Essay

Whose money is it anyway?

Print edition : April 12, 2019

Ambedkar Park in Lucknow, with statues of elephants, the BSP symbol. Photo: Rajeev Bhatt

Enormous sums spent on statues constitute waste of public money in a country where poverty is rampant. It is a sheer waste of taxpayers’ money, and it is liable to be quashed by the courts.

he Supreme Court’s judgment, on February 8, 2019, in the case of Mayawati, the Bahujan Samaj Party (BSP) chief and former Uttar Pradesh Chief Minister, is an important landmark in the march of administrative law. It will go a long way in retrieving the ground it had won but which another bench threw away. Recently, the court expressed its disapproval of Chief Ministers using their government’s advertisements, paid out of public funds, for personal publicity. This rule should apply particularly to the nation’s prime publicity seeker, Prime Minister Narendra Modi.

The Supreme Court held that Mayawati would have to refund to the exchequer the public money spent on her statues and those of the party’s symbol, elephant, at parks in Lucknow and Noida. “Mayawati has to deposit the public money into the State exchequer,” said a three-judge bench led by Chief Justice of India Ranjan Gogoi, while hearing a 10-year-old petition by advocate Ravi Kant, who alleged that crores were spent during 2008-09 to glorify the then Chief Minister, Mayawati. Clarifying that it was its tentative view, the bench posted the case for a final hearing on April 2.

The breakdown of the money alleged to have been spent improperly is staggering. Without adding the cost of land, monuments commemorating Dalit icons cost Rs.5,919 crore. These were constructed at nine places in Lucknow, Noida and Greater Noida areas of Uttar Pradesh. Over 5,600 employees were deployed for maintenance of the parks and memorials. The breakup was Rs.1,362 crore for B.R. Ambedkar Samajik Parivartan Sthal; Rs.1,075 crore for Kanshi Ram Green Garden; Rs.750 crore for two parks and other structures built outside Parivartan Sthal; Rs.727 crore for Kanshi Ram Smarak Sthal on VIP Road, with 30 elephant statues; Rs.458 crore for Buddha Vihar Shanti Upwan, with statues of Mayawati, Kanshi Ram and Gautam Buddha, besides a library on Buddhism; Rs.655 crore for Ramabai Ambedkar Rally Sthal (main venue for rallies); Rs.750 crore for Dalit Prerna Sthal in Noida; and Rs.142 crore for Ambedkar Park, Gautam Buddha Park in Mayawati’s village Badalpur, Greater Noida (The Tribune, February 9).

It bears recalling that on September 25, 1996, a bench of the Supreme Court, comprising Justices Kuldip Singh and Faizan Uddin, quashed 15 scandalous allotments of petrol pumps by Rajiv Gandhi’s close friend Satish Sharma, Minister of State for Petroleum and Natural Gas, and issued a show-cause notice to him. On November 4, 1996, after a full hearing, it ordered him “to pay a sum of Rs.50 lakh as exemplary damages to the Government Exchequer” and directed the Central Bureau of Investigation (CBI) to register a case against him for investigation in the light of the findings of fact.

However, on August 3, 1999, another bench of the court, comprising Justices S. Saghir Ahmed, K. Venkataswami and S. Rajendra Babu, allowed Sharma’s review petition and held that the judgment was vitiated by “errors apparent on the face of the record, which has resulted in serious miscarriage of justice”. These are apt characterisations of the judgment itself that Justice Saghir Ahmed delivered on behalf of the bench and of its order recalling the earlier order of payment of Rs.50 lakh by Sharma and a CBI probe against him. For, the bench completely overlooked a relevant ruling delivered by the court itself and misstated the law on “misfeasance in public office” with grave consequences.

Discretionary quota

We live in a set-up in which discretionary quotas for grant of largesse at state expense are permissible to the Prime Minister, Chief Ministers, Central and State Ministers, Members of Parliament and Members of Legislative Assemblies. For two decades, the court has ruled that, under the Constitution, such largesse must be allowed only in the public interest. It was accepted by both benches that Satish Sharma’s allotments were in gross abuse of power.

But Justice Saghir Ahmed ruled that the petitioner Common Cause, “not being an applicant for allotment of a petrol outlet could not have obtained a finding in the civil suit that the petitioner had committed the tort of misfeasance in public office ... there has to be an identifiable plaintiff or claimant whose interest was damaged by the public officer maliciously or with the knowledge that the impugned action was likely to injure the interest of that person. It is in favour of that specific identifiable plaintiff or claimant that the whole gamut of the law of tort is compensatory in nature and damages are awarded to compensate the losses caused on account of violation of the interest of one person by another.”

