Study Material for Constitutional Law II PDF

KLE LAW ACADEMY BELAGAVI (Constituent Colleges: KLE Society’s Law College, Bengaluru, Gurusiddappa Kotambri Law College, Hubballi, S.A. Manvi Law College, Gadag, KLE Society’s B.V. Bellad Law College, Belagavi, KLE Law College, Chikodi, and KLE College of Law, Kalamboli, Na...

KLE LAW ACADEMY BELAGAVI (Constituent Colleges: KLE Society’s Law College, Bengaluru, Gurusiddappa Kotambri Law College, Hubballi, S.A. Manvi Law College, Gadag, KLE Society’s B.V. Bellad Law College, Belagavi, KLE Law College, Chikodi, and KLE College of Law, Kalamboli, Navi Mumbai) STUDY MATERIAL for CONSTITUTIONAL LAW II Prepared as per the syllabus prescribed by Karnataka State Law University (KSLU), Hubballi Compiled by Reviewed by Vinuta Kulkarni, Asst. Prof. Dr. Sharada G. Patil, Principal Preeti Kasturi, Lecturer Swapna Somayaji, Lecturer G.K. Law College, Hubballi This study material is intended to be used as supplementary material to the online classes and recorded video lectures. It is prepared for the sole purpose of guiding the students in preparation for their examinations. Utmost care has been taken to ensure the accuracy of the content. However, it is stressed that this material is not meant to be used as a replacement for textbooks or commentaries on the subject. This is a compilation and the authors take no credit for the originality of the content. Acknowledgement, wherever due, has been provided. Sl. No. Units Topics 1 Unit I Federal system: Organisation of State. Relationship between the Centre and the State : Legislative, Financial and Administrative Co-operative Federalism Recommendation of Commission. Freedom of Trade and Commerce, Official Language, Local self- government with special emphasis on 73rd and 74th Amendment. Constitutional provisions of Jammu and Kashmir (Art 370) Special provisions relating to specific states (Article 371-A to 371-J) 2 Unit II Executive : Centre – President, powers and functions State – Governor, powers and functions Parliament and State Legislature: Bicameralism, Composition, powers and function Councils of ministers : collective responsibility, position of Prime Minister and Chief Minister 3 Unit III Speaker : Parliament and State Legislature, Powers and Functions, Privileges, Anti-Defection Law Judiciary : Union and States, Appointment, Powers, Jurisdiction, Transfer of Judges 4 Unit IV Subordinate Judiciary, Administrative Tribunals Public Service Commission : Services under the Centre and the State, Constitutional protection to Civil Servants. Election Commission: Powers and functions, State liability for Torts and Contract. 5 Unit V Emergency : Types, Effects and effects on fundamental rights for Torts and Contracts 2  UNIT- I 1. Federal System: Indian Constitution establishes a unitary state with subsidiary federal features whereas these views are strictly based on the theoretical considerations of the Indian constitution. K.C. Wheare opines Indian constitution as a quasi-federal. On the contrary it is misleading to refer to India as a quasi-federation, because there is no such thing as a quasi-federal system and that a system is either a federation or it is not a federation. India is legally a complete federation, because all the basic features of federal system are present in the Indian constitution. Taking into account the legal or institutional structure of a federal system, one finds that features of federalism such as- supremacy of the constitution, distribution of powers and an independent federal judiciary are there in the constitution. The minor features are also there such as participation of the constituent units in the amendment process of the constitution and federal character of the second chamber. However, inspite of the tendency of centralisation, the legal formal structure of our Constitution incorporates all these elements. Apart from this discussion on the nature of Indian constitution scholars have discussed the federal nature of Indian constitution from different angles. W.H. Morris Jones has studied Indian federal system in its political and dynamic perspectives. He talks of federalism in India as an example of the concept of bargaining federalism. He says that federalism in India is a form of co-operative federalism but according to him this phrase should be understood to include hard competitive bargaining. He further says, "whereas the emphasis in the constitution is on demarcation, that of practical relations, in on co-operative bargaining. The center has encouraged different modes of relations with the different states and hence a varied mode of federalism is perceivable" A large number of scholarly studies have been published on the dynamic aspect of India's federal system. They reveal the impact of the dynamics of political dimensions such as the party alliances, the ideological movements, national and regional political leadership, effectiveness of pressure groups and peoples demands. Besides socio-economic conditions are also determining the emerging framework of the center- 3 state relations. Each state of the union has its distinctive socio-economic and political problems. It therefore, evolves different types of relations with the center. This shows that the Indian federal system has evolved a dynamic character and this dynamic nature changes according to compelling reasons, pressures and circumstances. The real nature of a society cannot be understood merely by an analysis of the institutions. Its nature can be examined only by observing how the institutions work in the context of that society. It is the operation and not the form that is important. The essential nature of federalism is to be sought for not in the shadings of legal and constitutional terminology but in the forces-economic, social, political and cultural that has made the outward form of federalism necessary. There are three models of federalism in India. There is a distinction of degrees rather than kinds in this model. Sometime these models are visible in a political system in comparison to each other. Unitary Federalism: A historical study of the growth of federal systems brings home the political truth that what has happened during the last few decades is that the central governments have developed their powers more and more intensively at the expense of the areas originally allotted to the regional governments, it is due to this that the national governments have grown in importance in comparison with the regional governments. The main forces that have contributed to the growing strength of national government at the expense of regional government seem to have been six fold - war politics, depression politics, welfare politics, techno-politics, grant-in-aid politics and party politics. The horrible conditions of war and economic depression demand unitary control for the effective protection of national interests. The ideal of social welfare state has enjoined upon the national government to increase its scope of activity more and more to eradicate gigantic evils of property, unemployment, disease, starvation, ignorance etc. Techno-politics means the study of political institutions in the light of scientific and technological developments having their Impact upon the working of governmental machinery. It means government by experts and technocrats and not the leaders chosen by the people. The experts and technocrats stress goals of development and lay down politics and programmes. As these specialized services are mostly provided by the national government, the regional governments have to carry out the plans, programmes and instructions prepared by the technocrats working behind the rulers of the central administration. The regional governments live in a perpetual condition of financial difficulties. They not only have meager resources but they are forced to collect money that they cannot spend and also forced to spend in a particular way the money that they do not collect. In many cases the provincial governments have to stand like "baggars" at the door of the center. Though a federal system in all respects, the very system is reduced to a Unitarian model when political parties run the machinery of general and regional 4 governments without federalizing their own character. In this context, the case of Congress Party in India is a striking example, the High Command of this party is the final authority in matters of distribution of tickets, composition of the union and state ministries, selection of the Prime Minister and Chief Minister etc. The result is that both the Union and State Governments in India are virtually controlled by the all- powerful party in a way that our federal pattern has become a matter of form while its spirit has become unitary under the rule of the Congress Party. Almost all the national parties who have come to govern the central government have shown the same tendency. Carl J.Friedrich envisages "if the government is federally structured, parties must adapt themselves to such a structure". Co-operative Federalism: A federal system not only stands for the distribution of powers between the two sets of political organizations in order to ensure that the ideal of co-ordination and complete administration of the divided spheres is attained as effectively as possible. It is needed for the obvious reason that there is the area of inter-regional relationships disallowing any component unit to keep itself completely off from others in the interest of administrative efficiency and nationalist sentiments. K.C.Whare rightly visualizes that if each regional government "keeps completely to itself many matters will suffer from diversity of regulation and government itself be less efficient because the experience of other states will have been neglected. Hence some agencies of inter-governmental co-operation have been devised in various federal systems of the world. Taking the case of the Australian Federal System, we find Inter-Provincial Conference and Premiers Conference. The Governor’s Conference in United States and Dominion Provincial Conference in Canada are other cases of similar institutions for federal co- operation, Granville Austin is of the view that the Constituent Assembly of India was the first assembly which adopted from the very start what is called as the concept of Co-operative Federalism. This concept is distinct from Wheare's concept of federalism who says that "the general and regional governments of a country shall be independent of each other within its sphere." As against this, the concept of Co-operative Federalism implies a strong central government. This does not mean that the provincial governments are weak. According to Austin, provincial governments are largely administrative agencies for central policies. He quotes AH.Birch, wlio defines Co-operative Federalism as the practice of administrative co-operation between general and regional governments, the practical dependence of the regional governments upon payments from the general governments and the fact that the general governments by the use of conditional grants, frequently promote developments in matters which are constitutionally assigned to the regions. Inter-level co- operation in different fields has been the most significant aspect of Indian federalism. Many of the state legislatures through formal resolutions agreed to empower the Parliament to legislate in regard to levy of 5  succession duty on agricultural lands which under the constitution is a state subject. Administrative co- operation on a large scale is a remarkable development in the operation of Indian federalism.  For example, the execution of land reclamation and development schemes under the plans the central and state sector organizations function in close co-operation.  The central inspectors help the state inspectors in enforcing the provisions of the Drug Act.  