Tuesday, May 31, 2011
Overdose of secularism!
What is the best thing in an air travel? My answer would be – you do get to read a lot. Typically, reading while travelling denotes catching up with one of the recent best sellers and if you missed to carry one, you end up reading all kinds of newspapers (yes – it’s free)..
What I am going to dwell upon has nothing to do with the above. In one of my recent travel, I encountered a similar problem of not having a best seller and ended up reading most of the newspapers. Thats when I came across the reference to a bill drafted by the National Advisory Council (This is a council set up by Prime Minister’s office to provide policy and legislative inputs to the Government with special focus on social policy and the rights of the disadvantaged groups, with Mrs. Sonia Gandhi as the Chairperson). More out of curiosity, I chose to have a go at the proposed legislation. With my limited understanding, I would say the whole thing seemed absurd to me:
The draft bill in question is ‘Prevention of Communal and Targeted Violence (Access to Justice and Reparations) Bill, 2011.’ The bill can be accessed at http://nac.nic.in/pdf/pctvb_amended.pdf
The intent appears to be laudable, i.e., preventing communal violence in the country.
Before getting into an analysis or stating my views, I have to make a disclaimer and state that I belong to majority community (of course, not my choice) and I learned the meaning of the word ‘minority’ because the government chose to teach me.
Coming back to the draft bill, the proposed statute is quite complex and impractical. There are few areas which are outright disturbing and to cite a few from the definition sections;
3 (c) “communal and targeted violence” means and includes any act or series of acts, whether spontaneous or planned, resulting in injury or harm to the person and or property, knowingly directed against any person by virtue of his or her membership of any group, which destroys the secular fabric of the nation;
3 (e) “group” means a religious or linguistic minority, in any State in the Union of India, or Scheduled Castes and Scheduled Tribes within the meaning of clauses (24) and (25) of Article 366 of the Constitution of India;
3 (j) “victim” means any person belonging to a group as defined under this Act, who has suffered physical, mental, psychological or monetary harm or harm to his or her property as a result of the commission of any offence under this Act, and includes his or her relatives, legal guardian and legal heirs, wherever appropriate
The draft bill also has a definition for sexual assault under article 7 which state that ”A person is said to commit sexual assault if he or she commits any of the following acts against a person belonging to a group by virtue of that person’s membership of a group':
Not reproducing the entire definition here but would say without hesitation that the definition is sophomoric and quite hilarious, will be ripped apart by lawyers if this ever becomes a law. For the limited purpose of this article, it again refers to sexual assault against a person belonging to a Group. I always thought sexuality or sexual assault is a gender issue and not a majority/minority issue.
The Bill as a whole goes on a presumption that communal trouble is created only by members of the majority community. Whilst offences committed by majority community are punishable, offences committed by minority groups are not treated as offences.
In a nutshell, No member of the majority community can ever be a victim - How very nonsensical!
As is the case with every new law – this bill also envisages setting up a body known as National Authority for Communal Harmony, Justice and Reparation which will have seven members with a stipulation that at least four (including the chairman and vice-chairman) shall belong to a 'group' (read - the minority community). No prizes for guessing that this will be one of the high profile political appointments and a way for any incumbent government to keep those retired babus happy.
My humble questions or thoughts are:
• Do we need such legislation?
• Are we not over-doing the secularism card?
• What do they achieve by this legislation apart from political mileage and votes?
• Violence and terror has no caste, creed, religion or reasons. So, why should we attempt on a classification.
• Why do we have to invent new laws when we have enough laws if implemented well can be equally effective?
• Is this bill not taking away the ‘right to equality’ guaranteed to citizens under article 14 of the Constitution of India? The exception to this right inserted by politicians since independence can only be for the purpose of ‘advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribe’ and this bill is definitely not meant for that.
There is no paucity of laws in our country.. to the extent that no one has a clue as to how many laws we have; but what is lacking is the political will implement those. What you need is a serious and disciplined approach to mete out justice to all and not another law to add to the list.
Signature campaign against the bill can be accessed at at http://www.petitiononline.com/cvb_nac
Tuesday, May 17, 2011
Bye-Elections – who should pay!
The general elections in India are a mammoth exercise, with over 600 million voters, and about one million polling booths in the country.
Though the magnitude was not so much in the recently concluded assembly elections to the five states and few bye-elections, Election Commission of India has done a remarkable job of conducting a smooth election. Of course, even after their best efforts, they could not control the flow of black money entirely, which is understandable given the complexities in India.
Nonetheless, the point am attempting to touch upon is the 2 provisions of law concerning elections (cited below) which deserves a re-look,
The ability to become a minister without winning an election provided they get elected from a constituency within a period of 6 months
The legal background for this can be found in Article 164 of the Constitution of India which deals with ‘Other provisions as to Ministers’. Article 164 (4) is relevant, which reads as under:
“A minister who for any period of six consecutive months is not a member of the Legislature of the State shall at the expiration of that period cease to be a minister”.