This is palpably wrong and inconsistent with the sound exposition by the bench itself of the distinction between the private law of tort and the public law.

In sum, “mere” nepotism, no matter how gross, will not suffice to mulct a Minister in damages for misfeasance unless “an identifiable” person claims to have been wronged. The wrong to the public at large, is not relevant according to these judges.

This is in flat contradiction to the court’s earlier ruling, which is directly on point. In Shivsagar Tiwari vs Union of India and Ors, decided by Justices Kuldip Singh and B.I. Hansaria on October 11, 1996, concerning Sheila Kaul, Minister for Urban Development (“the housing scam”), the court, recalling English and Commonwealth cases, said: “We are conscious that the aforesaid cases dealt with injury to a third party (following misuse of power) who had sought damages for the loss caused, whereas in the present case there is no injury as such to any third person. Even so, the aforesaid cases have been referred for two purposes. Firstly and primarily, to bring home the position in law that misuse of power by a public official is actionable in tort. Secondly, to state that in such cases damages awarded are exemplary. The fact that there is no injury to a third person in the present case is not enough to make the aforesaid principles non-applicable inasmuch as there was injury to the high principle in public law that a public functionary has to use its power for bona fide purpose only and in a transparent manner [(1996), 6 SCC 558. Vide also (996), 6 SCC 599 on exemplary damages].”

The fundamentals were well set out by H.M. Seervai in his Constitutional Law of India. “Can government’s dealings with the assets and properties vested in it (“government property”) give rise to claim that such dealings violate the fundamental rights guaranteed by Part III of our Constitution? Again, can government be restrained from dealing with government property contrary to its duty, because contrary to the purpose for which such property is vested in government? Put plainly, can the Union or any State government say ‘We know that this government property is worth Rs.5 crore but we will sell it for Rs.1 crore—a government, like a private individual, can do what it likes with its “own” property’?

“It is clear from Art. 294 that assets and properties are vested in the Union or the State governments for the purpose of the Union or the States, and entry 32, List I, and entry 35, List II, Sch. VII confer express legislative power in respect of works, lands and buildings vested in a State, which legislative power is subject to the provisions of our Constitution (Articles 245, 246), and, therefore, to fundamental rights and other constitutional limitations. No law and no executive action under said entries can violate fundamental rights. Again, our Constitution provides for the levying, collection and expenditure of revenue of the Union and the States. Such revenues are to be expended for the purposes of the Union or the States; and Article 282 shows that an express provision was considered necessary to enable the Union and the States to make grants out of their revenue for purposes which were not the purposes of the Union or the States, provided the grant was for a public purpose” (fourth edition).

This is where the Pergau Dam case comes in. Every work on British constitutional law considers it; no Indian work does (Regina vs Secretary of State for Foreign and Common Wealth Affairs, Exparte World Development Movement (1995), The Weekly Law Reports, 386.) The case was heard for just two days, on November 9 and 10, 1994. The judgment, delivered by Lord Justice Rose on his behalf and that of Lord Justice Scott Baker, is free from the blemishes of silly rhetoric, long-winded sentences, quotations designed to impress and the like which have for decades marred the judgments of the Supreme Court ever since the restraints of judges of yore gave way to the flamboyance of Justices P.B. Gajendraghadkar and M. Hidayatullah. Since then, judges write for acclaim from the public and posterity. They write to impress. English judges write briefly in prose simple enough for the lower courts and the public to follow.

The facts are simply stated. In 1988 a British consortium sought aid and trade provision (ATP) under Section 1(1) of the Overseas Development and Co-operation Act, 1980, for a project to construct a hydroelectric power station on the Pergau river identified by the Malaysian Electricity Authority as a priority. In November the consortium submitted a formal application with indicative costs of £315 million to the Overseas Development Administration (ODA). In January 1989, they produced a firm contract proposal of £316 million with a United Kingdom content of £195 million. In early March 1989, an ODA appraisal mission sent to Malaysia reported back to London, where the U.K. government made an oral offer to the Malaysian government of ATP support up to £68.2 million for the project, conditional on a full economic appraisal.

Reports on its feasibility were negative. But the Foreign Secretary took the view that withdrawal from the deal would adversely affect relations with Malaysia and the U.K.’s credibility. On July 8, 1989, Britain and Malaysia signed a financial agreement for aid and trade development provision under section 1(1) of the Overseas Development and Co-operation Act, which reads thus: “The Secretary of State shall have power, for the purpose of promoting the development or maintaining the economy of a country or territory outside the United Kingdom, or the welfare of its people, to furnish any person or body with assistance, whether financial, technical or of any other nature.”

