Latest news with #DirectivePrinciplesofStatePolicy
Time of India
3 days ago
- Politics
- Time of India
India's Constitution Has Delivered On Socio-Economic Justice In 75 Years, Says CJI Gavai in Italy Address
1 2 3 4 Nagpur: Chief Justice of India (CJI) Bhushan Gavai on Wednesday underscored the Constitution's transformative role in delivering socio-economic justice in India over the past 75 years, stating it continues to serve as a living document that empowers the marginalised and upholds equality. Addressing legal professionals in Italy on the invitation of Chamber of International Lawyers, he delivered a keynote on "Role of the Constitution in Delivering Socio-Economic Justice". The framers of the Constitution were deeply conscious of the imperative of socio-economic justice, Justice Gavai said, noting how the document emerged from the struggle for independence with a vision to correct centuries of entrenched inequality. He emphasised that socio-economic justice was not just aspirational, but was pursued through constitutional mechanisms like the Directive Principles of State Policy, affirmative action, and judicial interpretation of rights. Justice Gavai, who hails from Vidarbha, pointed to the First Constitutional Amendment of 1951 as a foundational moment when Parliament protected land reform laws and enabled reservations for Scheduled Castes and Tribes. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Top Internet Deals for Your Home – 2025 Edition Search7 Learn More Undo "This amendment was a direct legislative response to ensure social justice and equitable distribution of opportunities," he said. The CJI credited Supreme Court for expanding the reach of socio-economic rights through progressive interpretations of Article 21, which guarantees the right to life. "The Constitution has shown that law can be a tool for social change, a force for empowerment, and a protector of the vulnerable," he stated, citing landmark rulings such as Kesavananda Bharati, which enshrined the 'basic structure' doctrine to shield fundamental constitutional values. Reflecting on India's early legislative interventions, he mentioned land and agrarian reform laws and affirmative action policies as tangible expressions of the Constitution's commitment to dismantling caste hierarchies and redistributing opportunity. "For countless landless and marginalised individuals, especially from oppressed castes and communities, these reforms represented the first real opportunity to secure economic independence and dignity," he added. Justice Gavai offered a personal reflection on the Constitution's democratising force, stating, "I have often said, and I reiterate here today, that it is because of this constitutional vision of inclusion and transformation that I am standing before you as the CJI. Coming from a historically marginalised background, I am a product of the very constitutional ideals that sought to dismantle barriers of caste and exclusion. " In the education sector, reservation policies for SCs, STs, and socially and educationally backward classes were highlighted as powerful tools for achieving substantive equality. He said such measures enabled generations from disadvantaged backgrounds to access professional and academic opportunities that were previously out of reach. Concluding his speech, he invoked Martin Luther King Junior, saying the Constitution provided both "the vision and moral guidance" to continue bending the arc of the moral universe toward justice. "It enabled us to create an inclusive democracy where law is not merely a command but a means to achieve dignity, equality, and justice for all," he affirmed. # Key takeaways from CJI Gavai's speech in Italy Indian Constitution is a transformative tool for socio-economic justice Directive Principles and early amendments protected land reforms & reservations Landmark rulings expanded socio-economic rights under Article 21 Land & agrarian reforms dismantled caste hierarchies, enabled economic dignity Affirmative action in education created access for marginalised communities Judiciary & Parliament work in tandem to enforce justice Constitution is a moral and legal force for empowerment Reiterated Constitution's success over 75 years of Indian democracy
Hindustan Times
4 days ago
- Business
- Hindustan Times
Karnataka government proposes 10-hour workdays, higher overtime cap: Report
