X BA = CV –
84,900 X 1.00 X 1.00 X 1.00 X 1.00 X 50.45 = Rs.42,83,205=00

Therefore, it may be seen that residential units situated in at Zone 1 Sub-Zone 4 and at Zone 2 and Sub-Zone 23, although having an identical capital values, but the former would not be subjected to increased tax liability, whereas the latter would be subjected to increased tax liability. 


Illustration for situation (ii)
The properties situate in Sr. No. 4, at Zone 1 and at Sub-Zone 4, having a base value of Rs.92,400 per sq. mtr for residential units, in a RCC Building of 5 years, comprising 4 floors, having a built up area of 46.45 sq. mtr; the capital value would be – BV X UC X NTB X AF X FF X BA = CV
92,400 X 1.00 X 1.00 X 1.00 X 1.00 X 46.45 = Rs.42,91,980=00
Similarly properties situated in Sr. No. 99, at Zone 9 and at Sub-Zone 72, having a base value of Rs.44,800 per sq. mtr for residential units, in a RCC Building of 5 years, comprising 4 floors, having a built up area of 50.45 sq. mtr; the capital value would be – BV X UC X NTB X AF X FF X BA = CV – 44,800 X 1.00 X 1.00 X 1.00 X 1.00 X 50.45 = Rs.22,60,160=00
Therefore, it may be seen that residential units situated in at Zone 1 Sub-Zone 4 although having a Capital value of about Rs.42.91 Lacs would not be subjected to increased tax liability; however the properties situated at Zone 9 and Sub-Zone 72, although having a capital value of Rs.22.60 Lacs would be subjected to increased tax liability.


Illustration for situation (ii)
The properties situate in Sr. No. 75, at Zone 7 and at Sub-Zone 61, having a base value of Rs.3,79,400 per sq. mtr for residential units, in a RCC Building of 5 years, comprising 4 floors, having a built up area of 46.45 sq. mtr; the capital value would be – BV X UC X NTB X AF X FF X BA = CV
3,79,400 X 1.00 X 1.00 X 1.00 X 1.00 X 46.45 = Rs.1,76,23,130=00
Similarly properties situated in Sr. No. 333, at Zone 48 and at Sub-Zone 234, having a base value of Rs.19,400 per sq. mtr for residential units, in a RCC Building of 5 years, comprising 4 floors, having a built up area of 50.45 sq. mtr; the capital value would be – BV X UC X NTB X AF X FF X BA = CV – 19,400 X 1.00 X 1.00 X 1.00 X 1.00 X 50.45 = Rs.9,78,730=00
Therefore, it may be seen that residential units situated in at Zone 7 Sub-Zone 61 although having a Capital value of about Rs.1.76 Crore would not be subjected to increased tax liability; however the properties situated at Zone 48 and Sub-Zone 234, although having a capital value of mere Rs. 9.78 Lacs would be subjected to increased tax liability.

(d) The repercussion of the 4th proviso, when read with 1st and 3rd proviso to said section, would continue at the lapse of 5 years, wherein the class of individuals set out in the 4th proviso would stand to benefit at the cost of remaining individuals, although both the classes stands on similar footing, and therefore, the solemn object of introducing capital value based system to “reduce disparity in burden of tax”, is frustrated and in fact defeated.

(e) The said 4th proviso would also create a situation wherein in the same residential Building, comprising units of 500 sq. ft. of carpet area and just above 500 sq. ft. carpet area, the individuals having a flat of 500 sq. ft. would not be liable for the increase in the tax, but individuals even having a 510 sq. ft. of flat may be subjected to increase of tax two times over the preceding year.


Excessive burden on a Class of Persons

(a) In the scheme of taxation vis a vis to civic services provided under the mandate of law (sections 61 to 63B of MMC Act), at least two broad classes can be ascertained – (i) A Class of persons who owns or is otherwise liable to pay property tax; (ii) A Class of persons who live in “slums” and “Houseless” who are not liable to pay property tax, but otherwise are entitled to minimum basic civic services. Therefore, it would not be incorrect to say that the “former” class bears the burden of the “latter”.

(b) 4th proviso to said impugned section, as far as residential units are concerned, further creates “two class” of persons in the “former” class, one who owns residential units admeasuring about  / upto 46.45 sq. mtrs / 500 sq. ft. carpet area (about 2BHK flat), and another class of persons who owns residential units admeasuring above 45.46 sq. mtrs / 500 sq. ft. carpet area.

(c) Whereas impugned section 140A creates “two class” of persons in the “former”, by virtue of 4th proviso, one class of persons is sought to be exempted from additional burden of tax and the second class is further burdened with (a) outgo of more money due to introduction of property based in capital value; (b) the additional share of burden which is sought to be exempted by virtue of 4th proviso to section 140A, including the burden as set out in Clause (a) hereinabove, thereby frustrating the very object of rationalizing the burden of taxation on each of the property.

Irrationality in the 4th Proviso to the impugned section

(a) The 4th proviso sought to sympathize with the prosperous class who have the privilege of having a 46.45 sq. mtr (500 sq. ft. flat) (Nearly 2 BHK flat) in the city of Mumbai and the proviso completely overlooks the class of “Houseless”, who are waiting to be housed. There is absolutely no reason or merit in granting the exemption from increased tax liability to the said class of people.

(b) By no stretch of imagination it can be argued that individuals who own a residential units upto 500 sq. ft. in the city of Mumbai constitute a poor class / weaker section of the society. On the contrary, by levying tax uniformly on both the classes, a substantial equality / rationality in the levy of tax burden could have been achieved.

(c) The 4th proviso sought to confer exemption to a privileged class and ignoring the deprived class. A combined reading of sections 63(a), 63(aa), 63(jjc), 63(jje), 354C(1)(A)(c), 354RM to 354RQ and section 460 of the MMC Act, 1888, and Article 243W (a)(i) and Entry Nos.3, 9, 10, 11 of 12th Schedule to the Constitution of India, obliges the Respondent No.2, inter alia, to attend to the needs of “Houseless”.

(d) It is further submitted that budgetary constraints of BMC may ordinarily discourage it to embark upon and implement “Housing Schemes” for the “Houseless” and for those living on “footpath”, i.e. Mahatma Gandhi Path Kranti Yojna. Etc; and therefore it is irrational to subsidize the privilege class of persons owning about 46.45 sq. mtr (500 sq. ft.) of flat in Mumbai.