The court remarked: “The subsection is ungrammatical in that it is unclear what verb is intended to govern ‘welfare’, and it appears that the word ‘of’ has been omitted after the word ‘development’. But that is presently immaterial. The argument before this court has centred on whether the grant in question was ‘for the purpose of promoting the development’ of Malaysia.”

It will be noticed that implicit in this provision is the kind of curbs that the Indian Constitution lays down, as Seervai rightly opined. The U.K. has no written Constitution. S 1(1) serves as the curb on discretion. On February 26, 1989, the Foreign Secretary acting under S. 1(1) decided to approve the ATP support for the dam. The ODA, whose missions had found the project uneconomical, was overruled. So was the consistently negative view of the Permanent Secretary in the ODA, Sir Tim Lankester. In the U.K., inconvenient civil servants can neither be transferred nor suborned.

The World Development Movement Ltd, a non-governmental organisation (NGO), is a non-partisan pressure group, over 20 years old and limited by guarantee. It has an associated charity that receives financial support from all the main U.K. development charities, the churches, the European Community and a range of other trusts. About 60 per cent of its total income comes from members and supporters. The Council of the applicants has cross-political party membership, and, indeed, historically, a Member of Parliament from each of the three main political parties has sat on the council. There are 7,000 full voting members throughout the U.K. with a total supporter base of some 13,000. There are 200 local groups whose supporters actively campaign through letter writing, lobbying and other democratic means to improve the quantity and quality of British aid to other countries. It conducts research and analysis in relation to aid. It is a founder member of the Independent Group on British Aid, which brings academics and campaigners together.

It has pressed the British government, the European Union, banks and other businesses for better trade access for developing countries. It is in regular contact with the ODA and has regular meetings with the Minister of that department, and it makes written and oral submissions to a range of select committees in both Houses of Parliament. It ran all-party campaigns against aid cuts in 1987 and 1992.

Internationally, it has official consultative status with the United Nations Educational, Scientific and Cultural Organisation (UNESCO) and has promoted international conferences. It has brought together development groups with the Organisation for Economic Cooperation and Development (OECD). It tends to attract citizens of the U.K. concerned about the role of the U.K. government in relation to the development of countries abroad and the relief of poverty abroad.

The court observed: “Its supporters have a direct interest in ensuring that funds furnished by the United Kingdom are used for genuine purposes, and it seeks to ensure that disbursement of aid budgets is made where that aid is most needed. It seeks, by this application, to represent the interests of people in developing countries who might benefit from funds which otherwise might go elsewhere.”

It applied for judicial review of the government’s decision—and won; specifically of a decision by the Secretary of State for Foreign and Commonwealth Affairs of July 15, 1991, to make a grant under the Overseas Development and Co-operation Act in respect of the funding of the Pergau Dam in Malaysia, and a decision of April 29, 1994, by which he refused to withhold outstanding payments made under that Act to fund the building of the dam. The relief sought was orders of certiorari to bring up and quash those decisions, an order of prohibition to prevent the Secretary of State from making further payments out of the funds for the Pergau Dam project, a declaration that the grant and the payments made in pursuit of the decision were unlawful, and such further or other relief as might be found just.

The grounds upon which relief was sought were, inter alia, that the Secretary of State decided, because of commitments given by the U.K. government to overrule a recommendation by the ODA accounting officer based on elaborate appraisal and which was supported by the Minister for Overseas Development that providing funds for the Pergau project would be consistent with the prudent and economical administration of the ATP , that the Public Accounts Committee in its report of March 30, 1994, had presumed that expenditure on the project was regular, and therefore complied with the relevant legislation, and sought confirmation that legal advice had been taken, that the applicants had objected in writing to the Minister for Overseas Development and in written evidence submitted in February 1994 to the Foreign Affairs Committee that the Pergau project was funded only because aid policy was subordinated to other commercial and foreign priorities, that the Secretary of State appearing before that committee, gave in evidence as his reasons for overriding the advice and assessments which were against going ahead with the grant the fact that the government had given its word and that there were real British business interests at stake.

London faced a problem. Sir Tim Lankester described the position then facing the U.K. as a “dilemma”, presenting four options: (i) a former offer of £397 million, which was inconceivable on the economic view which had been taken; (ii) withdrawing the offer, which was politically impossible; (iii) confirming an offer at £316 million, which was not tenable in view of the price rise; and (iv) making an offer based on £316 million, but with an indication of willingness to discuss the possibility of further assistance. Option (iv) was chosen by Ministers.