The Karnataka government is considering a sweeping reform of labour laws that could extend the state's maximum workday to 10 hours and significantly increase the cap on overtime, moves that are raising eyebrows among worker unions and policy experts alike, Deccan Herald reported. According to the draft proposals, the state aims to amend both the Karnataka Shops and Commercial Establishments Act, 1961, and the corresponding Rules of 1963, the report further added. (Also Read: DK Shivakumar appeals for calm after SC order on Thug Life: 'Don't take law into your hands') Currently, the law limits daily work hours to nine and restricts overtime to 10 hours in total. But under the proposed revisions, the daily work limit would rise to 10 hours, with overtime extending up to 12 hours per day. More strikingly, the three-month overtime cap could increase from 50 to 144 hours. More strikingly, the three-month overtime ceiling could be increased from 50 to 144 hours. The Labour Department has justified the changes by citing directives from the central government encouraging states to align with the national model labour codes. Officials also argued that several state, including Maharashtra, Gujarat, Uttar Pradesh, Chhattisgarh, and Uttarakhand, have already adopted similar provisions, setting a precedent for Karnataka to follow suit. In addition to altering work hours, the state is also looking to ease regulatory requirements for smaller establishments. Amendments to Rule 24 of the 1963 Rules would exempt businesses with fewer than 10 employees from maintaining records, registers, and other compliance documentation typically required during labour inspections. This, too, is being attributed to central guidance, which recommends exempting units with under 20 employees. Industry groups have welcomed the proposal. MG Balakrishna, president of the Federation of Karnataka Chambers of Commerce and Industries (FKCCI), hailed the reforms as both business-friendly and reflective of a younger, more dynamic workforce. "Longer hours can drive productivity, which is critical for staying competitive globally," he said. He also stressed that easing compliance norms for micro-establishments would help prevent bureaucratic harassment. However, the move has sparked strong opposition from labour unions. Maitreyi Krishnan, state general secretary of the All India Central Council of Trade Unions (AICCTU), called the proposals 'unconstitutional' and accused the government of turning its back on the Directive Principles of State Policy. 'It's ironic that Karnataka is using states like Uttar Pradesh and Chhattisgarh as benchmarks,' Krishnan said. 'These are the very states whose workers are migrating to Karnataka in search of better conditions. If we follow their lead, we risk driving our own workforce away.' The Labour Department is scheduled to hold consultations with stakeholders, including government officials, business leaders, and union representatives, on Wednesday to deliberate on the proposed changes and possibly finalise the draft. (Also Read: In mysterious discovery, human skull, bones found near Bengaluru apartment complex)
Indian Express
10-06-2025
- Politics
- Indian Express
Daily subject-wise quiz: Polity and Governance MCQs on Lok Sabha, Justice Hema Committee and more (Week 114)
UPSC Essentials brings to you its initiative of daily subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today's subject quiz on Polity and Governance to check your progress. 🚨 Click Here to read the UPSC Essentials magazine for May 2025. Share your views and suggestions in the comment box or at Which of the following part/s of the Constitution of India offer scope for introducing affirmative action? 1. Part III (Article 15 and 16) 2. Part IV (Directive Principles of State Policy) 3. Part IV-A (Fundamental Duties) Select the correct answer using the codes given below: (a) 1 and 2 only (b) 1 only (c) 2 and 3 only (d) 1, 2 and 3 Explanation — Part III (Article 15 and 16) and Part IV (Directive Principles of State Policy) of the Constitution offer scope for introducing affirmative action. — Affirmative action is a policy that seeks to increase employment and educational possibilities for people who are under-represented in numerous aspects of our society. It is a series of policies designed to build a justified society for individuals who have previously faced discrimination by giving them priority access to education, employment, healthcare, social welfare, and other services. Therefore, option (a) is the correct answer. Consider the following statements: Statement 1: In 1953, the government set up the First Backward Classes Commission under the chairmanship of Kaka Kalelkar. Statement 2: It was formed to identify the 'socially and educationally backward' communities. Which one of the following is correct in respect of the above statements? (a) Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1. (b) Both Statement 1 and Statement 2 are correct and Statement 2 is not the correct explanation for Statement 1. (c) Statement 1 is correct but Statement 2 is incorrect. (d) Statement 1 is incorrect but Statement 2 is correct. Explanation — While the Constitution ensured reservation for Scheduled Castes (SC) and Scheduled Tribes (ST), the identification of backward classes was a post-Constituent Assembly phenomenon. — Responding to requests for quota for Other Backward Classes (OBCs), the Congress administration established the First Backward Classes Commission in 1953, chaired by Kaka Kalelkar, to identify 'socially and educationally backward' communities. Hence, statements 1 and 2 are correct. — The committee classified 2,399 castes as 'socially and educationally backward' based on their social status in the caste hierarchy, educational advancement, and representation in government services, trade, commerce, and industry. Because the panel believed caste to be the sole basis for determining backwardness, rather than economic position, the then-Congress government rejected the findings and allowed the states complete authority to determine the backward classes in their respective regions. Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1. Therefore, option (a) is the correct answer. Initially, the Eighth Schedule listed 14 languages. Which of the following languages were not among the 14 languages? 1. English 2. Sindhi 3. Marathi 4. Punjabi Select the correct answer using the codes given below: (a) 1 and 2 only (b) 2 and 3 only (c) 3 and 4 only (d) 2 and 4 only Explanation — Every year, February 21 is observed as International Mother Tongue Day, a day with special significance in India, where hundreds of mother tongues are spoken across the subcontinent. — Initially, the Eighth Schedule listed 14 languages: Assamese, Bengali, Gujarati, Hindi, Kannada, Kashmiri, Malayalam, Marathi, Oriya (renamed Odiya in 2011), Punjabi, Sanskrit, Tamil, Telugu, and Urdu. — English is not one of the 22 languages in the Eighth Schedule, however Sindhi was added to the Eighth Schedule of the Indian Constitution by the 21st Amendment Act of 1967. Therefore, option (a) is the correct answer. The Justice Hema Committee was formed: (a) to draft a National Policy on Criminal Justice aimed at comprehensive reforms in the criminal justice system. (b) to examine the structure and functioning of police forces in India and recommend reforms to make them more accountable and professional. (c) to investigate sexual harassment and gender inequality in the industry. (d) to suggest reforms in the criminal justice system to make it more efficient and people-friendly. Explanation — The Kerala police withdrew 35 sexual assault complaints filed after the Kerala government announced the Justice Hema Committee report on August 19, 2024. — In July 2017, the Kerala government established the Justice Hema Committee to look into sexual harassment and gender discrimination in the industry. This was the first such committee established by any state in the country. — The report discovered a culture of sexual harassment in the Malayalam cinema industry. The Committee reported the existence of a casting couch (in which powerful men demand sexual favours from women in exchange for film roles), frequent suggestive and vulgar comments made by men at work, and drunk male co-actors forcing themselves into women's rooms, among other things. — The Committee also discovered that numerous women did not report cases of sexual assault for fear of retaliation. Therefore, option (c) is the correct answer. With reference to the rights of minorities, consider the following statements: 1. Article 30 of the Constitution of India provides for the rights of minorities to establish and administer educational institutions. 2. Only religion-based minorities shall have the right to establish and administer educational institutions of their choice. 3. The State can discriminate against any educational institution in awarding funding because it is managed by a minority, regardless of religion or language. How many of the statements given above are correct? (a) Only one (b) Only two (c) All three (d) None Explanation — Article 30 of the Constitution of India provides for the rights of minorities to establish and administer educational institutions. Hence, statement 1 is correct. — All minorities, regardless of religion or language, have the right to create and run educational institutions of their choosing. Hence, statement 2 is not correct. — When enacting any law providing for the compulsory acquisition of any property of an educational institution established and administered by a minority, the State must ensure that the amount fixed by or determined under such law for the acquisition of such property does not restrict or abrogate the right guaranteed. — The State shall not discriminate against any educational institution in awarding funding because it is managed by a minority, regardless of religion or language. Hence, statement 3 is not correct. Therefore, option (a) is the correct answer. (Source: Constitution of India) Why is the Lok Sabha called the popular chamber? (a) A joint session of Parliament is chaired by the Speaker of the Lok Sabha. (b) The strength of Lok Sabha is and will always be greater than that of Rajya Sabha (c) It is composed of representatives of the people chosen by direct election on the basis of adult suffrage. (d) The Lok Sabha has greater authority in financial matters than the Rajya Sabha. Explanation According to FAQs at — 'The Lok Sabha is composed of representatives of the people chosen by direct election on