THE ILLEGALITY NO.2:
PERMISSION TO RECOVER TAX FOR EARLIER YEARS:

a)      Section 3(b) of the Maharashtra Act No.VI of 2012, inserted sub section (2A) to section 140A of the MMC Act, 1888, which permits the BMC to recover taxes for earlier three years, i.e. 2010-11, 2011-12 and 2012-13.

b)      The permitting the recovery of tax for earlier years is illegal, for it is inconsistent with the mandate of other provisions of the MMC Act, 1888, more particularly of section 139 of the MMC Act, 1888.

c)      Although retrospective exaction of taxation is not altogether impermissible, but at the same time, it cannot be invoked indiscriminately; and it has to be seen and evaluate in each case of its due application.

d)     The taxing power of the Local bodies is limited to the extent, for carrying out its obligatory and discretionary functions under the statute. That in area of taxation, Local bodies do not enjoy the same freedom and latitude as otherwise being enjoyed by the Parliament and the State Legislature. There are inherent limitations on the part of Local bodies to recover taxes, that is to say, they can impose and recover taxes, “Only for the purposes of the Act” under which they are incorporated.

e)      The Local bodies have been assigned certain obligatory functions which it must perform and for which it must find money by taxation. It has also been assigned certain discretionary functions. If it undertakes any of them, it must find money. Even though the money that has to be found may be large, it is not unlimited, for, it must be only for the discharge of functions whether obligatory or optional assigned to the Local body.

f)       The limit to which the Corporation can tax is therefore, circumscribed by the need to finance the functions, obligatory or optional, which it has to or may undertake to perform. It will be not open to the Local body to collect more than it needs for the functions it performs.

g)      And, Local bodies make budgetary provisions for each year and are entitled to exact tax for the said amount. The Corporation is obliged to prepare annually the estimates of expenditure and income, comprising therein, inter alia, an estimate of expenditure to be incurred by the Corporation in the next ensuing official year; and inter alia, a statement of proposal as to the taxation which it will, in his opinion, be necessary or expedient to impose under the provisions of this Act, for the next ensuing official year. Therefore, there is no room for permitting the recovery of tax for erstwhile years, for, the local body is always entitled to raise revenue which is required by them, for the concerned fiscal year.

h)      The Local bodies, similarly, cannot raise the rate of taxation to such an extent, or to recover purported tax for earlier years, as to provide a “surplus” which is much more than what it needs for carrying out the functions assigned to it.

i)        In the instance case, section 139 of the MMC Act, 1888, expressly declare that,” For the purposes of this Act, taxation shall be imposed as follows …...”.

j)        Chapter III of the MMC Act, 1888, comprising duties and powers of the Municipal Authorities, in section 61, 62, 62A, 62B, 62BB, 62C, 62D, 62E lays down the obligatory duties of the Corporation, i.e. BMV; and Section 63 lays down the discretionary nature of functions which may be undertaken by the Corporation.

k)      Section 125 of the said Act obliges the Commissioner of the Corporation to prepare annually the estimates of expenditure and income, comprising therein, inter alia, an estimate of expenditure to be incurred by the Corporation in the next ensuing official year; and inter alia, an estimate of receipts and income for the next ensuing official year, other than from taxation; and, a statement of proposal as to the taxation which it will, in his opinion, be necessary or expedient to impose under the provisions of this Act, for the next ensuing official year.

l)        Therefore, there is no room for to permit the recovering of tax for erstwhile years, for, the local body is always entitled to raise revenue which is required by them, for the concerned fiscal year.

m)    The same principle would apply to the fixation of rates of taxation and if per chance the Corporation fixes rates which are unreasonable, there is control in the court to strike down such an unreasonable impost.


THE ILLEGALITY NO.3:
Inherently defective framework of Capital Value System:

a)      The main objects of introducing / shifting to the capital value system was to remove the disparities in tax liabilities between old and new properties / buildings. The earlier method was based on RLR (Residential Letting Rates) Annual Letting Value.

b)      The earlier method of valuation have led to a huge disparity whereby old properties were paying much less tax as compared to new properties; and the disparity had widened with the passage of time. The situation had reached a stage whereby owners of flats constructed in posh locality in South Mumbai, say forty or fifty years back, were paying lesser taxes than a newly constructed property situated even in far away suburbs like Borivali, for the equivalent area, inspite of the fact that those properties in South Mumbai commanded much higher value than the properties at far away suburbs.

c)      Therefore, it was proposed to introduce levying of property tax on lands or buildings based on their Capital value.

d)     Therefore, if any rationalization of burden of tax is to be achieved, the new tax system, i.e. Capital Value system, should provide a framework wherein the burden of tax on old properties should reasonably increase, and at the same time, the burden of tax on newer properties should decrease, or, at least it should not increase; and thereby some degree of rationality / reasonableness / equality / parity / fairness / equivalence may be achieved in the burden of tax among various users of properties.

e)      Now look at the very basic framework of the capital value system. It sought to levy property tax on “all” lands and buildings, based on their capital value. This system does not distinguish old properties or newer properties.

f)       The 1st proviso to section 140A(1) of the MMC Act, 1888, is clearly indicative of the fact that, by reason of adoption of levy of property tax on buildings and lands based on their capital value, the tax burden on the “subject” may increase substantially and multi fold; and therefore, it is provided that there should be some cap to any such increase; and therefore a cap of 2 times for buildings and lands used for residential purposes and 3 times for non-residential purposes was sought to be mandated.

g)      Therefore, in the new system, it may be noted that, whereas there would be an increase of tax burden on old properties, to the extent of 2 times and 3 times, but there is no corresponding decrease or stability in tax burden on newer properties, and there would be simultaneous increase of tax burden on newer properties as well.

h)      The only beneficiaries of this capital value system, whose tax liability would be reduced, are the owners of properties, who have let out their property on Leave & License, and who were subjected to excessive property tax under the erstwhile Rateable value system. By introduction of this system, the levy is made neutral, irrespective of whether the property is let out on Leave & License or self-occupied.

i)        Therefore, the “means” adopted to achieve the ends, fails to achieve the ends, i.e. rationality in the burden of taxation over the “subjects”.


The incidence of taxation is camouflaged wherein a levy is based on capital value of the lands and buildings:

a)      Ordinarily a tax on land is assessed on the actual or the potential productivity of the land sought to be taxed. In other words, the tax has reference to the income actually made, or which could have been made, with due diligence, and, therefore, is levied with due regard to the incidence of the taxation.

b)      The expression “Rate" is used to indicate an impost levied by a local authority to raise funds for its expenses; and had acquired a special meaning, and it meant a tax for local purposes, imposed by local authorities, on the basis of a percentage of the Annul Letting value, for which the land or building might reasonably fetch.

c)      Notwithstanding the fact that “levy based on rate” based on “Annual letting value” had led to great disparity on the share of burden of taxation among the “various Ratepayers”; the nexus of levy, based on Annual letting value had a cogent and balanced nexus with the incidence of taxation.

d)     Nonetheless there is no nexus with the capital value of a property and the nature of the levy. By levying it directly at a percentage of the capital value, the real incidence of taxation is camouflaged.

e)      The levy based on capital value of the property has no reference to income, either actual or potential, from the property sought to be taxed. Hence, it may be rightly be stated that the Act obliges every person who holds land or building to pay the tax at a particular rate prescribed, whether or not he makes any income out of the property; or whether or not the property is capable of yielding any income.

f)       Whereas there is no challenge to the legislative competence of the State to levy tax on lands and buildings based on their capital value, the levy of tax/ rate based on capital value may be permissible only in those cases where Rateable value of the property cannot be ascertained and therefore the concerned property may be valued on the basis of its capital value, and may be taxed accordingly.