Planning in India is a co-operative enterprise in which the basic norms of development are set by center in discussion with the states, a large amount of finance is provided by the center and the main administrative machinery is supplied by the states.  Another fruitful line of co-operation in India has been in the direction of utilization of the water resources of the country. For instance the Damodar Valley Scheme is a joint endeavour in which the center and the states of West Bengal and Bihar are involved. The Indian federation has also involved conference techniques facilitating smooth union state relation and inter-level co-operation. Periodic Conference between the representative of the Union and the States have become a regular feature of the operative machinery of Indian federalism. Conferences of the state Governors, meetings of the state Chief Ministers, State Ministers conferences and meetings of union and state officials. The value of these meetings lies in adoption of an integrated an co-operative approach towards the solution of the numerous problems which arise under India's federal structure. Bargaining federalism: We all are familiar that the bargaining process was found after the fourth, sixth, ninth and tenth Lok Sabha elections in India, when the non-congress and regional parties came to power in the states. Morris Jones talks of federalism in India as an example of the concept of competitive bargaining, one illustration may be given from procedures on legislation. The constitution prescribes that bills passed by state legislatures may on submission to the Governor be refused assent or returned for reconsideration or reserved for the consideration of the President and further that bills dealing with public acquisition of property must be so reserved. By convention, however, states send such hills to the center for examination and comment in advance, so that the reservation procedure when reached is merely formal; some states go further and submit in this way most bills which deal with subject on the concurrent list. Bargaining federalism is also traceable in existence, formal as well as tacit, in operation of various institutional agencies such as the Planning Commission National Development Council, Finance Commission, Inter-State Council, Zonal Councils and a host of statutory bodies for the adjudication of disputes with respect to use, distribution and control of inter-state rivers etc. In other words we can say that the Indian Constitution envisages the appointment of a number of high level commissions both 6 permanent and ad-hoc for the specific purpose of reconciling diverse and conflicting interests with the co- operation of Union and State Government. Dual federalism: is based on the relatively optimistic belief that a clear division between federal and state authority can, and does, exist. This theory states that authority between the two levels of U.S. government, national and state, could be treated equally, live together equally, and hold roughly equal authority. After all, the Constitution includes this very clever mechanism: the reserved powers clause, which seems to set a line between the two levels of U.S. government. Dual federalism has been nicknamed 'layer-cake federalism', since it imagines an obvious separation between state and federal duties. 2. Organisation of States: Federalism is a widely accepted form of government in the world today due to its accommodative or adaptive nature. It emerged as a strong counter device against the British colonial monarchism that existed across the world during that time. As a result, USA came with the first modern written democratic constitution by overthrowing the colonial monarchism. Subsequently the US constitution adopted the democratic means of governance by limiting the governmental power by vertical separation of powers and horizontal division of powers. This is because federalism emerges out of the balanced forces of nationalism and regionalism. On the contrary, UK developed another form of government, in which there was struggle for supremacy between the crown and the parliament. This experience taught to rest of the countries of the world to choose a federal democratic republican constitution. In the case of India, the constitutional maker’s choice was for federalism due to its sub-continental expanse and; socio-cultural and regional diversities. Historically, India has been a plural society as well as multicultural with all the characteristics of diversity. India had not only cultural diversities and differences but also threat of external aggression. After British left the India, it was open to threats from China, Russia and Afghanistan on the one hand and the newly created Pakistan on the other hand. The Cripps and Cabinet Mission Plans advocated for a relatively weak Centre due to various communal problems but, it was not accepted by the Constituent Assembly. However, the passing of the India Independence Act and the eventual partition of India and Pakistan led the constituent assembly to adopt the unitary form of federalism. After independence, Jawaharlal Nehru, like other congress leaders of that time, was very ambivalent and uncertain about the reorganization of states, owing to the fact that he worried about disintegrative consequences. He also had the fear of the viability and durability of the 7 monolingual states, which would not have long term sustainability. During the constitutional debate, Nehru supported administrative efficiency and a multi-cultural and multi-lingual political order. In contrast, Ambedkar supported the demand for the reorganization of Indian states on linguistic basis. He thought it would ensure the functioning of the democratic polity by enhancing the equitable survival of all languages, cultures; regions within an inclusive developmental polity. He also emphasized on administrative efficiency, specific needs of particular areas and proportion between majority and minority communities within a state. Thus, the reorganization of states would help countries maximize growth and political strength as well as allow expressions of regional characteristics. The federation was accepted as a useful and working system of government in conflict situations (issues of separation, division of large regions, diverse culture etc.) related to a federal structure(Watts, 1966). Within this federal framework, inter-state boundaries among Indian states since 1950 have continuously been reorganized and the process is not yet complete. In the 1950s, the reorganization of south India took place followed by the reorganization of states of western and northern India in the 1960s. Later, the northeastern states were reorganized in the 1970s. Three new states (Uttarakhand, Chhattisgarh and Jharkhand) were created in 2000. Among the linguistic states, Andhra Pradesh was the first state to be formed based on the Telugu speaking population in south India. In subsequent years, the rest of the Indian states started demanding for separation based on the linguistic identities. There are still some demands for creating new states and the finalizing of boundaries of the states. The post-independent Indian federal structure has weathered many linguistic, religious, ethnic, regional, cultural and politico-ideological challenges. In order to overcome these challenges, the Indian Constituent Assembly in 1948 appointed the Dar Commission followed by the Jawaharlal Nehru, Vallabhai Patel, PattabhiSitaramayya Committee (JVPC) to reorganize the states. Both the committees expressed concern regarding the new forms of inequalities and hierarchies based on the disproportionate spread of linguistic majority and minority groups in the reorganized provinces. In addition, seven other committees were constituted with regard to the federal structure in Indian polity. In 1953, the States Reorganization Committee (SRC) was established to look after the issues of reorganization of states in India. It is recommended some basic principles of reorganizing of the states as preservation and strengthening of unity and security of India, linguistic and cultural homogeneity, financial and administrative efficiency and the successful working of the 5-Year Plans. Later, as per the State Reorganization Committee 1956, the states were reorganized in terms of linguistic, cultural homogeneity and geographical contiguity. From 1947 to 1950, many princely states were integrated with neighboring provinces and some integrated with centrally administered units. On that basis, demands came from Orissa, Andhra, Maharashtra, Gujarat and later Haryana, Himachal Pradesh, Punjab and Assam for separation. These demands were raised continuously due to their economic 8 backwardness and for becoming sub-regions within larger states. The movement for separation of the Hyderabad-Karnataka region in Karnataka was due to its cultural distinctiveness and economic neglect. Similarly, in West Bengal, the Nepalese have been demanding a separate state of Gorkhaland due to their cultural distinctiveness and economic marginalization. Thus, as many as 30 such demands are there before the Indian Government at present. All these issues gave space for more demands to focus on better governance, equitable economic growth, increase in participative political order and development at the sub-regional level. Based on new state demands, several regional and sub-regional issues/challenges are also emerging such as the preservation of forests, welfare of tribal communities, emergence of new regional elites, rise of other backward castes and increase in the number regional political parties within a state. This is evident from the several demands for smaller states of Vidharba (Maharashtra), Saurashtra (Gujarat), Bodoland (Assam), Coorg (Karnataka), Harit Pradesh (Uttar Pradesh) and others. The issue of state formation has become a part of Indian political system today due to the emergence of coalition politics in India. The party that does not get the majority always depends on the support of regional parties to form the government at the Centre. The political parties do not want to lose their vote banks in terms of political power and they use the issue of state formation as their political agenda to obtain political positions. However, the Indian political system has started its journey towards cooperative federalism. It could be a significant tool or instrument for creating opportunities for national as well as regional development. Nevertheless, it is evident from the Karnataka and Andhra Pradesh Human Development Report that the two study areas have suffered discrimination many grounds. If this situation continues, then the objective of cooperative federalism and the growth of the nation generally and regionally, in particular, will not be realized. Hence, the issue of state formation has been a core area within the Indian political system. 