the basis of adult suffrage. That is why it is called the popular chamber.' Therefore, option (c) is the correct answer. Consider the following key Acts: 1. The Prevention of Money Laundering Act, 2002 (PMLA) 2. The Foreign Exchange Management Act, 1999 (FEMA) 3. The Fugitive Economic Offenders Act, 2018 (FEOA) 4. The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA), 1974 Which of the above acts is the Enforcement Directorate empowered to enforce: (a) 1, 2 and 3 only (b) 1 and 4 only (c) 2, 3and 4 only (d) 1, 2, 3 and 4 Explanation Mandate to enforce laws — While the ED has a broad mandate to investigate offences related to money laundering and foreign exchange violations, it's empowered to enforce the following key laws: — The Prevention of Money Laundering Act, 2002 (PMLA): The ED traces assets from money laundering activities and is responsible for ensuring the prosecution of offenders and confiscation (permanent seizure of ownership, usually after conviction) of such assets. — The Foreign Exchange Management Act, 1999 (FEMA): The law enforcement agency is also responsible for imposing penalties on offenders of FEMA and in the cases pertaining to violations committed prior to the repeal of the FERA of 1973, which FEMA replaced, thus being responsible for the handling of legacy FERA cases. — The Fugitive Economic Offenders Act, 2018 (FEOA): The ED is mandated to attach (temporarily seizing of property without assuming ownership to prevent sale, usually during trial phase) and confiscate properties of economic offenders evading Indian law by fleeing abroad. — The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA), 1974: The Directorate is the sponsor of cases under the law and can initiate preventive detention proceedings on FEMA violations based on COFEPOSA. (Refer to read more: As SC raps ED, a look at agency's powers, role and red lines) Therefore, option (d) is the correct answer. With reference to the office of Deputy Speaker, consider the following statements: 1. Like the Speaker, the Constitution states that the Deputy Speaker must be appointed in the first sitting of the newly elected Member of Parliaments of the House of People. 2. The Deputy Speaker has the same general powers as the Speaker when presiding over the House. 3. There was no Deputy Speaker for the entire duration of the 16th, 17th and 18th Lok Sabha. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) 3 only (d) 1, 2 and 3 Explanation — There was no Deputy Speaker for the entire duration of the 17th Lok Sabha (2019-24). M Thambi Durai of the AIADMK, a BJP ally at the time, was Deputy Speaker of the 16th Lok Sabha (2014-19). The Opposition had the post of Deputy Speaker continuously from 1990 through 2014. Hence, statement 3 is not correct. — According to Article 95(1), the Deputy Speaker performs the duties of the Speaker if the post is vacant. The Deputy Speaker has the same general powers as the Speaker when presiding over the House. All references to the 'Speaker' in the Rules are deemed to be references to the Deputy Speaker as well for the times when he or she presides. Hence, statement 2 is correct. — Both the Speaker and Deputy Speaker must be appointed 'as soon as may be'. Article 93 states that 'The House of the People shall, as soon as may be, choose two members of the House to be respectively Speaker and Deputy Speaker'. Hence, statement 1 is not correct. Therefore, option (b) is the correct answer. Daily Subject-wise quiz — History, Culture, and Social Issues (Week 114) Daily subject-wise quiz — Polity and Governance (Week 113) Daily subject-wise quiz — Science and Technology (Week 113) Daily subject-wise quiz — Economy (Week 113) Daily subject-wise quiz — Environment and Geography (Week 113) Daily subject-wise quiz – International Relations (Week 113) Subscribe to our UPSC newsletter and stay updated with the news cues from the past week. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X. Manas Srivastava is currently working as Senior Copy Editor with The Indian Express (digital) and leads a unique initiative of IE - UPSC Essentials. He majorly writes on UPSC, other competitive exams and education-related projects. In the past, Manas has represented India at the G-20 Youth Summit in Mexico. He is a former member of the Youth Council, GOI. A two-time topper/gold medallist in History (both in graduation and post-graduation) from Delhi University, he has mentored and taught UPSC aspirants for more than four years. His diverse role in The Indian Express consists of writing, editing, anchoring/ hosting, interviewing experts, and curating and simplifying news for the benefit of students. He hosts the YouTube talk show called 'Art and Culture with Devdutt Pattanaik' and a LIVE series on Instagram and YouTube called 'You Ask We Answer'.His talks on 'How to read a newspaper' focus on newspaper reading as an essential habit for students. His articles and videos aim at finding solutions to the general queries of students and hence