The impost based on capital value and the cumulative effects of Amendments are excessive if not confiscatory:

a)      The 1st proviso to section 140A(1) of the MMC Act, 1888, is clearly indicative of the fact that, by reason of adoption of levy of property tax on buildings and lands based on their capital value, the tax burden on the “subject” may increase substantially and multi fold; and therefore, it is provided that there should be some cap to any such increase; and therefore a cap of 2 times for buildings and lands used for residential purposes and 3 times for non-residential purposes was sought to be mandated.

b)      Section 140A(2A) of the MMC Act, 1888, further empowers the MMC to recover from the “Ratepayer” the difference of tax liability, which may arise due to valuation based on Rateable value and capital value, for earlier three years, i.e. for the year 2010-11, 2011-12, 2012-13.

c)      Therefore, a subject, in respect of his residence ,if was paying a property tax of say Rs.10,000/-, in the financial year 2012-13, he may be asked to shell out Rs.70,000/-for the year 2013-14; and a subject, in respect of his business, if paying a property tax of say Rs.20,000, in the year 2012-13, may be asked to shell out at least Rs.2,00,000/- for the year 2013-14.


Removal of the criteria which has no bearing with the quantum of civic services rendered

Fairness and uniformity are basic principles of property tax assessment, whatever system of taxation may be employed. Whereas similar civic services are provided by the Municipality to all “Rate payers”, the “Rate”, i.e. the tax must fall on them, “equally”, as far as practicable; That each of the criteria, which has no bearing / nexus with the quantum / degree of the services which are provided by the Local Body, shall not be considered  in the valuation of the Capital Value of the Property; and therefore there is no reason to charge more tax or less tax, based on “Age of the Building, construction type.


The Rules manifestly in breach of Section 154(1A)(b) of the MMC Act, 1888

The Rules are ultra vires of the parent Act, under which they are enacted, that is to, it is in clear breach section 154(1A)(b) of the MMC Act. Section 154(1A)(b) inter alia, provides that the Commissioner while fixing the Capital value, inter alia, shall consider the carpet area of the building.

Whereas in the Rules, the Capital value of the Building is based on SDRR, and SDRR is based on Built up area, thus the Rules prescribe the ascertainment of the capital value of the Buildings on built-up area.

The Rules manifestly in breach of Section 154(2) of the MMC Act, 1888

The Rules are ultra vires of the parent Act, under which they are enacted, that is to say, they are in clear breach section 154(2) Mumbai Municipal Corporation Act, 1888.

Section 154(2) of the MMC Act expressly states that the value of any machinery contained in or situate in any land or building shall not be included in valuing the capital value of the said land and building.

The value of the Buildings mentioned in the Stamp Duty Ready Reckoner  are inclusive of machinery within the building such as Electrical Lifts and Pumps.

Thus deriving the capital value based on the said SDRR in which the value of machinery inheres, and using that as a base for levying property tax, would be ex-facie illegal.


The complete reliance on SDRR is misplaced.

The Legislature was conscious of the fact that (a) SDRR is based on built up area; (b) The valuations indicated in SDRR includes machinery which inheres in any building; (c) MMC Act and Stamp Act are not pari material Acts; (d) SDRR is only for the limited purpose of levying Stamp duty on the transactions of sale and purchase of lands or buildings, and therefore SDRR may not truly reflect the correct valuation of any land or building.

The Legislature have had expressly chosen to use the expression “Shall have regard while fixing the base value”. If the Legislature had wanted SDRR to be considered as a base value of lands or buildings, it may have expressed its intention by stating so.

And, therefore, comprehensive reliance on the valuation indicated in SDRR is ex-facie unlawful, and deserves to be declared so.



The Hon’ble Bombay High Court have had the occasion to observe that, … it is now, a well settled principle of law that the ready reckoner is prepared by the State Govt for the purpose of computing Stamp duty payable on transaction. The Ready Reckoner cannot be regarded as an accurate reflection of market value…”. The observation of this Court assumes significance, for, the Court was unequivocal in stating that, “a well settled principle of law…”.  (2014) 1 MhLJ 152.


Submissions on Article 14 of the Constitution

a)      Art. 265 of the Constitution imposes a limitation on the taxing power of the State, in so far as it provides that the State shall not levy or collect a tax, except by authority of law, that is to say, a tax cannot be levied or collected by a mere executive fiat. It has to be done by authority of law, which must mean valid law enacted by the competent Legislature.

b)      In order that the law may be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing a tax and authorizing the collection thereof; and, secondly, the tax must be subject to the conditions laid down in Article 13 of the Constitution. One of such condition envisaged by Article 13(2) is that the Legislature shall not make any law which takes away or abridges the equality clause in Article 14, which enjoins the State not to deny to any person, equality before the law or the equal protection of the laws of the country. It cannot be disputed that if the Act infringes the provisions of Article 14 of the Constitution of India, it must be struck down as unconstitutional.

The Constitutional mandate under Article 14 and other submissions of the Petitioners

a)      The Indian Constitution, most noticeable under Article 14 and 19 permitted Courts to undertake inquiries into the substantive fairness of the legislations, which Courts undertook under classification and reasonableness tests respectively.

b)      "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differential which distinguished persons or things that are grouped together from others left out of the group and, (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The differentia which is the basis of the classification and the object of the Act are two distinct things.


Explanation to the principle inhere in Article 14

a)      Classification means segregation in classes which have a systematic relationship, usually found in common properties and characteristics. It postulates a rational basis and does not mean hording together of certain persons and classes arbitrarily. The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience.

b)      The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.

c)      Though a law ex-facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinize the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situated differently; but on investigation they may be found not to be similarly situated. To state it differently, it is not the phraseology of a statute that governs the situation but the effect of the law that is decisive.

d)     What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. In substance, the differentia required is that it must be real and substantial, bearing some just and reasonable relation to the object of the legislation. The fact that the classification by itself is reasonable is not enough to support it unless there is nexus between the classification and the object to be achieved. Art. 14 certainly apply where equals are treated differently without any reasonable basis.

Approach of the Court in applying facts of the case at the touchstone of the principle enshrined under Article 14

a)      The constitutional standards by which the sufficiency of the differentia which forms a valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests of a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends.

b)      If legislation discriminates one person or class of persons against others similarly situated and denies to the former the privileges that are enjoyed by the latter, it may be regarded as "hostile" in the sense that it affects injuriously the interests of that persons or class.

c)      That while good faith and knowledge of the existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the Court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to discriminating legislation.

d)     A statute may direct its provisions against one individual person or things or to several individual person or things but no reasonable basis of classification may appear on the fact of it or be deducible from the surrounding circumstances; or matters of common knowledge. In such a case the Court will strike down the law as an instance of naked discrimination.

e)      In determining the validity or otherwise of a statute or of the statutory provision, the Court have to examine whether such classification is or can be reasonably regarded as based upon some differentia which distinguishes such persons or things grouped together from those left out of the group; and whether such differentia has a reasonable relation to the object sought to be achieved by the statute.

f)       The intelligible differentia classification test often focused on why the classification was carried out. While the definition of the class was readily ascertainable and one could fathom whom the law would apply to, the Courts often found that the class was not created on the basis of some acceptable or reasonable standard of general applicability based on the inherent properties or the characteristics of the class created. In such cases, the Court looked for reasonable, ascertainable or inherent basis of general applicability on the strength of which the discrimination was sought to be carried out. The Court would investigate the reasonableness and justifications of dividing persons into different groups and look to see if there were compelling reasons to distinguish between two classes.

g)      In determining the impact of State action upon constitutional guarantees which are fundamental, it follows that the extent of protection against impairment of a fundamental right is determined not by the object of the Legislature nor by the form of the action, but by its direct operation upon the individual's rights, that is to say, It is not the object of the authority, making the law, nor the form of action, it is the effect of the law and of the action upon the right which attracts the jurisdiction of the Court to grant relief.

h)      The above principles may be borne in mind by the Courts when they are called upon to adjudge the constitutionality of any particular law attacked as discriminatory and violative of the equal protection of the laws.