3. Relationship between Centre and State Our Constitution is one of the very few that has gone into details regarding the relationship between the Union and the States. A total of 56 Articles from Article 245 to 300 in Part XI and XII are devoted to the State-Centre relations. Part XI (Articles 245-263) contains the legislative and administrative relations and Part XII (Articles 246-300) the financial relations. By going into great details of the relations, the Constitution framers hope to minimize the conflicts between the centre and the states. By and large, the confrontations between the two have been minimal. I. Legislative Relations (Articles 245-255): 9 From point of view of the territory over which the legislation can have effect, the jurisdiction of a State Legislature is limited to the territory of that State. But in the case of Parliament, it has power to legislate for the whole or any part of the territory of India i.e.States, Union Territories or any other areas included for the time being in the territory of India. Parliament has the power of ‘extraterritorial legislation’ which means that laws made by the Union Parliament will govern not only persons and property within the territory of India, but also Indian subjects resident and their property situated anywhere in the world. Only some provisions for scheduled areas, to some extent, limit the territorial jurisdiction of Parliament. Legislative Methods of the Union to Control over States: (i) Previous sanction to introduce legislation in the State Legislature (Article 304). (ii) Assent to specified legislation which must be reserved for consideration [Article 31 A (1)]. (iii) Instruction of President required for the Governor to make Ordinance relating to specified matters [Article 213(1)]. (iv) Veto power in respect of other State Bills reserved by the Governor (Article 200). As for the subjects of legislation the Constitution has adopted, as if directly from the Government of India Act, 1935, a three-fold distribution of legislative powers between the Union and the States, a procedure which is not very common with federal constitutions elsewhere. The Constitutions of the United States and Australia provided a single enumeration of powers power of the Federal Legislature and placed the residuary powers in the hands of the States. Canada provides for a double enumeration, dividing the legislative powers between the Federal and State legislatures. The Indian Constitution introduces a scheme of three-fold enumeration, namely, Federal, State and Concurrent. List I includes all those subjects which are in the exclusive jurisdiction of Parliament. List II consist of all the subjects which are under exclusive jurisdiction of the State Legislature, and List III which is called the Concurrent List, consists of subjects on which both Parliament and the State legislatures can pass laws. 10 (i) Union List: List I, or the Union List, includes 99 items, including residuary powers, most of them related to matters which are exclusively within the jurisdiction of the Union. Subjects of national importance requiring uniform legislation for the country as a whole are inducted in the Union List. The more important examples are defence, armed forces, arms and ammunition, atomic energy, foreign affairs, coinage, banking and insurance. Most of them are matters in which the State legislatures have no jurisdiction at all. But, there are also items dealing with inter-state matters like inter-state trade and commerce regulation and development of inter-state rivers and river valleys, and inter-state migration, which have been placed under the jurisdiction of the Union Parliament. Certain items in the Union List are of such a nature that they enable Parliament to assume a role in certain spheres in regard to subjects which are normally intended to be within the jurisdiction of the States; one such example is that of industries. While assigned primarily to the State List; industries, the control of which by the Union is declared by a law of Parliament, to be expedient in the public interest’ are to be dealt with by parliamentary legislation alone. Parliament, by a mere declaration, can take over as many industries as it thinks fit. It is under this provision that most of the big industries, like iron, steel and coal, have been taken over by Parliament under its jurisdiction. Similarly, while museums, public health, agriculture etc. come under State subject, certain institutions like the National Library and National Museum at New Delhi and the Victoria Memorial in Calcutta have been placed under the jurisdiction of Parliament on the basis of a plea that they are financed by the Government of India wholly or in part and declared by a law of Parliament to be institutions of national importance. The university is a State subject but a number of universities have been declared as Central Universities and placed under the exclusive jurisdiction of Parliament. Elections and Audit, even at the State level, were considered matters of national importance. The Extensive nature of the Union List thus places enormous powers of legislation even over affairs exclusively under the control of the States in the hands of Parliament. (ii) State List: 11 List II or the State List, comprises 61 items or entries over which the State Legislature has exclusive power of legislation. The subject of local importance, where variations in law in response to local situations may be necessary, has been included in the State List. Some subjects of vital importance in the list are State taxes and duties, police, administration of justice, local self-government, public health, agriculture, forests, fisheries, industries and minerals. But, in spite of the exclusive legislative jurisdiction over these items having been given to the States, the Constitution, through certain reservations made in the Union List has given power to Parliament to take some of these items under its control. Subject to these restrictions, one might say, the States have full jurisdiction over items included in the State list. (iii) Concurrent List: The inclusion of List III or the Concurrent List, in the Constitution gives a particular significance to the distribution of legislative power in the Indian federal scheme. The Concurrent List consists of 52 items, such as criminal law and procedure, civil procedure, mar-riage, contracts, port trusts, welfare of labour, economic and social planning. These subjects are obviously such as may at some time require legislations by Parliament and at other by a State Legislature. The provision of a Concurrent List has two distinct advantages. In certain matters in which Parliament may not find it necessary or expedient to make laws, a State can take the initiative, and if other States follow and the matter assumes national importance, Parliament can intervene and bring about a uniform piece of legislation to cover the entire Union Territory. Similarly, if a State finds it necessary to amplify a law enacted by Parliament on an item included in the Concurrent List in order to make it of a greater use of its own people, it can do so by making supplementary laws. The items included in the Concurrent List can be broadly divided into two groups-those dealing with general laws and legal procedure, like criminal law, criminal procedure, marriage, divorce, property law, contracts etc, and those dealing with social welfare such as trade unions, social security, vocational and technical training of labour, legal, medical and other professions etc.; while the items coming under the first group are of primary importance to the Union Government, they have been left, by convention, to Parliament. In matters of social welfare, it is open to the State legislatures either to take the initiative in making laws or to enact laws which are supple-mentary to the Parliamentary laws. 12 Predominance of Union Law: In case of over-lapping of a matter between the three Lists, predominance has been given to the Union Legislature. Thus, the power of the State Legislature to legislate with respect to matters enumerated in the State List has been made subject to the power of the Union Parliament to legislate in respect of matters enumerated in the Union and Concurrent Lists, and the entries in the State List have to be interpreted accordingly. In the Concurrent sphere, in case of repugnancy between a Union and a State law relating to the same subject, the former prevails. If however, the State law was reserved for the assent of the President and has received such assent, the State law may prevail notwithstanding such repugnance. But it would still be competent for Parliament to override such State law by subsequent legislation. Residuary Powers: The Constitution vests the residuary power, i.e., the power to legislate with respect to any matter not enumerated in any one of the three Lists in the Union Legislature (Art. 248). It has been left to the courts to determine finally as to whether a particular matter falls under the residuary power or not. It may be noted, however, that since the three lists attempt an exhaustive enumeration of all possible subjects of legislation, and courts generally have interpreted the sphere of the powers to be enumerated in a liberal way, the scope for the application of the residuary powers has remained considerably restricted. Expansion of the Legislative Powers of the Union under Different Circumstances: (a) In the National Interest: Parliament shall have the power to make laws with respect to any matter included in the State List for a temporary period, if the Council of States declares by a resolution of 2/ 3 of its members present and voting, that it is necessary in the national interest. (b) Under the Proclamation of National or Financial Emergency: In this circumstance, Parliament shall have similar power to legislate with respect to State Subjects. (c) By Agreement between States: If the Legislatures of two or more States resolve that it shall be lawful for Parliament to make laws with respect to any matters included in the State List relating to those States, Parliament shall have such power. 13 It shall also be open to any other State to adopt such Union legislation in relation to itself by a resolution passed on behalf of the State legislature. In short, this is an extension of the jurisdiction of the Union Parliament by consent of the Legislatures. (d) To implement treaties: Parliament shall have the power to legislate with respect to any subject for the purpose of implementing treaties or international agreements and conventions. (e) Under a Proclamation of Failure of Constitutional Machinery in the States: When such a Proclamation is made by the President, the President may declare that the powers of the Legislature of the State shall be exercisable by or under the authority of Parliament. II. Administrative Relations (Articles 256-263) The distribution of executive powers between the Union and the States follows, in general, the pattern of distribution of the legislative powers. The executive power of a State is treated as coextensive with its legislative powers, which means that the executive power of a State extends only to its territory and with respect to those subjects over which it has legislative competence. Looking at from the point of view of the Union Government, we can say that the Indian Constitution provides exclusive executive power to the Union over matters with respect to which Parliament has exclusive powers to make laws, (under List I of Schedule VII) and over the exercise of powers conferred upon it, under Article 73, by any treaty or agreement at the international level. On the other hand, the States have exclusive executive powers over matters included in List II. In matters included in the Concurrent List (List III) the executive function ordinarily remains with the States, but in case the provisions of the Constitution or any law of Parliament confer such functions expressly upon the Union, the Union Government is empowered to go beyond giving directions to the State executive to execute a Central law relating to a Concurrent subject and take up the direct administration of Union law relating to any Concurrent subject. In the result, the executive power relating to Concurrent subjects remains with the States, except in two cases-(a) Where a law of Parliament relating to such subject vests some executive functions specifically 14 in the Union, e.g., the Land Acquisition Act, 1894; the Industrial Disputes Act, 1947 [Provision to Art. 73(1)]. So far as these functions specified in such Union Law are concerned, it is the Union and not the States which shall have the executive power while the rest of the executive power relating to the subjects shall remain with the States, (b) where the provisions of the Constitution itself vest some executive functions upon the Union. Thus, (i) the