Now, to cite an example from the recently concluded elections, Mamata Banerjee who has done the unthinkable of uprooting the Left from West Bengal after 34 long years, will become the Chief Minister. The repercussions are;
- There will be a vacancy in a lok sabha
- She has to get elected from an assembly constituency in the next 6 months.
We are looking at 2 bye-elections within a period of 6 months as in terms of section 151A of The Representation of the People Act, 1951 – a bye-election to fill up a casual vacancy shall be held within a period of six months from the date of the occurrence of the vacancy. The intent of having a bye-election is noble as a constituency should not go unrepresented for a long time.
However, one should think of the money and machinery to be deployed in conducting an election, both by the state and the candidate. According to an estimate from Centre for Media Studies, political parties and candidates spent a whopping Rs. 10,000 crore (including Rs.3,000 crore by the Election Commission) in the last lok sabha elections.
For a candidate, the current ceiling of spent is Rs.40 lakhs for a lok sabha seat and Rs 16 lakhs for an assembly seat and it would be naïve to think that these limits can be met. Apart from money, the logistics of conducting an election is also a nightmare.
Ability to contest from 2 constituencies at the same time
This prerogative given to candidates has its roots in Section 33 (7) of The Representation of the People Act, 1951 which states that ‘a person cannot contest elections from more than two constituencies for a lok sabha election or an assembly election’.
This provision also results in the same scenario of bye-elections if the candidate contesting from two constituencies wins both.
It is pertinent to note that the Committee of Electoral Reforms formed by the Ministry of Law and Justice, Government of India which submitted its report to the Cabinet in December 2010 has recommended that a person should not be allowed to contest from more than one constituency at a time.
Should we not have a law to ensure that any bye-election aimed at facilitating the needs of a political party should be at their expense and not on tax payer’s money and restrict state funding for instances like death of an incumbent member etc?
Though the magnitude was not so much in the recently concluded assembly elections to the five states and few bye-elections, Election Commission of India has done a remarkable job of conducting a smooth election. Of course, even after their best efforts, they could not control the flow of black money entirely, which is understandable given the complexities in India.
Nonetheless, the point am attempting to touch upon is the 2 provisions of law concerning elections (cited below) which deserves a re-look,
The ability to become a minister without winning an election provided they get elected from a constituency within a period of 6 months
The legal background for this can be found in Article 164 of the Constitution of India which deals with ‘Other provisions as to Ministers’. Article 164 (4) is relevant, which reads as under:
“A minister who for any period of six consecutive months is not a member of the Legislature of the State shall at the expiration of that period cease to be a minister”.
Now, to cite an example from the recently concluded elections, Mamata Banerjee who has done the unthinkable of uprooting the Left from West Bengal after 34 long years, will become the Chief Minister. The repercussions are;
- There will be a vacancy in a lok sabha
- She has to get elected from an assembly constituency in the next 6 months.
We are looking at 2 bye-elections within a period of 6 months as in terms of section 151A of The Representation of the People Act, 1951 – a bye-election to fill up a casual vacancy shall be held within a period of six months from the date of the occurrence of the vacancy. The intent of having a bye-election is noble as a constituency should not go unrepresented for a long time.
However, one should think of the money and machinery to be deployed in conducting an election, both by the state and the candidate. According to an estimate from Centre for Media Studies, political parties and candidates spent a whopping Rs. 10,000 crore (including Rs.3,000 crore by the Election Commission) in the last lok sabha elections.
For a candidate, the current ceiling of spent is Rs.40 lakhs for a lok sabha seat and Rs 16 lakhs for an assembly seat and it would be naïve to think that these limits can be met. Apart from money, the logistics of conducting an election is also a nightmare.
Ability to contest from 2 constituencies at the same time
This prerogative given to candidates has its roots in Section 33 (7) of The Representation of the People Act, 1951 which states that ‘a person cannot contest elections from more than two constituencies for a lok sabha election or an assembly election’.
This provision also results in the same scenario of bye-elections if the candidate contesting from two constituencies wins both.
It is pertinent to note that the Committee of Electoral Reforms formed by the Ministry of Law and Justice, Government of India which submitted its report to the Cabinet in December 2010 has recommended that a person should not be allowed to contest from more than one constituency at a time.
Should we not have a law to ensure that any bye-election aimed at facilitating the needs of a political party should be at their expense and not on tax payer’s money and restrict state funding for instances like death of an incumbent member etc?
Wednesday, April 13, 2011
Jan Lokpal Bill- With great power comes great responsibility!
I would like to begin this post by saluting Anna Hazare – who brought the entire nation together with his selfless agitation against corruption and forced the government to succumb and commit introduction of the Jan Lok Pal Bill to tackle the menace of corruption. It is a commendable effort by a 76 year old and deserves the highest accolades!
Without much discussion or debate, we can safely conclude that most of the Indian politicians are corrupt. The recent spate of scams - CWG scam, 2G scam etc. only goes to support this profoundly disturbing truth. But let's admit - it's just not the politicians, its in all walks of life.