Concluding remarks

The law of the Constitution is not only for those who govern, and, for the theorist, but also for the bulk of the people, for the common man, for whose benefit & pride, and, safeguard, the Constitution has also been written.


Number of Writ Petitions have been filed in the Bombay High Court, inter alia, challenging this system of taxation. Janhit Manch, to which the present author is a Member, has also filed a PIL in the Bombay High Court in this respect.

Sandeep Jalan
Advocate
Mumbai.

Sunday, February 9, 2014

A complete misreading of the Girish Ramchandra Deshpande judgment of the Apex Court…..


….. delivered in the backdrop of the disclosure of Information of Income tax Returns etc. of Public Servants / Ministers / MPs.

(1)        Ordinarily, the information requested under RTI Act, 2005,  of the Service records, Assets and Liabilities / Income Tax Returns of a Public Servant / Ministers / MPs, are refused, whilst invoking the ruling of the Apex Court given in the Girish Ramchandra Deshpande case.

(2)        It is my case that any such information can lawfully be disclosed within the framework of sections 8(1)(j) and / or 8(2).

(3)        It is observed that the PIOs / FAA / CIC / SIC sought to deny the info on the premise that (a) the info requested is a personal information; and the info requested has no relationship to public activity and public interest; (b) the disclosure of info would cause unwarranted invasion to the privacy of the concerned individual; (c) there is no larger public interest involved in the disclosure of info requested; (d) the Apex Court have in the Girish Ramchandra Deshpande case have barred the disclosure of Income Tax / Assets of Public Servant / Ministers / MPs etc. I have not seen a case where the PIO / FAA /CIC have ever dealt with the proposition of law, wherein the info may be disclosed, if the info can be furnished to the Parliament or State Legislature.

(4)        In the ruling of the Girish Ramchandra Deshpande case, the Apex Court have not laid down any law in respect of purport and ambit of section 8(1)(j) of the RTI Act, 2005, and therefore, the said ruling has no precedent value as such; and the said ruling is confined to the facts of the said case and therefore has no precedent value as such.

(5)        It appears that PIOs / FAA / SIC / CIC are entertaining the belief that the Apex Court, in their Ruling in Girish Ramchandra Deshpande, have put complete embargo on the disclosure of the Income Tax Returns. This is completely misreading of the said ruling.

(6)        It is submitted that, in the said ruling, the Apex Court have held that “Income Tax returns are a personal information”; and thereafter, the Apex Court refused to direct the disclosure of information, on the premise of the factual matrix of the said case, that is to say, the Hon’ble Apex court refused on the premise of (a) the absence of element of public activity and public interest having regard to the nature of information sought; (b) unwarranted breach of privacy of the individual concerned having regard to the nature of information sought; (c) the Petitioner therein has not succeeded in establishing that the information sought for, is for the larger public interest.

From the perusal of Para 1 of the said judgment, it would reveal that the Hon’ble Court have not posed any question of law to itself. Therefore, as such the Hon’ble Court had no intention to interpret the mandate of section 8(1)(j);

From the perusal of Para 10, it would reveal that proviso to section 8(1)(j) is not stated therein. Therefore, it can safely be argued that the said judgment was passed in ignorance of the said proviso.

In Para 12 of the said judgment, the Hon’ble Court have inter alia, stated that –
§  the info requested is a personal information;
§  the performance of an employee/officer is primarily a matter between the employee and the employer, which are governed by the service rules,
§  which has no relationship to any public activity or public interest;
§  the disclosure of which would cause unwarranted invasion of privacy of that individual.
§  The Court have expressly observed to say that, in a given case, if the Central Public Information Officer or the State Public Information Officer of the Appellate Authority is satisfied that the larger public interest justifies the disclosure of such information, appropriate orders could be passed but the petitioner cannot claim those details as a matter of right.

(7)        It is further submitted that, had the judgments of R. Rajagopal and ADR /PUCL discussed hereinafter, which dealt with the issues privacy, public records and disclosure of information in respect of Public servants, were brought to the knowledge of the Hon’ble Apex Court, the Hon’ble Apex Court could have never arrived at the conclusion, as recorded in Para 12.

(8)        It is of fundamental importance to understand that every request for information is a peculiar case in itself; and the expression “Public interest” is not capable of precise definition, and no hard and fast rules can be laid down as what constitutes Public interest. Its ascertainment would always depend on the nature of information requested and facts and circumstances of each case.

The law of Precedents

(9)        I now crave leave to state some of the law of precedents, which has immediate bearing on the instant write up. Article 141. Law declared by Supreme Court to be binding on all courts.— The law declared by the Supreme Court shall be binding on all courts within the territory of India.

a)      Broadly speaking, every judgment of superior courts has three segments, namely, (i) the facts and the point at issue; (ii) the reasons for the decision; and (iii) the final order containing the decision. It is the ratio decidendi of a judgment and not the final order in the judgment, which forms a precedent.

b)      What is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence... A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered.

c)      It is not everything said by a judge while giving judgment, constitutes a precedent. The enunciation of the reason or principle on which a question before the court has been decided, is alone binding as a precedent.

d)     A judgment should be understood in the light of the facts of that case, and no more should be read into it than what it actually says.

e)      Every judgment to qualify to be a precedent should invariably answer an issue of law; and a decision is available as a precedent only if it decides a question of law.

f)       The only thing binding as an authority upon a subsequent judge is the principle upon which the case was decided.

g)      It is well settled that a decision of the Apex Court based on specific facts does not operate as a precedent for future cases. Only the principles of law that emanate from a judgment of the Court, which have aided in reaching a conclusion of the problem, are binding precedents within the meaning of Article 141.

h)      The expression “declared” in Article 141 of the Constitution is wider than the words “found or made”. To declare is to announce opinion. Interpretation, ascertainment and evolution are parts of the process, while that interpreted, ascertained or evolved is declared as law.

That there is a Fiduciary relationship

(10)      It is seen that an argument is advanced by PIOs / FAA / SIC / CIC that Income Tax Dept holds financial information of the People in fiduciary capacity. This is misconceived, for, the people submit their financial information to the Income Tax Dept under a statutory obligation, and thus the Income tax dept holds their financial information by virtue of law.

Further, it may be stated that, the fiduciary relationship presupposes some kind of discretion / choice between the concerned parties; wherein the submission of financial information to the Income tax dept is a statutory obligation. The individual has no choice of whether he wants to file the Income tax return, nor does it presuppose any trust or faith he has in the Income tax department. He does it because the law requires him to do this, and if he did not fulfill his statutory duty he would have to bear the legal consequences.

(11)      Coming to the real controversy – Whether the information [Income Tax Returns of an Elected Representative who is a Minister / Public Servant] can be disclosed, within the framework of Law, i.e. section 8(1)(j) of the Right to Information Act [RTI], 2005. The expression “framework of Law”, would certainly include the Law declared by Apex Court as enshrined under Article 141 of the Constitution of India.