executive power to implement any treaty or international agreement belongs exclusively to the Union; (ii) the Union has the power to give directions to the State Governments as regards the exercise of their executive power in certain matters. The Constitution has devised techniques of control over the States by the Union to ensure that the State governments do not interfere with the legislative and executive of the Union. Some of these administrative avenues of control are as under: (i) The power to appoint and dismiss the Governor (Article 155-156) (ii) The power to appoint other dignitaries in the State such as judges of the High Court, members of the State Public Service Commission (Article 217, 317). There are some other specified agencies for Union Control (i) Directions to the State Government: The Constitution prescribes a Coercive Sanction for the enforcement of the directions issued under any of the foregoing powers, namely the power of the President to make a Proclamation under Article 356. (ii) Delegation of Union Functions: While Legislating on a Union Subject, Parliament may delegate powers to the State Governments and their officers in so far as the Statute is applicable in the respective States [Article 258 (2)]. (iii) All-India Services: Besides the person serving under the Union and the States, there are certain services which are ‘common to the Union and the States’. There are called ‘All-India Services’ of which 15 the Indian Administrative service and the Indian Police Service are the existing examples [Article 312 (2)]. The Indian Constitution has provision for the Organisation of certain all-India services, recruited and controlled by the Union Government as far as their general administration is concerned. The British Government had instituted the Indian Civil Services (ICS) in order to establish a kind of direct control over the provincial administration. The idea was adopted by the Constituent Assembly and under Article 312, power has been given to the Council of States, by a resolution sup-ported by not less than a two-thirds majority of the members present and voting, to constitute all- India service common to the Union and the States. It was further provided that the Indian Administrative Service (IAS) and the Indian Police Service (IPS), which had been constituted before the Constitution came into force, would be deemed to have been constituted under this Article. The Union Government is able to penetrate quite deep into the administrative affairs of the States through these all India services. The IAS and the IPS are not the only all-India services. Serial new services, governed by the same conditions, have been added, like the Indian Engineering Service, the Indian Economic Service, the Indian Statistical Service, the Indian Agriculture Ser-vice and the Indian Education Service. (iv) Grant-in-Aid: The Parliament is given such powers to make such grants as it may deem neces-sary to give financial assistance to any State which is in need of such assistance (Article 275). Besides this, the Constitution provides for specific grants on the following two matters: (a) For schemes of development; (b) For welfare of scheduled tribes; (c) For raising the level of administration of scheduled areas. (d) To the State of Assam, for the development of the tribal areas in that State [Article 275 (1)] (v) Inter-state Council: Article 263 says that the President is empowered to establish an inter-State Council. The Constitution assigned three fold duties to this body. 16 (a) To investigate and discuss subjects of common interest between the Union and the States or between two or more States; (b) Research in such matters as agriculture, forestry, public health etc., and (c) To make recommendations for co-ordination of policy and action relating to such subjects. The Sarkaria Commission has recommended the Constitution of a permanent inter-State Council. Such a council, consisting of six Union Cabinet Ministers and the Chief Ministers of all the States, has been created in April 1990. (vi) Inter-State Commerce Council: For the purpose of enforcing the provisions of the Constitution, relating to the freedom of trade, commerce and intercourse throughout the territory of India (Article 301- 305), Parliament is empowered to constitute as authority similar to the Inter-State Commerce Commission in the U.S.A. and to confer on such authority such powers and duties as it may deem fit (Article 307). (vii) Extra-Constitutional Bodies: Apart from the above Constitutional agencies for Union Control, there are some advisory bodies and conferences which held at the Union level which further the co-ordination of State policy and eliminate differences as between the States. (viii) Planning Commission: This extra-Constitutional and non-statutory body was set up by a reso-lution (1950) of the Union Cabinet and its main objective was to formulate an integrated Five Year Plan for economic and social development and to act as an advisory body to the Union Government. (ix) National Development Council (NDC): This council was formed in 1952 as an adjunct to the Planning Commission to associate the States in the formulation of the Plans. The main functions of this council are: (a) To strengthen and mobilize the efforts and resources of the nation in support of the plans; (b) To promote common economic policies in all vital spheres; and 17 (c) To ensure the balanced and rapid development of all parts of the country. (x) National Integration Council (NIC): Another non-constitutional body was created in 1986 to deal with the welfare measures for the minorities on an all India basis. Some of the burning issues before it were communal harmony, increased violence by secessionists, the problems in respect of Punjab, Kashmir, and Ram Janambhoomi-Babri Masjid. During ‘Emergencies’ the government under the Indian Constitution will work as if it were a unitary government. Some of the important Provisions during ‘Emergency’ are as under: (i) During a Proclamation of Emergency, the power of the Union to give directions extends to the giving of directions as to the manner in which the executive power of the State is to be exercised, relating to any matter [Article 353(a)]. (So as to bring the State Government under the complete control of the Union, without suspending it). (ii) Upon a Proclamation of failure of Constitutional machinery in a State, the President shall be entitled to assume to himself all or any of the executive powers of the State [Article 356(1)]. During a Proclamation of Financial Emergency: (a) To observe canons of financial propriety, as may be specified in the directions [Article 360(3)]. (b) To reduce the salaries and allowances of all or any class of persons serving in connection with the affairs of the Union including the Judges of the Supreme Court and High Courts [Article 360(4)(b)]. (c) To require all Money Bills or other Financial Bills to be reserved for the consideration of the President after they are passed by the Legislature of the State [Article 360(4)]. III. Financial Relations Related to the Distribution of Revenue (Article 264-281): 18 All feasible sources of taxation have been listed and allocated either to the Centre or to the States. These are as follows: (i) There are certain items of revenue in the State List which are levied, collected and appropriated by the States. For example, naval revenue etc.; (ii) There are certain items of revenue in the Union List which are levied, collected and appropriated by the Union, e.g. Customs duties etc.; (iii) There are certain duties levied by the Union but collected and appropriated by the States. For example, stamp duties etc.; (iv) There are certain taxes levied and collected by the Union but assigned to the States e.g. succes-sion and estate duties, taxes on railway fares and freights, etc; (v) There are certain taxes levied and collected by the Union and distributed between the Union and the States, e.g. excise duties etc. Consolidated Funds and Public Accounts of India and of the States: Subject to the provisions of Article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one Consolidated Fund to be entitled “the Consolidated Fund of India”, and all revenues re-ceived by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of the State” [Article 266(1)]. All other public money received by or on behalf of the Government of India or the Government of a State shall be credited to the Public Account of India or the Public Account of the State, as the case may be (Article 266(2)). 19 No money out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution [Article 266(3)]. Contingency Fund:Parliament may by law establish a Contingency Fund in the nature of an impress to be entitled “the Contingency Fund of India” into which shall be paid, from time to time, such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by Parliament by law under Ar-ticle 115 or Article 116 [Article 267(1)]. The Legislature of a State may by law establish a Contingency Fund in the nature of an impress to be entitled “the Contingency Fund of the State” into which shall be paid from time to time such sums as may be determined by such law, and the said Fund shall be placed at the disposal of the Governor of the State to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by the Legislature of the State by law under Article 205 or Article 206 [Article 267(2)]. Finance Commission: Arts. 270, 273, 275 and 280 provide for the Constitution of a Finance Commission (at stated intervals) to recommend to the President certain measures relating to the distribution of financial re-sources between the Union and the States, for instance, percentage of the net proceeds of income- tax which should be assigned by the Union to the States and the manner in which the share to be assigned shall be distributed among to the States [Art. 280]. The Constitution of the Finance Commission is laid down in Art. 280, which has to be read with the Finance Commission (Miscellaneous Provisions) Act of 1951, which has supplemented the provisions of the Constitution. Briefly speaking, the Commission has to be reconstituted by the President, every five years. The Chairman must be a person having ‘experience in public affairs’, and the other four members must be appointed from amongst the following 20 a) A High Court Judge or one qualified to be appointed as such; (b) a person having special knowledge of the finances and ac-counts of the Government; (c) a person having wide experience in financial matters, and administra-tion; (d) a person having special knowledge of economics, (e) a person familiar with treasures needed to augment the consolidated fund of a State to supplement the resources of the Panchayat, in the State. It shall be the duty of the Commission to make recommendations to the President as to: (a) the distribution between the Union and the States of the net proceeds of taxes which are to be or may be, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds; (b) the principles which should govern the grants-in-aid of revenues of the States out of the Consolidated Fund of India; (c) any other matter referred to the Commission by the President in the interests of sound finance. The Constitution has left it to the discretion of Parliament to decide by law whether any of the union duties of excise should be shared with the States, how these are to be shared, and how the shares are to be distributed to the States, (iv) Taxes which are to be levied and collected by the Centre, but to be distributed entirely (except for those proceeds which are attributable to the Union territories) to the States in accordance with such principles of distribution as may be laid down by Parliament by law. These taxes consist of succession and estate duties; termi-nal taxes on passengers and goods carried by rail, sea or air taxes on railway fares and freights; taxes on the sale or purchase of newspapers; sale or purchase taxes on inter-State trade, (v) Taxes levied by the Centre but collected by the States and appropriated by them for their own use. Grants and Loans: Besides the devolution of revenues the Union meets the financial needs of the State in two other ways: (i) by making grants-in-aid of State revenues and other grants, and (ii) by giving loans. According to the Constitution, both the Union and the States are empowered to make grants. 