There was another factor which Lord Justice Rose mentioned as a matter of fact without comment. Prime Minister Margaret Thatcher met Mahathir Mohammed, Prime Minister of Malaysia, on March 15, 1989. She promised to support the project after a full economic appraisal. The Foreign Secretary would differ with her, unless he was Sir Geoffrey Howe. His resignation speech in the House of Commons will ever rank as a classic.

Counsel for the NGO submitted that the power conferred by Section 1(1) of the Act of 1980 is limited to the purpose imposed by the subsection, namely, in the present circumstances, for promoting development. This, he submitted, is concerned with the authorisation of assistance, not projects. The correct test was, did the Secretary of State decide to furnish the Malaysian government with financial assistance for the purpose of promoting development? Accordingly, he submitted, if aid is to be granted, projects have to be “sound development projects”. The Pergau Dam was not.

The court said: “It is common ground that a power exercised outside the statutory power is unlawful. This may be the consequence of an error of law in misconstruing the limits of the exercise of the power, or because the exercise is ultra vires, or because irrelevant factors were taken into account.

“In the present case Mr Pleming counsel for the applicants submitted that the power to furnish assistance is not absolute or unfettered, but could only be exercised to advance the purposes for which it was conferred. The principle is correctly summarised by Professor Wade in Administrative Law, 7th ed. (1994), p. 413: ‘statutory powers, however, permissive, must be used with scrupulous attention to their true purposes and for reasons which are relevant and proper.’

“A political purpose can taint a decision with impropriety: see per Glidewell J. in Reg. V. Inner London Education Authority, Ex parte Westminster City Council [1986] 1 W.L.R. 28 and Reg. V. Governor of Brixton Prison, Ex parte Soblem [1963) 2 Q.B. 243, 302, where Lord Denning M.R. said, in relation to the decision to deport: ‘If it was done for an authorised purpose, it was lawful. If it was done professedly for an authorised purpose, but in fact for a different purpose with an ulterior object, it was unlawful.’”

The Foreign Secretary himself submitted an affidavit in his defence in which he asserted: “I also regard it as perfectly proper—and indeed essential given my general responsibilities as Secretary of State—to take into account other wider political and economic considerations, such as the promotion of regional stability, good government, human rights or British interests....

“In reaching a decision on the provision of assistance, I also had to take into account two additional considerations. On the one hand, I was aware that formal offers of financial support had already been made—and renewed—to the Malaysian government, which clearly regarded this project as a key element of their programme for addressing their substantial power requirements. I took the view that the withdrawal of the offer to provide assistance would affect the United Kingdom’s credibility as a reliable friend and trading partner and have adverse and far-reaching consequences for our political and commercial relations with Malaysia. On the other hand, the price of the project on which the initial offer of aid was made, had risen significantly.”

The NGO contended that “the reason or motive, submitted by Mr Pleming, was political or diplomatic, namely that the Prime Minister had given an undertaking in March 1989 that Britain would provide ATP support, and to go back on that word would be detrimental to the interests of Britain, British companies and British workers. Section 1 confers no power to make decisions on such a basis”, namely political. Note counsel’s fairness.

The decision was taken by the Foreign Secretary personally. Lord Justice Rose’s comment on his counsel’s submission was restrained but withering. “For my part, I am unable to accept his counsel Mr Richard’s submission that it is the Secretary of State’s thinking which is determinative of whether the purpose was within the statute and that therefore paragraph 3 of his affidavit is conclusive. Whatever the Secretary of State’s intention or purpose may have been, it is, as it seems to me, a matter for the courts and not for the Secretary of State to determine whether, on the evidence before the court, the particular conduct was, or was not, within the statutory purpose.” He noted that “no legal advice was ever sought”. The judge was not indifferent to the realities of political compulsions.

Lord Justice Baker concurred in three short paragraphs; “When the decision was made in July 1991, there was nothing in aid terms to justify the use of public money for the Pergau project. The Secretary of State’s power to provide financial assistance under section 1(1) of the Overseas Development and Co-operation Act 1980 was not triggered. Had it been, that would have brought into play the opportunity for the Secretary of State to take into account political and wider economic considerations, such as British commercial interests. But it was not.” Now read Section 1(1) of the Act. The court drew from it a justified inference that waste of public money would violate the law. In India it would violate the Constitution. I forbear from mentioning names of historical persons.

But, surely, enormous sums on their statues constitute waste of public money in a country where poverty is rampant. It is a sheer waste of taxpayers’ money—and it is liable to be quashed by the courts.

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