I proceed to interpret, literally, the mandate of sections 8(1)(j) and 8(2). Section 8(1)(j) and 8(2) reads as –

SECTION 8: Exemption from disclosure of information:
(1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,
(j) information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the Appellate Authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information:

Provided that the information which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.

(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. 

The literal interpretation of the mandate of sections 8(1)(j) and 8(2) –

1.      To qualify for the exemption from disclosure, two ingredients should exist, and under two circumstances, the information requested may be denied –

(a)  Where the Information requested is (a) a personal information; and (b) the Nature of info requested has apparently no relationship to any public activity or interest;
or
      (b)  Where the Info requested is (a) personal information; and (b) the disclosure of information would cause unwarranted invasion of privacy of the individual concerned.

However, information requested may be disclosed in the following seven circumstances –

a)      Where the Information requested is although a personal information; but it has relationship to a public activity;

b)      Where the Information requested is although a personal information; but it has relationship to a public interest;

c)      Where the Information requested is although a personal information; but the disclosure of info may not cause unwarranted invasion to the privacy of the concerned individual;

d)     Where the Info requested is although a personal information; and Nature of info requested has apparently no relationship to any public activity or public interest; but where the LARGER PUBLIC INTEREST justifies the disclosure of such information;

e)      Where the Info requested is although a personal information; and the disclosure of info may cause unwarranted invasion of privacy of the concerned individual, but where the LARGER PUBLIC INTEREST justifies the disclosure of such information;

f)       Where the Info requested is although a personal information; and the nature of info requested has apparently no relationship to any public activity or interest; and the Info requested is a personal information; and the disclosure of info may cause unwarranted invasion of privacy of the individual; and where there is apparently no LARGER PUBLIC INTEREST in the disclosure of the Info, YET, where the information requested, can be furnished to the Parliament or to a State Legislature, on their asking [Proviso to S.8(1)], the same can be furnished to the citizen;

g)      Where the Info requested is although a personal information; and the nature of info requested has apparently no relationship to any public activity or interest; and the Info requested is a personal information; and the disclosure of info may cause unwarranted invasion of privacy of the individual; and where there is apparently no LARGER PUBLIC INTEREST in the disclosure of the Info; YET, the Info may be disclosed where the disclosure of information in the public interest outweighs the harm claimed by the third party or by any other individual claiming prejudice by reason of such disclosure [S.8(2)];

(12)      The ruling of the Apex Court in the landmark ADR / PUCL case [(2002) 5 SCC 294] assumes greatest significance in the light of the nature of Info which is the subject matter of the present write up. The said judgment throws light on the element of “Public interest” in the disclosure of certain Information of Public Servants / Ministers / MPs etc., and so also justifies the disclosure of Info on LARGER PUBLIC INTEREST ground.

(13)      In the ruling of Rajagopal case [(1994) 6 SCC 632], the Apex Court have stated what constitute “privacy” vis a vis a privacy of a public servant.

(14)      The ruling of the Bombay High Court in the case of Kashinath J. Shetye versus Dinesh Vaghela, in WP No.1 of 2009, delivered by Justice C.L. Pangarkar, dated 20.01.2009, the Hon’ble Court, inter alia, have dealt with the proposition of law, wherein the info may be disclosed, if the info can be furnished to the Parliament or State Legislature.


(15)      I now crave leave to deal with each of the above referred judgment, which dealt with the issues of (a) Public Interest (b) Privacy (c) disclosure of info on the ground of furnishing of info to the Parliament  / State Legislature.

(16)      The keen observations of the Apex Court in the case of ADR /PUCL case [(2002) 5 SCC 294, [Relevant Paras 1, 2, 10, 30, 31, 32, 33, 34, 36, 39, 40, 48]; and Para 7 of the Bombay High Court Ruling, stated hereinbefore, supplement the argument, of the existence of the element of “Public Interest” and “Larger Public Interest”, in the disclosure of Info, including of Income Tax Returns of Public Servants / MPs / Ministers etc.

(17)      In the backdrop of aforesaid submission, it is further submitted that there is a general belief that Public servants, politicians and elected representatives are corrupt and amass wealth at the expense of the public. There is also a common belief that Income Tax authorities do not check the IT returns of those who are elected with their declared affidavits filed at the time of standing for elections. If this is true, citizens will act as monitors. On the other hand if citizens’ apprehensions are not true, it would enhance the trust and respect for the elected representative, which is necessary for a healthy democracy. This would certainly be significant public interest to enhance the credibility and trust in elected representatives and the Income tax department.

(18)      The keen observations of the Apex Court in the case of Rajagopal case [(1996) 6 SCC 632 [Relevant Paras 1, 9, 18, 26] and in the case of ADR /PUCL case [(2002) 5 SCC 294 [Relevant Para 41]; and Para 8 of the Bombay High Court Ruling stated hereinbefore, supplement the argument, of the absence of the element of “Privacy” in the disclosure of Information, including of Income Tax Returns of Public Servants / MPs / Ministers etc.

(19)      The Para 8 of the Ruling of the Bombay High Court, referred hereinbefore, dealt with the proviso to section 8(1)(j) which dealt with the proposition that the disclosure of information on the ground of furnishing of information to the Parliament  / State Legislature.

(20)      The observations of the Apex Court in the ADR /PUCL case [(2002) 5 SCC 294 [Relevant Para 42, 43, 44, 48] fortifies the proposition that “No further purported harm could accrue to the Public Servant / MPs / Ministers etc.”, in the disclosure of Information, including of Income Tax Returns of Public Servants / MPs / Ministers etc.

(21)      All the relevant Paras referred hereinbefore of the concerned Apex court and Bombay High court rulings are reproduced at the end of this write up.

(22)      It is further submit that the Preamble and the Statement of objects of the RTI Act, 2005, gives a vital clue that the said Act was enacted with the spirit of ensuring transparency in the administration of the nation; and all the aforesaid discussion may be viewed from the prism of the Preamble and Statement of object of RTI Act. The Preamble and the Statements of objects and Reasons runs as follows –

An Act to provide for setting out the practical regime of right to information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority, the constitution of a Central Information Commission and State Information Commissions and for matters connected therewith or incidental thereto

WHEREAS the Constitution of India has established democratic       Republic;

AND WHEREAS democracy requires an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed;

AND WHEREAS revelation of information in actual practice is likely to conflict with other public interests including efficient operations of the Governments, optimum use of limited fiscal resources and the preservation of confidentiality of sensitive information;

AND WHEREAS it is necessary to harmonise these conflicting interests while preserving the paramountcy of the democratic ideal;

NOW, THEREFORE, it is expedient to provide for furnishing certain information to citizens who desire to have it.