21 But by virtue of the sums at its disposal, the Union’s power is greater. The Union can make grants for purposes outside its legislative jurisdiction, and it is under this provision that many of the large capital grants for national development schemes are made. Grant-in-aid may be made to a State to defray its budgetary deficits, or it may make grant-in-aid on the basis of budgetary need, and to aid States whose revenues, even after devolution fall short of their expenditures. Efforts are generally made to keep these grants-in-aid to a minimum by making devolution adequate. Other grants are generally unconditional, but in certain cases, as in Assam, grants have been made for the development of backward areas and tribes. Besides grants-in-aid, States also sometimes depend heavily on the Union for loans. The Union government has unlimited power to borrow either within India or outside, and may exercise this power subject only to such limits as might be fixed by Parliament from time to time. In the case of the States, however, their borrowing power is subject to a number of Constitutional limitations. A State cannot borrow outside India. The State executive has the power to borrow within the territory of India, subject to many conditions. Role of the Planning Commissions: The institution which is sometimes held responsible for giving the maximum strength to the forces of centralisation in the country and yet has continued to remain an extra- statutory and extra-constitutional body is the Planning Commission. A Planning Commission was set up under Nehru’s Chairmanship by the Indian National Congress more than ten years before the country became independent to draw up a national plan. It had produced some voluminous reports. A Planning and Development Department was set up and a Development Board was organised by the British Government during the Second World War but these were, comparatively, minor efforts. One might, therefore, say that real planning began with the setting up of the Planning Commission in 1950. 22 No attempt was, however, made to take resort to legislation or to an amendment of the Constitution. It was set up by a simple resolution of the Union Cabinet put forward by Prime Minister Nehru with himself as its Chairman, to formulate an integrated five-year plan for the economic and social development of the country and to act as an advisory board to the Union Government in this sphere. But, even though the Planning Commission was set up without legislation or constitutional amendment, it has been growing in strength from year to year. Consisting of the Prime Minister, some important Cabinet Ministers of the Union and some non-officials, it has grown over the years as a heavy bureaucratic organisation. The function of the Planning Commission, in theory, is to prepare a plan for the most effective and balanced utilisation of the country’s resources, with a view to initiate “a process of development which will raise living standards and open out to the people new opportunities for a richer and more varied life”. Its function, in other words, is to formulate a plan. Development being related mostly to State subjects, the implementation of the plan rests with the States. The role that the Commission plays with regard to the States is merely advisory. Once the advice has been tendered by the Planning Commission, it has no direct means of securing the implementation of the plan. The practice, however, is different. The States have to depend on the Centre for financial assistance without which the plans cannot be implemented. Since the States cannot implement the plans without financial assistance from-the Centre, and the Union would like different States to follow a more or less uniform policy the Centre comes to exercise an immense control over the implementation part of the plans in the States. National Development Council (NDC): Constituted as the another part of the Planning Commission, it works in close cooperation with the Government of India. In order to promote coordination with the States, a National Development Council, consisting of all the Cabinet Ministers of the Government of India, the Members of the Planning Commission and the Chief Ministers of all the States, was set up. Having no statutory or constitutional basis, the National Development Council is an ad hoc improvised body, but, thanks to a convention, its decisions are regarded as binding on the Centre as well as on the State government. 23 It is interesting to note that there is no body analogous to the Planning Commission at the State level, though generally there are Planning Departments and sometimes Development Commission-ers in the States. All planning is done at the Union level and it is the responsibility of the States to implement the plans. Part XI Articles 245-293: A Combination of Conflicts and Cooperation: The relationship between the Centre and the States covers a wide range and embraces a very large part of the functions and activities in the administrative, social and economic spheres. Since 1950, many events have occurred which have a direct or indirect bearing on the Centre-State relations. For instance, the Planning Commission was set up by a resolution of the Government of India in March, 1950 with the object of accelerating the economic growth of the country and to meet the social urge for the extension of social services. Though not a creation of the Constitution, not even endowed with a statutory sanction, the Planning Commission assumed the role of the architect of India’s destiny. There were widespread complaints and it was contended that Five-Year Plans had reduced the federal structure to almost a unitary system. The reorganisation of the States in 1956 and there-after, especially with the emergence of non-Congress Governments in some States after the 1967 gave the issue of Centre-State relations a new dimension and importance. Grievance of States in General against the Centre: (i) The States regard as inadequate the resources placed at their disposal and demand transfer of more financial resources. The tight control exercised by the Centre over the financial institutions of India restricts the action of States. The States have, consequently, to look to the Centre for funds in case of unforeseen calamities or to carry out various schemes. They do not see eye to eye with the Centre on the issue of overdraft facilities and debt and repayment liabilities of State governments. 24 (ii) The Centre has the prerogative to decide finally the location of various industries and projects. Undue delays in clearance of projects have adversely affected the interests of the States. (iii) The States resent the Centre’s encroachment into their sphere, evidence in the transfer of subjects from the State List to the Concurrent List. It may be noted that even the Congress-ruled States have objected to this. Nor do the States like the persistence of the Centre in the matter of getting sales tax abolished. (iv) The States disapprove of the Centre’s practice of unilaterally increasing the wages and salaries of its staff, as this creates problems for the State governments vis-a-vis their own staff. The administered prices are controlled by the Centre, and arbitrary and drastic increase in the prices upset State budgets. (v) Resentment is also caused because of conflicting interests in location of new and important projects and industries. Grievances of ‘Opposition-Ruled’ States against the Centre: Besides the general grievances stated above, there are some specially felt by the States ruled by parties different from that of ruling at the Centre. (i) They are critical of the role of the Governors; the manner of their appointment, transfers and dismissals. They feel that party considerations outweigh constitutional conventions in the matter Of Governors’ appointment. They see the Governor as the Centre’s agent. (ii) They resent the frequent (and sometimes arbitrary) imposition of President’s Rule and dismissal of State governments. This is seen as unwarranted and unconstitutional action on the Centre’s part. (iii) The State governments resent deployment of paramilitary forces such as CRPF, RPF, Central Industrial Security Force, etc. in the States without requisition from the States. (iv) The States allege that the Centre shows little respect for the views expressed by State Chief Ministers or Ministers at conferences convened by the Centre. The Centre is alleged to expect unquestioned submission by the State governments like the appointment of Commission of inquiry by the Centre 25 against the governments and ministries, invariably, of those States ruled by parties other than that at the Centre. Centre’s Grievances against States: The Centre, for its part, feels displeased at the attitude of the States over various issues. Its aim is to achieve equitable development of the country. It feels perturbed at the objections of the more advanced States over its special concessions and measures to develop the backward areas. The Centre also alleges that State governments tend to divert funds allocated for a particular scheme to other purpose. The Centre also resents the States’ claiming credit for the successful implementation of Centrally-sponsored projects. Reforming Centre-State Relations: Some of the major recommendations made by different committees and teams are as under: 1. The Setalvad Study Team: The Setalvad Study Team had recommended the Constitution of an inter- State Council composed of the Prime Minister and other central ministers holding key portfolios, Chief Ministers and others, invited or co-opted. It suggested measures to rationalize the relationship between the Finance Commission and the Planning Commission. Besides, it recommended that the office of Governor be filled by a person having ability, objectivity and independence and the incumbent must regard himself as a creation of the Constitution and not as an errand boy of the Central Government 2. The Administrative Reforms Commission: The Administrative Reforms Commission noticed that the Central Government had even moved into the fields earmarked for the States under the Constitution and asked it to withdraw from such areas. 26 It recommended the setting up of an inter-State Council but made a novel suggestion about its composition. Instead of giving seats in this body to all the Chief Ministers, it wanted to have five representatives one each from the five zonal councils. Much more importantly, the ARC highlighted the need for formulation of guidelines for governors in the exercise of their discretionary powers. This would ensure uniformity of action and eliminate all suspicions of partnership or arbitrariness. The question whether a Chief Minister enjoys majority support or not should be tested on the floor of the Legislature and for this he should summon the Assembly when-ever a doubt arises. It also opined that when a ministry suffers a defeat in the Legislative Assembly on major policy issues and the outgoing chief minister advises the governor to dissolve the Assembly with a view to obtaining the verdict of the electorate, the governor should normally accept the advice. 