he believes in being students' editor, preparing them not just for any exam but helping them to become informed citizens. This is where he makes his teaching profession meet journalism. He is also the editor of UPSC Essentials' monthly magazine for the aspirants. He is a recipient of the Dip Chand Memorial Award, the Lala Ram Mohan Prize and Prof. Papiya Ghosh Memorial Prize for academic excellence. He was also awarded the University's Post-Graduate Scholarship for pursuing M.A. in History where he chose to specialise in Ancient India due to his keen interest in Archaeology. He has also successfully completed a Certificate course on Women's Studies by the Women's Studies Development Centre, DU. As a part of N.S.S in the past, Manas has worked with national and international organisations and has shown keen interest and active participation in Social Service. He has led and been a part of projects involving areas such as gender sensitisation, persons with disability, helping slum dwellers, environment, adopting our heritage programme. He has also presented a case study on 'Psychological stress among students' at ICSQCC- Sri Lanka. As a compere for seminars and other events he likes to keep his orating hobby alive. His interests also lie in International Relations, Governance, Social issues, Essays and poetry. ... Read More
Hans India
10-06-2025
- Politics
- Hans India
From socialism to market economy-Power over private property
The judgment allows for some private resources to be used for the public good under Article 39(b) while preserving individuals' property rights, supporting India's economic growth within a democratic framework. The court emphasized that DPSPs are not enforceable laws. The government must balance social welfare goals with citizens' rights. Recently, former Chief Justice D.Y. Chandrachud led the majority (8:1) and wrote: 'India's economic trajectory has shifted from socialism to liberalization and market reforms. The Constitution does not endorse any single economic ideology.' He added that calling all private property 'material resources' forces a rigid socialist theory, which no longer reflects India's democratic economic reality. Are there any limits on power of the government over private property? Can the government seize any private property by calling it a 'material resource of the community' under Article 39(b) of the Indian Constitution? On 5 November 2024, a nine-judge Constitution Bench of the Supreme Court of India delivered a historic verdict in the Property Owners Association v. State of Maharashtra case. The ruling settled a long-standing constitutional question: It answered with a clear no, thereby reaffirming individual property rights and limiting government power. This judgment has brought clarity to the conflict between Directive Principles of State Policy (DPSPs) and Fundamental Rights, and overruled earlier judgments that adopted a broad socialist interpretation of Article 39(b). Ignoring the Directive Principles Article 39(b) is part of the Directive Principles of State Policy in Part IV of the Constitution. It says: 'The State shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.' It encourages laws for equitable distribution of wealth and resources, but DPSPs are not legally enforceable—they are only guiding principles. Do we have any Property Rights? Before 1978, right to property was a Fundamental Right under Article 19(1)(f) and Article 31. However, due to frequent land reforms, bank nationalization, and other socialist welfare measures, the Parliament passed the: 25th Constitutional Amendment (1971): Introduced Article 31C to protect laws made under Article 39(b) and (c) from being challenged for violating Fundamental Rights like Articles 14, 19, and 31. 42nd Constitutional Amendment (1976): Further expanded Article 31C to cover all Directive Principles, not just 39(b) and (c). But in Minerva Mills (1980), the Supreme Court struck down this wider protection, ruling that only Article 39(b) and (c) could remain shielded. Where Article 31C was upheld: In the famous Kesavananda Bharati case (1973), the Supreme Court upheld Article 31C, but with a caveat — laws passed under it must still pass judicial review. This was to prevent misuse of DPSPs to undermine basic structure principles like judicial independence or fundamental rights. Thus, the Court permitted limited curtailment of property rights, but only in pursuit of the common good as envisaged in Articles 39(b) and (c), and not at the cost of the basic structure of the Constitution. A 32-year fight for justice: Though justice is upheld in some cases, delay is the biggest problem. The current verdict comes from a petition filed by the Property Owners Association (POA) in Mumbai, challenging Chapter VIIIA of the Maharashtra Housing and Area Development Act (MHADA), 1976, which permitted the government to acquire 'cessed properties' (old private buildings) for restoration. The POA argued this violated their right to