Misconceived interpretation that Information requested may also be denied u/s 11 of the RTI Act

(23)      An argument is also advanced that information requested may also be denied u/s 11 of the RTI Act, 2005.  

a)      It is submitted that whenever any PIO is in receipt of an Application u/s 6 of the Act, seeking information, the said PIO is, at the outset, expected to consider if the information requested, is exempted as per the provisions of Sections 8 and/or 9 of the RTI Act. If the PIO comes to the conclusion that the information requested is not exempted u/s 8 and/or 9, the PIO may disclose the information.

b)      However, where the PIO intends to disclose the information, but where the information requested, has been supplied by a third party and is treated as confidential by the said third party, the PIO is obliged to intimate to the concerned third party of his intention to disclose the information.

c)      If the third party objects to the disclosure of the information, the PIO is to keep it in his mind his objections while taking a decision about disclosure of the information requested.

d)     The PIO is not obliged to accept every objection which has been raised by the concerned third party, and PIO is obliged to keep in view such objections of the third party; and these objections have to be tested at the mandate of sections 8 and / or 9 of the RTI Act. In other words, every objection raised by the third party has to be tested at the touchstone of the provisions of sections 8 and/or 9 of the RTI Act.

e)      The PIO may then decide to deny the information requested only if he is convinced about the objections of the third party justifying that the information sought is exempted as per the provisions of Section 8 and/or 9 of the RTI Act.

f)       The RTI Act does not give veto power to the third party, but provides the third party with an opportunity to raise his legitimate objections; and in case the PIO decides to disclose the information despite the objections, the concerned third party may prefer an Appeal against the decision of the said PIO, as per the provisions of Section 11 (2) to 11 (4).  These express provisions 11(2) to 11(4) makes it clear that the third party is not rendered remediless, in cases where PIO disagrees with the third party’s objection in disclosure of information.

g)      The expression “Where PIO intends to disclose information..” is guiding force to deal with the Application. Further, the nature of objections, if any, of the third party have to be justified in terms of the exemptions under Sections 8 and/or 9.

h)      Section 11(3) contemplates “decision” about the disclosure or non- disclosure of information requested; and the PIO is obliged to inform the concerned third party about his said decision. It may be noted that this sub-section (3) contemplates only “decision” to disclose or not, and not the actual disclosure. And therefore, there are adequate safeguards in the Act to protect the interests of the third parties, who may prefer an Appeal, if their legitimate objections are ignored by the concerned PIO.

i)        The reading of section 7(7) of the RTI Act, 2005, clearly suggests that information requested can be denied only u/ss 8 and / or of the Act.

j)        I further say that while deciding any Application / Appeal received u/s 6, 19(1) or 19(3) of the Act, the main issue before the PIO / 1st Appellate Authority (FAA) and Commission is “Having regard to the nature of information requested, and the grounds advanced by the Appellant, if any, whether information can be furnished, at the touchstone of sections 8 and/or 9.

k)      While dealing with RTI Applications involving the purported applicability of section 8(1)(j), while granting or refusing the disclosure of the information, the issue is always of “subjective satisfaction” of the concerned PIO / FAA and the Commission, and each of the concerned authority has every right to reach appropriate conclusion, provided it records reasons for its said “subjective satisfaction”.

l)        While dealing with the cases of personal information or cases of third party information, the concerned PIO, FAA and the Commissions are obliged to take independent decision, while taking into consideration the larger public interest involved in the disclosure of the information and the nature of the objection raised by the third party.

m)    The said authorities are obliged to deal with the grounds, if any, furnished by the concerned Applicant / Appellant, and shall record their “satisfaction”, in the form of reasons, for rejection or for allowing the furnishing of information.

n)      The concerned authorities cannot merely reject the Application, based on the objection raised by the third party, or reject the Application / Appeal, by merely stating that no larger public interest is involved in the disclosure of information requested.

o)      Every request for information is a peculiar case in itself; and the expression “Public interest” is not capable of precise definition, and no hard and fast rules can be laid down as what constitutes Public interest. Its ascertainment would always depend on the nature of information requested.

(24)      In its recent ruling the Apex Court [(2012) 3 SCC 387] said –

Para 28: Now, the interpretation of a legal provision and its application to a set of facts are two different exercises requiring different approaches.

28.1: "Interpretation" means the action of explaining the meaning of something. For interpreting a statutory provision, the court is required to have an insight into the provision and unfold its meaning by means of the well-established canons of interpretation, having regard to the object, purpose, historicism of the law and several other well-known factors. But, what is important to bear in mind is that the interpretation of a legal provision is always independent of the facts of any given case.

28.2: "Application" means the practical use or relevance (of something to something); the application of a statutory provision, therefore, is by definition case related and as opposed to interpretation, the application or non-application of a statutory provision would always depend on the exact facts of a given case. Anyone associated with the process of adjudication fully knows that even the slightest difference in the facts of two cases can make a world of difference on the question whether or not a statutory provision can be fairly and reasonably applied to it.

(25)      Whereas I have tried to articulate the mandate of section 8(1)(j) hereinbefore, taking clue from the aforesaid Apex Court ruling, every Application / Appeal may accordingly deserves to be decided while applying the mandate of law to the facts and circumstances bearing each of the concerned Application / Appeal.


The observations in ADR /PUCL case [(2002) 5 SCC 294]

Para 1: Short but important question involved in these matters is _ in a nation wedded to republican and democratic form of government, where election as a Member of Parliament or as a Member of Legislative Assembly is of utmost importance for governance of the country, whether, before casting votes, voters have a right to know relevant particulars of their candidates?

Para 2  Petitioner has also referred Para 6.2 of the report of the Vohra Committee of the Government of India, Ministry of Home Affairs, which reads as follows:-

"6.2 Like the Director CBI, the DIB has also stated that there has been a rapid spread and growth of criminal gangs, armed senas, drug Mafias, smuggling gang, drug peddlers and economic lobbies in the country which have, over the years, developed an extensive network of contacts with the bureaucrats/Government functionaries at the local levels, politicians, media persons and strategically located individuals in the non State sector. Some of these Syndicates also have international linkages, including the foreign intelligence agencies. In this context the DIB have given the following examples _

(i) In certain States like Bihar, Haryana and UP, these gangs enjoy the patronage of local level politicians, cutting across party lines and the protection of Governmental functionaries. Some political leaders become the leaders of these gangs, armed senas and over the year get themselves elected to local bodies State Assemblies and the national Parliament. Resultantly, such elements have acquired considerable political clout seriously jeopardising the smooth functioning of the administration and the safety of life and property of the common man causing a sense of despair and alienation among the people;

(ii) The big smuggling Syndicates having international linkages have spread into and infected the various economic and financial activities, including havala transactions, circulation of black money and operations of a vicious parallel economy causing serious damage to the economic fibre of the country. These Syndicates have acquired substantial financial and muscle power and social respectability and have successfully corrupted the Government machinery at all levels and yield enough influence to make the task of Investigating and Prosecuting agencies extremely difficult; even the members of the Judicial system have not escaped the embrace of the Mafia;

(iii) Certain elements of the Mafia have shifted to narcotics, drugs and weapon smuggling and established narco-terrorism networks specially in the States of J and K, Punjab, Gujarat and Maharashtra. The cost of contesting elections has thrown the politician into the lap of these elements and led to a grave compromise by officials of the preventive/detective systems. The virus has spread to almost all the centres in the country, the coastal and the border States have been particularly affected;

(iv) The Bombay bomb blast case and the communal riots in Surat and Ahmedabad have demonstrated how the India underworld has been exploited by the Pak ISI and the latter's network in UAE to cause sabotage subversion and communal tension in various parts of the country. The investigations into the Bombay bomb blast cases have revealed expensive linkages of the underworld in the various governmental agencies, political circles, business sector and the film world".