3. Rajamannar Committee Report: The DMK government of Tamil Nadu appointed a Commission with a direction to suggest changes in the existing level of Union-State relations. Their terms of reference were to examine the entire question regarding the relationship that should exist between the Centre and the States in a federal set-up and to suggest amendments to the Constitution so as to “secure utmost autonomy to the States.” The Committee headed by P.V. Rajamannar, a retired Chief Justice of Madras High Court, presented its report on May 27, 1971. Some of the important recommendations of the Committee were: (i) The Committee recommended the transfer of several subjects from the Union and Concurrent Lists to the State List. It recommended that the ‘residuary power of legislation and taxation’ should be vested in the State Legislatures. (ii) An Inter-State Council comprising Chief Ministers of all the States or their nominees with the Prime Minister as its Chairman should be set up immediately. 27 (iii) The Committee recommended the abolition of the existing Planning Commission and that its place must be taken by a statutory body, consisting of scientific, technical, agricultural and economic experts, to advise the States which should have their own Planning Boards. (iv) The Committee advocated deletion of those articles of the Constitution empowering the Centre to issue directives to the States and to take over the administration in a State. The Committee was also opposed to the emergency powers of the Central Government and recommended the deletion of Articles 356, 357 and 360. (v) The Committee recommended that every State should have equal representation in the RajyaSabha, irrespective of population. (vi) The Governor should be appointed by the President in consultation with the State Cabinet or some other high power body that might be set up for the purpose and once a person had held this office, he should not be appointed to any other office under the Government. (vii) On recruitment to the services, the Committee recommended that Article 312 should be so amended as to omit the provision of the creation of any new All-India cadre in future. (viii) The High Courts of States should be the highest courts for all matters falling within the jurisdic-tion of States. (ix) The Committee said that ‘territorial integrity’ of a State should not be interfered with in any manner except with the consent of the State concerned. (x) It recommended that the States should also get a share of the tax revenues from corporation tax, customs and export duties and tax on the capital value of assets and also excise duties. 4. Sarkaria Commission Report: In view of the various problems which impeded the growth of healthy relations between the Centre and the States, the Central Government set up a Commission in June 1983, under the Chairmanship of Justice R.S. Sarkaria mainly to suggest reforms for an equitable distribution of powers between the Union and the States. The Commission submitted its report in 1988. 28 Major Recommendations: (i) Though the general recommendations tilt towards the Centre – advocating the unity and integrity of the nation, the Commission suggested that Article 258 (e.g. the Centre’s right to confer authority to the States in certain matters) should be used liberally. (ii) Minimal use of Article 356 should be made and all the possibilities of formation of an alternative government must be explored before imposing President’s Rule in the State. The State Assem-bly should not be dissolved unless the proclamation is approved by the Parliament. (iii) It favoured the formation of an Inter-Government Council consisting of the Prime Minister and the Chief Ministers of States to decide collectively on various issues that cause friction be-tween the Centre and the States. (iv) It rejected the demand for the abolition of the office of Governor as well as his selection from a panel of names given by the State Governments. However, it suggested that active politicians should not be appointed Governors. When the State and the Centre are ruled by different political parties, the Governor should not belong to the ruling party at the Centre. Moreover, the retiring Governors should be debarred from accepting any office of profit. (v) It did not favour disbanding of All India Services in the interest of the country’s integrity. Instead, it favoured addition of new All India Services. (vi) The three-language formula should be implemented in its true spirit in all the States in the interest of unity and integrity of the country. (vii) It made a strong plea for Inter-State Councils. (viii) The Judges of the High Courts should not be transferred without their consent. (ix) It did not favour any drastic changes in the basic scheme of division of taxes, but favoured the sharing of corporation tax and ‘every of consignment tax. 29 (x) It found the present division of functions between the Finance Commission and the Planning Commission as reasonable and favoured the continuance of the existing arrangement. 4. Recommendations of Commissions The Administrative Reforms Commission (1968) recommended that the report of the Governor regarding President's Rule has to objective and also the Governor should exercise his own Judgement in this regard. The Commission recommended, "In all such cases the Governor's report has to be objective, according to the facts as he sees and interprets them and not as his ministers or the Centre interpret them. Briefly, therefore, in reporting to the President, whether in routine or in unusual circumstances warranting Presidential intervention, the Governor is expected to exercise his own Judgement." The Administrative Reforms Commission (1968) recommended that where President's Rule is imposed the Governor of the State should responsibly act under the direction of the Union Government. The Commission recommended that "Where Presidential Rule is imposed the Governor may be entrusted by the Centre with the task of actively carrying on the administration for which he then becomes directly responsible under the overall direction of the Union Government." These recommendations are an important restraint m the exercise of the Presidential powers under Article 356. But these recommendations were not implemented due to lack of will power. President, Y.V. Giri, established Governors' Committee headed by the then Jammu & Kashmir Governor, Bhagwan Sahay, to review the issues relating to Governors. Gopal Reddy, Aliyaver Jung and S.S. Dhawan were the members of this Committee. The Committee gave its recommendations in 1971. The Governors· Committee (1971) laid down the responsibility on the Governor to see that the administration of the State does not breakdown due to political instability and he must send regular report about the political situation of the State. The Governor should also report to the President about any serious internal disturbance or external aggression in the State concerned and about action to be taken under Article 356. The Committee recommended that "As Head of the State, the Governor has a duty to see that the administration of the State does not break down due to political instability. He has equally to take care that responsible Government in the State is not lightly disturbed or superseded. It is not in the event of political instability alone that a Governor may report to the President under Article 356. Reference has been made elsewhere in this report to the President about any serious internal disturbances in the States, or, more especially of the existence or possibility of a danger of external aggression. In such situations also it may become necessary for the Governor to report to the President for action pursuant to Article 356. The Governors' Committee also recommended that the 30 guiding principles for the Governors to act according to his best judgement should be maintained. The Committee also recommended that "The Governor has to act on each occasion according to his best Judgement, the guiding principle being, as far as possible, maintained" The Governors' Conference discussed this report on November 26, 1971 at New Delhi, but the idea of instructions to Governors was withdrawn, although these recommendations were very useful. THE CENTRE-STATE RELATIONS INQUIRY COMMITTEE (RAJAMANNAR COMMITTEE) REPORT, 1971. The DMK government in Tamil Nadu headed by M. Karunanidhi established a Centre-State relations Inquiry Committee headed by P.V. Rajamannar, former Chief Justice of Madras High Court, on September 2, 1969. The Committee gave its recommendations in 1971. The recommendations of Rajamannar Committee are analysed as follows. 1. The Rajamannar Committee (1971) recommended the deletion of Articles 356 and 357 from the Constitution of India. The necessary provisions for safeguards against arbitrary action of the ruling party at the Centre under Article 356 should be incorporated in the Constitution. The Committee recommended, "Articles 356 and 357 may be entirely repealed. The only other alternative is to provide safeguards to secure the interests of the States against the arbitrary and unilateral action of a party commanding overwhelming majority, which happens to be in power at the Centre."2. Tile Rajamannar Committee emphasised that the Governor of the State should not consider himself as an agent of the Centre but play his role as the constitutional head of the State. The Committee emphasised the fact that "The Governor should not deem himself to be a mere agent of the Centre and that the emphasis should be on his role as the constitutional head of the State." The Rajamanna Committee recommended that the Ministry of the State concerned should not depend on the pleasure of the Governor and the Ministry should continue its function till it commands majority in the State Legislative Assembly. The Committee also recommended that the tenure of office of a Ministry in any State should not be dependent on the pleasure of the Governor and that the Ministry should continue to function and perform its allotted duties so long as it is able to command a majority in the Legislative Assembly. If Article 356 is to be retained, the words 'or otherwise' occurring in clause of the article may be omitted. The Committee recommended that before recommending the President's Rule in the State, the Governor should ensure a Ministry which would enjoy the confidence of the Legislature after observing all the possibilities. The justification of the President's Rule is possible only when there is complete breakdown of law and order in the State. The Committee has also recommended that the Governor, before recommending President's Rule, should explore all possible avenues open to him to secure a Ministry which, would command the confidence of the Legislature. The only other contingency which would justify the imposition of President's Rule is the complete breakdown of law and order in the 31 State. The only forum which could decide the question whether a Ministry could continue in office is the Legislative Assembly. The Committee recommended that before sending his recommendation for the President's Rule, the Governor should refer the report to the Legislative Assembly within a specified period to know the Assembly's views. The Committee suggested that "the addition of a proviso of clause (1) of Article 356 requiring the President, before issuing the Proclamation, to refer the report of the Governor to the Legislative Assembly for expressing its views thereon within such period as may be specified in the reference. The Committee further recommended that the President's Rule should be imposed in the State if the State Government concerned fails to implement the direction issued by the Union Government. The Committee have also recommended that any contravention of, or failure to implement, a direction issued by the Union to the State should, under no circumstances, be made a ground for the imposition of President's Rule. It follows that Article 365 has to be repealed."10 It is obvious that recommendations of Rajamanna Committee 1971 are very important for autonomy of States