property, and that Article 39(b) had been wrongly used to justify taking over all private property. The case spanned decades and multiple bench references, eventually resulting in this nine-judge bench being formed. Govt cannot acquire private property per se: The Court ruled that not every private property can be called a 'material resource of the community'. Article 39(b) does not give the government a blanket power to seize all private assets for the 'common good'. Material resources- Limited, not universal: The court clarified that 'material resources' must meet specific criteria such as: Belonging in public trust; Having community impact; being scarce or capable of causing harm by monopoly and possessing intrinsic public value like water and minerals, among others. Thus, private homes or businesses do not automatically qualify. Balanced approach to 'distribution' The term 'distribution' under Article 39(b) includes: Government acquisition and redistribution to private parties — only when it benefits the common good. So, laws under 39(b) must meet both public interest and proportionality tests. Survival of Article 31C: The Court confirmed Article 31C still protects laws made under Article 39(b) and (c) from Fundamental Rights challenges, but not from judicial review. This limits the misuse of Article 31C as a shield. The court recognized the dramatic shifts like private property, from traditional assets to data and space exploration. The judgment emphasizes the need to respect evolving market realities. Are we reinforcing a market-oriented economic model? It is interpreted that this judgment offers protection for marginalized communities against the unjust acquisition of their small farms and forest lands while promoting responsible management of essential public resources. The judgment allows for some private resources to be used for the public good under Article 39(b) while preserving individuals' property rights, supporting India's economic growth within a democratic framework. The court emphasized that DPSPs are not enforceable laws. The government must balance social welfare goals with citizens' rights. Justice Iyer's opinion was relied on by subsequent Constitution Benches in Sanjeev Coke Manufacturing and Mafatlal Industries judgments in 1982 and 1997, respectively; hence, necessitating a reference to the nine-judge Bench. The CJI quoted a 'harsh' observation made by the Chief Justice about Justice V.R. Krishna Iyer in a 'proposed judgment'. Justice Iyer was a former top court judge whose humanism and reforms in criminal justice are considered legendary. His coinage 'bail is the rule, jail is the exception' is still assiduously quoted in Supreme Court judgments. Justice Krishna Iyer's dissenting view in Ranganath Reddy (1977) that all private wealth could be treated as public resources. The judgment noted that while Justice Iyer's ideas were rooted in the socialist vision of the 1970s, India's voters have since chosen liberal economic policies. Rejecting the view of Justice Iyer as one presenting a 'particular ideology', the majority opinion penned by Chief Justice Chandrachud said India has moved on from socialism to liberalisation to market-based reforms. Justice Iyer was a former top court judge, whose humanism and reforms in criminal justice are considered legendary. His coinage 'bail is the rule, jail is the exception' is still assiduously quoted in Supreme Court judgments. In separate opinions, Justices B.V. Nagarathna and Sudhanshu Dhulia, he had observed that 'the Krishna Iyer doctrine does a disservice to the broad and flexible spirit of the Constitution'. Dissenting: Justice B.V. Nagarathna: 'Judges must not decry the contributions of their predecessors. The institution is greater than individuals.' Justice Dhulia praised Justice Iyer's humanist vision, saying: 'The Krishna Iyer Doctrine was built on fairness and empathy. In dark times, it illuminated our path.' Though he dissented on interpretational grounds, he recognized the spirit of the Constitution as a living document, balancing rights and welfare. Finally, the November 5, 2024 Supreme Court ruling is a turning point in the constitutional understanding of property rights in India, saying: Individual property rights are protected. The government cannot seize private property arbitrarily. Article 39(b) remains relevant but must be applied with caution and clear public purpose. Article 31C survives, but judicial review cannot be ousted. The Directive Principles must align with fundamental rights, not override them. Courts remain vigilant in preserving constitutional balance between economic justice and individual liberty. This landmark judgment reaffirms the Supreme Court's role as a constitutional guardian, ensuring that the state acts for public welfare without violating basic rights. It also recognizes the evolving nature of economic policies in a vibrant democracy, where people, not dogmas, shape the nation's path. (The writer is Professor of the Constitution of India and founder-Dean, School of Law, Mahindra University, Hyderabad)