Para 10: Mr. K.K. Venugopal, learned senior counsel appearing on behalf of Election Commission exhaustively referred to the counter affidavit filed on behalf of Election Commission. At this stage, we would refer to some part from the said affidavit. It is stated that issue of persons with criminal background' contesting election has been engaging the attention of the Election Commission of India for quite some time; even Parliament in the debates on 50 years of independence and the resolution passed in its special Session in August, 1997 had shown a great concern about the increasing criminalisation of politics; it is widely believed that there is criminal nexus between the political parties and anti-social elements which is leading to criminalisation of politics; the criminals themselves are now joining election fray and often even getting elected in the process. Some of them have even adorned ministerial berths and, thus, law breakers have become law makers.


Para 30: Now we would refer to various decisions of this Court dealing with citizens' right to know which is derived from the concept of 'freedom of speech and expression'. The people of the country have a right to know every public act, everything that is done in a public way by the public functionaries. MP or MLAs are undoubtedly public functionaries. Public education is essential for functioning of the process of popular government and to assist the discovery of truth and strengthening the capacity of an individual in participating in decision making process. The decision making process of a voter would include his right to know about public functionaries who are required to be elected by him.

Para 31: In State of Uttar Pradesh V/s. Raj Narain and others (1975) 4 SCC 428), the Constitution Bench considered a question _ whether privilege can be claimed by the Government of Uttar Pradesh under Section 123 of the Evidence Act in respect of what has been described for the sake of brevity to be the Blue Book summoned from the Government of Uttar Pradesh and certain documents summoned from the Superintendent of Police, Rae Bareli, Uttar Pradesh? The Court observed that "the right to know which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy is claimed for transactions which can, at any rate, have no repercussion on public security. The Court pertinently observed as under :

"In a government of responsibility like ours, where all the agents of the public must be responsible for their conduct, there can be but few secrets. The people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. - They are entitled to know the particulars of every public transaction in all its bearing..."

Para 32: In Indian Express Newspapers (Bombay) Private Ltd, and Others etc. V/s. Union of India and others [(1985) 1 SCC 641], this Court dealt with the validity of customs duty on the newsprint in context of Art. 19(1)(a). The Court observed (in para 32) thus:
"The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic country cannot make responsible judgments... "

Para 33: The Court further referred (in para 35) the following observations made by this Court in Romesh Thappar V/s. State of Madras (1950 SCR 594) :

"...(The freedom) lay at the foundation of all democratic organisations, for without free political discussion no public education, so essential for the proper functioning of the processes of popular government, is possible. A freedom of such amplitude might involve risks of abuse... (But) "it is better to leave a few of its noxious branches to their luxuriant growth, than, by pruning them away, to injure the vigour of those yielding the proper fruits".

Again in paragraph 68, the Court observed :-
"....The public interest in freedom of discussion (of which the freedom of the press is one aspect) stems from the requirement that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect themselves." (Per Lord Simon of Glaisdale in Attorney -General V/s. Times Newspapers Ltd. (1973) 3 All ER 54). Freedom of expression, as learned writers have observed, has four broad social purposes to serve: (1) it helps an individual to attain self -fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision -making and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle involved here is the people's right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration...."

Para 34: From the afore-quoted paragraph, it can be deduced that the members of a democratic society should be sufficiently informed so that they may influence intelligently the decisions which may affect themselves and this would include their decision of casting votes in favour of a particular candidate. If there is a discharge by a candidate as sought for then it would strengthen the voters in taking appropriate decision of casting their votes.

Para 36: Thereafter, the Court summarised the law on the freedom of speech and expression under Art. 19(1)(a) as restricted by Art. 19(2) thus:_
"The freedom of speech and expression includes right to acquire information and to disseminate it. Freedom of speech and expression is necessary, for self -fulfilment. It enables people to contribute to debate on social and moral issues. It is the best way to find a truest model of anything, since it is only through it that the widest possible range of ideas can circulate. It is the only vehicle of political discourse so essential to democracy Equally important is the role it plays in facilitating artistic and scholarly endeavours of all sorts... "

Para 37: The Court thereafter (in paragraph 82) held :-
"True democracy cannot exist unless all citizens have a right to participate in the affairs of the polity of the country. The right to participate in the affairs of the country is meaningless unless the citizens are well informed on all sides of the issues, in respect of which they are called upon to express their views. One-sided information, disinformation, misinformation and non-information all equally create an uninformed citizenry which makes democracy a farce when medium of information is monopolised either by a partisan central authority or by private individuals or oligarchic organisations. This is particularly so in a country like ours where about 65 per cent of the population is illiterate and hardly 1 1/2 per cent of the population has an access to the print media which is not subject to pre-censorship."
The Court also observed -"a successful democracy posits an 'aware' citizenry."

Para 39-40: In the case of Dinesh Trivedi, M.P. and Others V/s. Union of India and Others [(1997) 4 SCC 306], the Court dealt with a petition for disclosure of a report submitted by a Committee established by the Union of India on 9/07/1993 which was chaired by erstwhile Home Secretary Shri N.N. Vohra which subsequently came to be popularly known as Vohra Committee.

In the said case, the Court dealt with citizen's rights to freedom of information and observed "in modern constitutional democracies, it is axiomatic that citizens have a right to know about the affairs of the Government which, having been elected by them, seek to formulate sound policies of governance aimed at their welfare". The Court also observed "democracy expects openness and openness is concomitant of a free society and the sunlight is a best disinfectant".

Para 41: Mr. Ashwini Kumar, learned senior counsel appearing on behalf of the intervenor submitted that the aforesaid observations are with regard to citizen's right to know about the affairs of the Government, but this would not mean that citizens have a right to know the personal affairs of MPs or MLAs. In our view, this submission is totally misconceived. There is no question of knowing personal affairs of MPs or MLAs. The limited information is - whether the person who is contesting election is involved in any criminal case and if involved what is the result? Further there are widespread allegations of corruption against the person holding post and power. In such a situation, question is not of knowing personal affairs but to have openness in democracy for attempting to cure cancerous growth of corruption by few rays of light. Hence, citizens who elect MPs or MLAs are entitled to know that their representative has not misconducted himself in collecting wealth after being elected. This information could be easily gathered only if prior to election, the assets of such person are disclosed. For this purpose, learned counsel Mr. Murlidhar referred to the practice followed in the United States and the form which is required to be filled in by a candidate for Senate which provides that such candidate is required to disclose all his assets and that of his spouse and dependants. The form is required to be re-filled every year. Penalties are also prescribed which include removable from ballot.

Para 42: Learned counsel Mrs. Kamini Jaiswal referred to All India Service (Conduct) Rules, 1968 and pointed out that a member of All India Service is required to disclose his/her assets including that of spouse and the dependant children. She referred to Rule 16 of the said Rules, which provides for declaration of movable, immovable and valuable property by a person who becomes Member of the Service. Relevant part of Rule 16 is as under:

"16. (1) Every person shall, where such person is a member of the Service at the commencement of these rules, before such date after such commencement as may be specifieded by the Government in this behalf, or, where such person becomes a member of the Service after commencement, on his first appointment to the Service submits a return of his assets and liabilities in such form as may be prescribed by the Government giving the full particulars regarding: -

(a) the immovable property owned by him, or inherited or acquired by him or held by him on lease or mortgage, either in his own name or in the name of any member of his family or in the name of any other person.
(b) shares, debentures, postal Cumulative Time Deposits and cash including bank deposits inherited by him or similarly owned, acquired or held by him;
(c) other movable property inherited by him or similarly owned, acquired or held by him; and
(d) debts and other liabilities incurred by him directly or indirectly"

Para 43: Such officer is also required to submit an annual return giving full particulars regarding the immovable and movable property inherited by him or owned or acquired or held by him on lease or mortgage either in his own name or in the name of any member of his family or in the name of any other person.