and it also suggests some checks upon the misuse of provision relating the President's Rule, but the suggestion of deletion of Articles 356 and 357 was not reasonable and possible for unity and integrity of the country and for proper functioning of constitutional machinery in the States. These recommendations, however, were rejected by the Union Government. Rajeev Dhavan and GeetanjaliGoel observed, "These suggestions, some eminently sensible, were not accepted as a package because they were found to be too extreme. But the issues raised by 'Rajamannar' have resurfaced and remained." The Commission on Centre-State Relations (Sarkaria Commission) Report, 1988: The Government of India established a Commission on March 24, 1983, headed by Justice R.S. Sarkaria, to review the Centre-State relations and to suggest measures for reforming these relations. B. Shivraman and S.R. Sen were also the members of this Commission. The Commission submitted its report on June 30, 1988. The Commission received valuable suggestions from the State Governments and many eminent persons and some suggested that Article 356 may be deleted from the Constitution of India. Unless there is a will and commitment to work for a united country, there are real dangers that regionalism, linguistic, chauvinism, communalism, casteism, etc. may foul the atmosphere to a point where secessionist thoughts start pervading the body politic. It is, necessary to preserve the overriding powers of the Union to enable it to deal with such situations and ensure that the government in the State is carried on in accordance with the provisions of the Constitution. Some seek to restrict the scope of Article 356 only to a serious breakdown of law and order paralysing the State administration and where the State Government lacks the will and capability to meet the situation. Some others are of the view that action under Article 356 may also be taken where there is a complete failure to induct a government which can command a majority in the State Legislature. Some State Governments and others have suggested that the Inter-State Council should 32 be consulted before a proclamation under Article 356 is issued. One State Government has suggested that Article 356 should be amended to provide for prior approval of the Inter-State Council or its Standing Committees. They have also suggested that, in case elections cannot be held within six months after proclamation of President's Rule, the Inter-State Council should be consulted again and its option placed before Parliament. It has been suggested that principles of natural justice should be followed before a State Government is dismissed and President's Rule imposed. It is suggested that, before sending his report, the Governor should communicate it to the State Government and obtain its comments. Again, before issue of a proclamation, the President should convey the reasons for the action contemplated and take into consideration the clarifications of the State Government before taking a final decision to impose President's Rule. Yet another suggestion is that, in keeping with the principles of fair-play and justice, warning should be given. It has been argued that in keeping in view the alleged misuse of the provisions of Article 356 in the past, there is need for severe restrictions in respect of any extension beyond one year of the Proclamation. While several State Governments consider that the existing provisions or appropriate, two have suggested that the position as was obtaining prior to the 44th Amendment should be restored. Two other State Governments have suggested that a little more flexibility could be introduced without detracting from the present limitations by substituting the word 'or' for the word 'and' between Sub-Clauses (a) and (b) of Clause (5) of Article 356. The recommendations of Sarkaria Commission are analysed as follows: 1. The Sarkaria Commission (1988) recommended that Article 356 should be used in very rare cases when it becomes unavoidable to restore the breakdown of constitutional machinery in the State. The Commission recommended that "Article 356 should be used very sparingly, in extreme cases, as a measure of last resort, when all available alternatives fail to prevent or rectify a breakdown of constitutional machinery in the State." 2. The Commission recommended that before taking action under Article 356, a warning should be issued to the State Government that it is not functioning according to the Constitution. However, the explanation submitted by the State Government should not be taken into account if there is an urgency of taking immediate action to prevent disastrous consequences. The Commission recommended that "A warning should be issued to the errant State, in specific terms that it is not carrying on the Government of the State in accordance with the Constitution. However, this ·may not be possible in a situation when not taking immediate action would lead to disastrous consequences." 3. The Commission recommended that the Union Government should make use of Article 355 in case an 'external aggression' or 'internal disturbance' collapses the constitutional machinery of the State 33 concerned. The Commission recommended that "When an 'external aggression' or 'internal disturbance' paralyses the State administration creating a situation drifting towards a potential breakdown of the Constitutional machinery of the State, all alternative courses available to the Union for discharging its paramount responsibility under Article 355 should be exhausted to contain the situation." 4. The Commission recommended that in case of political breakdown, the Governor should allow a government to function in the State which enjoys the majority in the State Assembly. If it is not possible and there is urgency of fresh elections then the outgoing Ministry-will function as a caretaker government. The Commission recommended that "If' a situation of political · breakdown, the Governor should explore all possibilities of having a government enjoying majority support in the Assembly. If it is not possible for such a government to be installed and if fresh elections can be held without avoidable delay, he should ask the outgoing Ministry, if there is one, to continue as a caretaker government... The Governor should recommend proclamation of President's Rule without dissolving the Assembly." 5. The Commission also recommended that the Proclamation of the President's Rule should be placed before each House of Parliament before the expiry of two months' period specified for its approval. The Commission recommended that, "Every Proclamation should be placed before each House of Parliament at the earliest, in any case before the expiry of the two month period contemplated in clause (3) of Article 356." 6. The Commission recommended that the Governor or the President should not dissolve the State Assembly before the approval of the Proclamation by each House of the Parliament. The Commission recommended that "The State Legislative Assembly should not be dissolved, either by the Governor or by the President before the Proclamation issued under Article 356( I) has been laid before Parliament and it has had an opportunity to consider it. Article 356 should be suitably amended to ensure this." 7. The Commission recommended that the safeguards in clauses (7) and (8) of Article 352 should be incorporated in Article 356 to enable the Parliament to review continuance in force of a Proclamation. The Commission recommended that "Safeguards corresponding, in principle; to clauses (7) and (8) of Article 352 should be incorporated in Article 356 to enable Parliament to review continuance in force of a Proclamation." 8. The Commission recommended that the material facts and grounds on which Article 356 is invoked should be made an integral part of the Proclamation of that Article. The Commission recommended that "Notwithstanding anything in clause (2) of Article 74 of the Constitution, the material facts and grounds 34 on which Article 356(1) is invoked should be made an integral part of the Proclamation issued under that Article." 9. The Commission recommended that the report of the Governor regarding Article 356 should be placed before each House of Parliament and it should be a 'speaking document'. The Commission recommended that "Normally, the President is moved to action under Article 356 on the report of the Governor. The report of the Governor is placed before each House of Parliament. Such a report should be a 'speaking document' containing a precise and clear statement of all material facts and grounds on the basis of which the President may satisfy himself as to the existence or otherwise of the situation contemplated in Article 356." 10. The Commission recommended that the report of the Governor regarding imposition of President's Rule should be given wide publicity in the media. The Commission recommended that "The Governor's report, on the basis of which a Proclamation under Article 356 is issued, should be given wide publicity in all the media and in full." The Commission recommended that the President's Rule in a state should be proclaimed on the basis of the Governor's report in normal situation. The Commission recommended that "Normally, President's Rule in a State should be proclaimed on the basis of the Governor's report under Article 356. 11. The Commission recommended that the word 'and' occurring between sub-clauses (a) and (b) should be substituted by 'or', in Clause (5) of Article 356. The Commission recommended that "In clause (5) of Article 356, the word 'and' occurring between sub-clauses (a) and (b) should be substituted by 'or' it is obvious that Sarkaria Commission's suggestions are useful to check upon the misuse of provisions relating to President's Rule and it promotes a constitutional structure that promotes co-operative and federal institutions. It will also be helpful in promoting healthy Centre-State relations and federal setup. Owing to lack of political will power suggestions have not been implemented so far. S. Saraswathi observed, "The Sarkaria Commission has taken great efforts to examine Union-State relationships but the end product reveals the existence of certain diametrically opposite views that cannot meet. As long as such views exist, the problems of relationship will continue and any suggestion for betterment of relations are bound to have temporary effect only." Court, was the Chairperson of this Commission. Justice R.S. Sarkaria was the chairperson of emergency provisions review committee and Justice B.P. Jeevan Reddy presented the paper on Article 356. The Commission submitted its report in 2002. The analysis as in the recommendations of the Commission is as follows: 35 1.TheVenkatachaliah Commission (2002) recommended that the Article 356 must be used sparingly and only as a remedy of the last resort after exhausting all actions under Articles 256, 257 and 355. The Commission recommended that "In the spirit of the framers of the Constitution, that Article 356 must be used sparingly and only as a remedy of the last resort and after exhausting action under other Articles like 256, 257 and 355.'' 2. The Commission recommended that in case of political breakdown, the State concerned should be given an opportunity to explain its position and redress the situation before issuing a proclamation under Article 356. The Commission recommended that "Before issuing a proclamation under Article 356 the concerned State should be given an opportunity to explain its position and redress the situation, unless the situation is such that following the above course would not be in the interest of security of State, or defence of the country, or for other reasons necessitating urgent action." 