Indian Express
04-06-2025
- Business
- Indian Express
Radio news & a dinner party: When bank nationalisation was ruled ‘unconstitutional' over unfair compensation method
During an intimate dinner party hosted by Rustom Cavasjee Cooper, 47, in July 1969, a news development crackled over the radio: the government had nationalised 14 of India's largest private commercial banks having deposits of over Rs 50 crore. Recalling that dinner party in an article for Himmat, a weekly magazine, Cooper, a shareholder in several of these banks and a Swatantra Party leader, remembers spending the rest of the evening pacing and feeling agitated. Sensing his turmoil, a senior government official at the party remarked casually, 'Why don't you contest it in the Supreme Court?' That casual suggestion would ignite one of the most important legal battles in India's constitutional history, ending with the Supreme Court emphasising that actions made for public interest must ensure just compensation and reaffirming that Directive Principles of State Policy, the guiding principles in making policies that aim to create a welfare state, cannot override fundamental rights. After the dinner party The very next morning, Cooper boarded the first flight to Delhi. Fate, it seemed, had conspired in his favour. Nani Palkhivala, one of India's brightest legal minds, happened to be in Delhi too. By that evening, the preparations for a constitutional challenge were underway. Six months later, on February 10, 1970, an 11-judge Bench of the Supreme Court led by Justice J C Shah, while holding the Bank Nationalization Act, 1969, as 'unconstitutional' since it violated the right to property, clarified that nationalisation of banks itself was not unconstitutional. Striking down the law, the SC said the method of calculating compensation to the shareholders undervalued the banks' assets by ignoring their goodwill and key properties. Born on August 18, 1922, in a Mumbai-based Parsi family, Cooper, a chartered accountant, had completed his PhD in economics from the London School of Economics (LSE). He was also president of the Institute of Chartered Accountants of India (1963-64), the president of the Indian Merchants' Chamber (IMC), and the treasurer and general-secretary of Swatantra Party. The ordinance enabling bank nationalisation was promulgated on July 19, 1969, a few days before the Parliament session was to begin. Three days prior to the ordinance, then Prime Minister Indira Gandhi had divested Morarji Desai of his finance portfolio. Cooper's opposition to bank nationalisation was not about personal financial loss. Besides holding shares in the Central Bank of India Ltd (of which he was a director), Bank of Baroda Ltd, Union Bank of India Ltd and Bank of India Ltd, he also had current and fixed deposit accounts in these banks. His shareholdings were modest, entitling him to cash compensation in any event. Instead, Cooper's grievance was rooted in principle: he believed the ordinance, promulgated in haste and without parliamentary debate, had trampled upon the Constitution's sanctity since it violated his right to property under Articles 19 (1)(f) and 31 over the unfair compensation method. Cooper challenged the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance 8 of 1969. The ordinance transferred and vested the undertaking of 14 commercial banks that held over 80% of India's bank deposits and had deposits of not less than Rs 50 crore, in the corresponding new nationalised banks set up under the decree. Though pleas challenging the ordinance were lodged before the Supreme Court, before they were heard, Parliament enacted the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969, replacing the ordinance with modifications. The objective of the Act was to enable acquisition and transfer of the undertakings of certain banking companies so as to 'better serve the needs of development of the economy, in conformity with national policy' and connected matters. Filed under Article 32 (right to move to Supreme Court to enforce fundamental rights), Cooper, through Palkhivala, argued that the law impaired his rights guaranteed under Articles 14, 19 and 31 (right to property). In his February 20, 1970, article for Himmat, Cooper wrote, 'I thought that it (bank nationalisation) was done with unreasonable haste…a clear violation of the sanctity of the Constitution…I felt that not only political parties but individuals in the highest places had started regarding the Constitution as something which could easily be played with.' While accusations later surfaced that big business interests were backing Cooper's case, he steadfastly denied such claims. 