Para 44: It is also submitted that even the Gazetted Officers in all government services are required to disclose their assets and thereafter to furnish details of any acquisition of property annually. In our view, it is rightly submitted that in a democratic form of government, MP or MLA is having higher status and duty to the public. In P.V. Narasimha Rao. V/s. State (CBI/SPE) [(1998) 4 SCC 626], the Court inter alia considered whether Member of Parliament is a public servant? The Court [in para 162] held thus:

"A public servant is "any person who holds an office by virtue of which he is authorised or required to perform and public duty". Not only, therefore, must the person hold an office but he must be authorised or required by virtue of that office to perform a public duty. Public duty is defined by Section 2(b) of the said Act to mean "a duty in the discharge of which the State, the public or that community at large has an interest". In a democratic form of government it is the Member of Parliament or a State Legislature who represents the people of his constituency in the highest lawmaking bodies at the Centre and the State respectively. Not only is he the representative of the people in the process of making the laws that will regulate their society, he is their representative in deciding how the funds of the Centre and the State shall be spent and in exercising control over the executive. It is difficult to conceive of a duty more public than this or of a duty in which the State, the public and the community at large would have greater interest... "

Para 48: The Election Commission is directed to call for information on affidavit by issuing necessary order in exercise of its power under Art. 324 of the Constitution of India from each candidate seeking election to Parliament or a State Legislature as a necessary part of his nomination paper furnishing therein, information on the following aspects in relation to his/her candidature:-
(1) Whether the candidate is convicted / acquitted / discharged of any criminal offence in the past if any, whether he is punished with imprisonment or fine?
(2) Prior to six months of filing of nomination, whether the candidate is accused in any pending case, of any offence punishable with imprisonment for two years or more, and in which charge is framed or cognizance is taken by the Court of law. If so, the details thereof.
(3) The assets (immovable, movable, bank balances etc.) of a candidate and of his/her spouse and that of dependants.
(4) Liabilities, if any, particularly whether there are any over dues of any public financial institution or Government dues.
(5) The educational qualifications of the candidate.


The observations in Rajagopal case [(1996) 6 SCC 632]

Para 1: This petition raises a question concerning the freedom of press vis-a-vis the right to privacy of the citizens of this country. It also raises the question as to the parameters of the right of the press to criticise and comment on the acts and conduct of public officials.

Para 9:  A more elaborate appraisal of this right took place in a later decision in Gobind V/s. State of M.P wherein Mathew, J. speaking for himself, Krishna lyer and Goswami, JJ. traced the origins of this right and also pointed out how the said right has been dealt with by the United States Supreme court in two of a its well-known decisions in Griswold V/s. Connecticut and Roe V/s. Wade. After referring to Kharak Singh and the said American decisions, the learned Judge stated the law in the following words:

Any right to privacy must encompass and protect the persona] intimacies of the home, the family, marriage, motherhood, procreation and child-rearing. This catalogue approach to the question is obviously not as instructive as it does not give analytical picture of the distinctive characteristics of the right of privacy. Perhaps, the only suggestion that can be offered as unifying principle underlying the concept has been the assertion that a claimed right must be a fundamental right implicit in the concept of ordered liberty.

Para 18: The principle of the said decision (New York Times versus Sullivan) has been held applicable to "public figures" as well. This is for the reason that public figures like public officials often play an influential role in ordering society. It has been held as a class the public figures have, as the public officials, have, access to mass media communication both to influence the policy and to counter criticism of their views and activities, On this basis, it has been held that the citizen has a legitimate and substantial interest in the conduct of such persons and that the freedom of press extends to engaging in uninhibited debate about the involvement of public figures in public issues and events.

Para 26: We may now summarise the broad principles flowing from the above discussion:
(1) the right to privacy is implicit in the right to life and liberty guaranteed to the citizens of this country by Art. 21. It is a "right to be let alone." A citizen has a right to safeguard the privacy of his own, his family, marriage, procreation, motherhood, child bearing and education among other matters. None can publish anything concerning the above matters without his consent - whether truthful or otherwise and whether laudatory or critical. If he does so, he would be violating the right to privacy of the person concerned and would be liable in an action for damages. Position may, however, be different, if a person voluntarily thrusts himself into controversy or voluntarily invites or raises a controversy.

(2) The rule aforesaid is subject to the exception, that any publication concerning the aforesaid aspects becomes unobjectionable if such publication is based upon public records including Court records. This is for the reason that once a matter becomes a matter of public record, the right to privacy no longer subsists and it becomes a legitimate subject for comment by press and media among others. We are, however, of the opinion that in the interests of decency (Article 19(2)) an exception must be carved out to this rule, viz., a female who is the victim of a sexual assault, kidnap, abduction or a like offence should not further be subjected to the indignity of her name and the incident being published in press/ media.


The observations made by Bombay High Court in the case of Kashinath J. Shetye versus Dinesh Vaghela, in WP No.1 of 2009, delivered by Justice C.L. Pangarkar, dated 20.01.2009

Para 7 The first thing that needs to be taken into consideration is that the petitioner is a public servant. When one becomes a public servant, he in strict sense becomes a public servant and as such, every member of public, gets a right to know about his working, his honesty, integrity and devotion to duty. In fact, nothing remains personal while as far as the discharging of duty. A public servant continues to be a public servant for all 24 hours. Therefore, any conduct/ misconduct of a public servant even in private, ceases to be private. When, therefore, a member of a public, demands an information as to how many leaves were availed by the public servant, such information though personal, has to be supplied and there is no question of privacy at all. Such supply of information, at the most, may disclose how sincere or insincere the public servant is in discharge of his duty and the public has a right to know.


Para 8: The next question is whether the applicant should be supplied the copies of the application at all. It was contended that the copies of the application should not be supplied for, they may contain the nature of the ailment and the applicant has no right to know about the ailment of the petitioner or his family. To my mind, what cannot be supplied, is a medical record maintained by the family physician or a private hospital. To that extent, it is his right of privacy, it certainly, cannot be invaded. The application for leave is not a medical record at all. It, at the most, may contain ground on which leave was sought. It was contended that under Sec.8 (1) (j), the information cannot be supplied. In this regard, it would be necessary to read proviso to that section. If the proviso is read, it is obvious that every citizen is entitled to have that information which the Parliament can have. It is not shown to me as to why the information as is sought, cannot be supplied to the Parliament. In fact, the Parliament has a right to know the ground for which a public servant has taken leave since his salary is paid from the public exchequer. In the circumstances, I do not find that the Information Commission committed any error in directing such information to be supplied. There is no substance in the writ petition. It is dismissed.

Thanking you.

Sandeep Jalan
Advocate

Mumbai.