3. The Commission recommended that the question whether the Council of Ministers in a State has lost the confidence of the State Assembly or not, should be decided only on the floor of the House and not anywhere else. So far as the political breakdown of the State, the Governor should explore all possibilities of formation of a Government enjoying majority support in the State Assembly. If an alternative Government can not to be formed and if a fresh election is to be held without delay, the Governor should ask the outgoing Ministry to continue as a caretaker government. The Commission recommended that "The question whether the Ministry in a State has lost the confidence of the Legislative Assembly or not, should be decided only on the floor of the Assembly and nowhere else. The Governor should not be allowed to dismiss the Ministry, so long as it enjoys the confidence of the House. It is only where a Chief Minister refuses to resign, after his Ministry is defeated on a motion of no-confidence, that the Governor can dismiss the State Government. In a situation of political breakdown, the Governor should explore all possibilities of having a Government enjoying majority support in the Assembly. If it is not possible for such a Government to be installed and if fresh elections can be held without avoidable delay, he should ask the outgoing Ministry, (if there is one), to continue as a caretaker government, provided the Ministry was defeated solely on issue, unconnected with any allegations of maladministration or corruption and is agreeable to continue. The Governor should then dissolve the Legislative Assembly, leaving the resolution of the constitutional crisis to the electorate." 4. The Commission recommended that with regard to the election of the new leader of the State Assembly (Chief Minister) and the removal of the previous Government, a constructive vote of no- confidence is to be accepted and implemented. The Commission recommended that "In regard to the 36 election of the leader of the House (Chief Minister) and the removal of the Government only by a constructive vote of no-confidence are accepted and implemented." 5. The Commission recommended that the President's Rule in a State should be proclaimed on the basis of the Governor's report in all normal circumstances. The report of the Governor under Article 356 should be a 'speaking document'. The Commission recommended that "Normally President's Rule in a State should be proclaimed on the basis of Governor's report under Article 356(1). The Governor's report should be a 'speaking document,' containing a precise and clear statement of all material facts and grounds, on the basis of which the President may satisfy himself, as to the existence or otherwise of the situation contemplated in Article 356." 6. The Commission recommended that in clause (5) of Article 356, in sub-clause (a) the word "and" occurring at the end should be substituted by "or" so that President's Rule may be continued if elections of the State Assembly cannot be held. The Commission recommended that "In clause (5) of Article 356 of the Constitution, in sub-clause (a) the word 'and' occurring at the end should be substituted by 'or' so that even without the State being under a proclamation of Emergency, President's Rule may be continued if elections cannot be held." 7. The Commission recommended that clauses (6) and (7) under Article 356 may be added to the following lines: (6) The President shall revoke a proclamation issued under clause (I) or a proclamation, varying such proclamation if the Lok Sabha passes a resolution disapproving or disapproving the continuance in force of such proclamation, where a notice in writing signed by not less than of the total number of members of the Lok Sabha has been given, of intention to move a resolution for disapproving a special sitting of the House shall be held within fourteen days from the date on which such a notice is received by the Speaker or by the President, for the propose of considering such resolution. The Commission recommended that ''clauses (6) and (7) under Article 356 may be added on the following lines (6) Notwithstanding anything contained in the foregoing clauses, the President shall revoke a proclamation issued under clause(1) or a proclamation varying such proclamation if the House of the People passes a resolution disapproving, or, as the case may be, disapproving the continuance in force of, such proclamation. (7) Where a notice in writing signed by not less than one-tenth of the total number of members of the House of the People has been given, of their intention to move a resolution for disapproving, or, as the case may be, for disapproving the continuance in force of, a proclamation issued under clause (I) or a proclamation varying such proclamation : (a) to the Speaker, if the House is in session; or (b) to the President, if the House is not in session, a special sitting of the House shall be held 37 within fourteen days from the date on which such a notice is received by the Speaker, or, as the case may be, by the President, for the purpose of considering such resolution." 8. The Commission recommended that Article 356 should be amended to ensure that the State Legislative Assembly should not be dissolved by the Governor or the President before the proclamation of President's Rule has been laid before Parliament and it has had an opportunity to consider it. The Commission recommended that "Article 356 should be amended to ensure that the Legislative Assembly should not be dissolved either by the Governor or the President before the proclamation issued under Article 356 has been laid before Parliament and it has had an opportunity to consider it." The suggestions of the Constitution Review Commission (2002) have also been useful to check upon the misuse of the provisions regarding President's Rule. It is submitted that the Inter-State Council should discuss on these suggestions and these suggestions should be implemented in consultations with the State governments. M.P. Singh observed that the constitutional reforms the NCRWC offers are very relevant today. Their urgency can hardly be exaggerated. Out of the 230 recommendations of the Sarkaria Commission on which Inter-State Council took decision, altogether 8 recommendations have so far been in various stages of implemented, 35 have been rejected and 87 are under implementation. The remaining 17 recommendations regarding the imposition of President's Rule (Article 356), the deployment of CRPF in the States, compliance with Union's directions under Articles 256 and 257 and effect of the failure to comply therewith, or to give effect to directions given by the Union Government, etc., have been considered by the subcommittee of the Council. The Council has rejected 6 recommendations pertaining to the role of Governor and 18 on All India Services. Although divergence of views still prevail on issues like Article 356, role of Governor, etc. 5. Freedom of Trade and Commerce The framers of the Indian constitution, instead of leaving the idea of 'intercourse' to be implied by the process of judicial pronouncements, expressly incorporated the same in Article 301. The words trade and commerce have been broadly interpreted. In most of the cases, the accent has been on the movement aspect. For example, in the Atiabari Tea Co. v. State ofAssam case, the court emphasized : "whatever else it (Art.301) may or may not include, it certainly includes movement of trade which is of the very essence of all trade is its integral part," and, further, that "primarily it is the movement part of the trade" which Article 301 has in its mind, that "the movement or the transport of the trade must be free," and that "it is the free movement or the transport of goods from one part of the country to the other that is intended to be saved." 38 Again, in State of Madras v. NatarajaMudaliar, the court stated that "all restrictions which directly and immediately affect the movement of trade are declared by Article 301 to be ineffective." Nevertheless cases are not wanting where movement has not been involved but other aspects of trade and commerce have been involved. The view now appears to be fairly settled that the sweep of the concept 'trade, commerce and intercourse' is very wide and that the word trade alone, even in its narrow sense, would include all activities in relation to buying and selling, or the interchange or exchange of commodities and that movement from place to place is the very soul of such trading activities. In Koteswar v. K.R.B. & Co, a restriction on forward contracts was held to be violative of Article 301.The Supreme Court held that a power conferred on the state government to make an order providing for regulating or prohibiting any class of commercial or financial transactions relating to any essential Article, clearly permits restrictions on freedom of trade and commerce and, therefore, its validity has to be assessed with reference to Article 304(b). In District Collector, Hyderabad v. Ibrahim, the Supreme Court has invalidated under Article 301 an attempt by a state to create by an administrative order a monopoly to deal in sugar in favor of cooperative societies. The order was issued while the proclamation of emergency was operative and so Article 19 (1)(g) could not be invoked. The court therefore took recourse to Article 301. In Fatehchand Himmatlal v. State of Maharashtra, the Supreme Court considered the question that whether the Maharashtra debt relief act, 1976, was constitutionally valid vis-à-vis Article 301. This depended on the further question that whether money-lending to poor villagers which was sought to be prohibited by the Act could be regarded as trade, commerce and intercourse. The court answered in the negative although it recognised that the money-lending amongst the commercial community is integral to trade and therefore is trade. Certain activities may not be regarded as trade, commerce and intercourse although the usual forms and instruments are employed therein, as for example, gambling, and thus an Act restricting betting and gambling is not bad under Article 301. In this case, the Supreme Court had expressed some sentiments of suggesting that unlawful activities opposed to public morality and safety would not be regarded as trade and commerce. But the court then resiled from this broad proposition saying that the wide proposition that a dealing against morals would not be business, involves the position that the meaning of the expression 'trade or business' would depend upon, and vary with, the general standards of morality accepted at a particular point of time in the country. 39 After an elaborate study of the scope of the meaning of these words, it can be said that the word "trade" cannot be confined to the movement of goods but extends to transactions linked with merchandise or flow of goods, the promotion of buying and selling, advances, borrowings, discounting bills and mercantile documents, banking and other forums of supply of funds. Money lending and trade financing also constitutes trade. The word 'free' in Article 301 cannot mean an absolute freedom or that each and every restriction on trade and commerce is invalid. The Supreme Court has held in Atiabari that freedom of trade and commerce guaranteed by Article 301 is freedom from such restrictions as directly and immediately restrict or impede the free flow or movement of trade. Therefore Article 301 would not be attracted if a law creates an indirect or inconsequential impediment on trade, commerce and intercourse which may be regarded as remote. The word 'free' in Article 301 does not mean freedom from regulation. As has been observed by the Supreme Court: "there is a clear distinction between laws interfering with freedom to carry out the activities constituting trade and laws imposing on those engaged therein rules of proper conduct or other restraints directed to the due and orderly manner of carrying out the activities." Re