'Insinuations were made to this effect before the Supreme Court during the hearings too. I would like to clarify that not only was there no interest in financing this petition, but every single person (lawyers, accountants and experts)…who assisted Mr Palkhivala and me in these proceedings, did …not charge any fees,…including a large amount of travelling expenses,' his article states, adding that 'none of the Chairmen or members of the old boards of Directors of the nationalised banks or eminent businessmen and industrialists came forward to join us in this fight for democracy'. Besides stating that the method of calculating compensation undervalued the banks' assets by ignoring their goodwill and key properties, the Supreme Court's February 10, 1970, verdict also held that forcing nationalised banks to cease both banking and non-banking activities was discriminatory and especially violative of equality before law under Article 14. Denying the government's submission that banks — and not the shareholders — were directly affected by the decision, the SC held that shareholders could independently move the top court if their fundamental rights were infringed upon. This approach would later become the bedrock of public interest litigation (PILs) in the country, empowering citizens to seek justice not just for themselves, but for broader public causes. The Supreme Court clarified that nationalisation of banks itself was not unconstitutional, while emphasising that actions made for public interest must ensure just compensation. The court also reaffirmed that Directive Principles of State Policy cannot override fundamental rights. Justice A N Ray, who became the Chief Justice of India (CJI) in April 1973, superseding three of his Bench colleagues, Justices J M Shelat, A N Grover and K S Hegde, however, took a dissenting view. Upholding the Act, Justice Ray said it was 'for development of the national economy with the aid of banks'. Then CJI Mohammad Hidayatullah had recused himself from hearing the matter as he had given assent to the impugned law in capacity as then acting President of India. Before 1970, constitutional law was still shaped by the judgment in the A K Gopalan v State of Madras (1950), where the Supreme Court had held that each fundamental right operated in isolation and that as long as a law adhered to one specific constitutional provision, its effects on other rights were irrelevant. However, R C Cooper v Union of India shattered this view. The Supreme Court held that the impact of state action on individual rights determined constitutionality. 'Impairment of the right of the individual and not the object of the State in taking the impugned action, is the measure of protection. To concentrate merely on power of the State and the object of the State action in exercising that power is therefore to ignore the true intent of the Constitution…,' stated the majority opinion, authored by Justice Shah on behalf of the nine other judges and him. In his article, Cooper opined that the SC judgment was important for shareholders of nationalised banks, as well those of any industries that may be nationalised in future. 'Parliament certainly has a right to legislate for nationalisation of certain aspects of economic activity…The second important principle which has emerged is that for assets which are taken over by the State there should be fair and reasonable compensation. And the third is that there should be no hostile discrimination against any particular concern or concerns in an industry,' he wrote. Four days after the judgment, on February 14, 1970, then President V V Giri issued a new ordinance that stipulated compensation to shareholders of the 14 nationalised banks. Cooper felt the new decree 'was an improvement over the previous one' and sought to 'undo illegalities' pointed out by the Constitution Bench. He added that the compensation offered to shareholders under the new ordinance was 'more realistic' and 'payable wholly in cash if so desired…in three years …, together with interest'. The judgment paved the way for the apex court's decision in the 1973 Kesavananda Bharati case, in which it laid down the 'basic structure' doctrine that put limits on Parliament's powers to amend the Constitution, along the verdict in the 1978 Maneka Gandhi vs Union of India. Cooper's case is remembered not merely for challenging bank nationalisation, but for establishing that constitutional rights must be protected against the real impact of state action, not just its stated aims. While the right to property ceased to be a fundamental right in 1978, it is protected under Article 300A, which provides protection to citizens against arbitrary deprivation of their property by the state. With the Swatantra Party dissolving in 1974 and Indira Gandhi imposing an Emergency in the country ini 1975, Cooper relocated to Singapore. where he set up a financial consultancy and also wrote two books, Job Sharing in Singapore (1986) and War on Waste (1991). He died at the age of 90 while on a visit to London in June 2013. Nearly 55 years after the judgment, Cooper's spirit — demanding fairness, reasonableness and accountability from the state — continues to guide judicial review.