As a citizen, are we responsible in any way for the current state of this country?. How many of us can claim that we have never paid bribe or greased palms to get our work done?. The instance may be frivolous or one we may not even remember, it could be for a traffic violation, or for a confirmed ticket in a train, it could be for a school admission, or for getting a driving license. Each one of us has contributed in our own way to growing this irrepressible menace of corruption.
According to the Prevention of Corruption Act, 1988, paying bribe and accepting bribe, both are punishable offence by law.
Recently, I came across a paper by Mr. Kaushik Basu, Chief Economic Adviser, Ministry of Finance , Government of India, titled ‘Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal’, where the author talks about the concept of ‘harassment bribe’. Harassment bribe according to him, is the bribes that people often have to give to get what they are legally entitled to, he says these should be made legal. Examples of harassment bribes quoted in the study are; suppose an income tax refund is held back from a taxpayer till he pays some cash to the officer; suppose government allots subsidized land to a person but when the person goes to get his/her paperwork done and receive documents for this land, he/she is asked to pay a hefty bribe. Read more at http://finmin.nic.in/WorkingPaper/Act_Giving_Bribe_Legal.pdf
The central message of this paper by Mr.Kaushik Basu is that we should declare the act of giving a bribe in all such cases as legitimate activity. In other words the giver of a harassment bribe should have full immunity from any punitive action by the state. Of course the author suggests strong punishment for the bribe taker.
Whether this concept of harassment bribe will receive acceptance in the eyes of law is something only time will tell, but for now, both acts of giving and taking bribe are punishable by law.
To conclude, as it stands today bribe in any form, giving or taking is bad at law. Given the state of affairs, I would be considered naïve if I say that you can live in this society without ever having to pay a bribe.
But once the Jan Lokpal Bill is a reality (hopefully it will be by end of this year) – every citizen of the country should also be obligated to do his due……………..
To borrow a famous quote from the Spiderman series - With great power comes great responsibility!
Without much discussion or debate, we can safely conclude that most of the Indian politicians are corrupt. The recent spate of scams - CWG scam, 2G scam etc. only goes to support this profoundly disturbing truth. But let's admit - it's just not the politicians, its in all walks of life.
As a citizen, are we responsible in any way for the current state of this country?. How many of us can claim that we have never paid bribe or greased palms to get our work done?. The instance may be frivolous or one we may not even remember, it could be for a traffic violation, or for a confirmed ticket in a train, it could be for a school admission, or for getting a driving license. Each one of us has contributed in our own way to growing this irrepressible menace of corruption.
According to the Prevention of Corruption Act, 1988, paying bribe and accepting bribe, both are punishable offence by law.
Recently, I came across a paper by Mr. Kaushik Basu, Chief Economic Adviser, Ministry of Finance , Government of India, titled ‘Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal’, where the author talks about the concept of ‘harassment bribe’. Harassment bribe according to him, is the bribes that people often have to give to get what they are legally entitled to, he says these should be made legal. Examples of harassment bribes quoted in the study are; suppose an income tax refund is held back from a taxpayer till he pays some cash to the officer; suppose government allots subsidized land to a person but when the person goes to get his/her paperwork done and receive documents for this land, he/she is asked to pay a hefty bribe. Read more at http://finmin.nic.in/WorkingPaper/Act_Giving_Bribe_Legal.pdf
The central message of this paper by Mr.Kaushik Basu is that we should declare the act of giving a bribe in all such cases as legitimate activity. In other words the giver of a harassment bribe should have full immunity from any punitive action by the state. Of course the author suggests strong punishment for the bribe taker.
Whether this concept of harassment bribe will receive acceptance in the eyes of law is something only time will tell, but for now, both acts of giving and taking bribe are punishable by law.
To conclude, as it stands today bribe in any form, giving or taking is bad at law. Given the state of affairs, I would be considered naïve if I say that you can live in this society without ever having to pay a bribe.
But once the Jan Lokpal Bill is a reality (hopefully it will be by end of this year) – every citizen of the country should also be obligated to do his due……………..
To borrow a famous quote from the Spiderman series - With great power comes great responsibility!
Thursday, March 17, 2011
Independent Director - no more a time-pass activity!
Who is an independent director? To put simply, they are supposed to be custodians of the governance process and they should not be employeed or affiliated with the company in any other way. You do find various best attempt definitions in the companies act and listing agreement which focus on technicalities. And it is these technicalities which have become the basis for the appointment of the Independent Directors and also the reason for blatant exploitation of the law governing this role.
What was happening hitherto? With due respect to few Corporates who try to implement this in spirit, majority of the companies were filling this position with people known to them – Alas! They did technically qualify as independent director as many of them were truly independent of the Company to the extent that they may not even know what the business of the company was!
But the culprit here is not the companies but the Law itself, which fails to provide a clear elucidation on the roles and responsibilities of an Independent Director in a corporate set-up
When we talk about technicality, the current law governing the appointment of Independent Director in listed companies finds its place in clause 49 of the listing agreement and stipulates that an Independent director should not have any material pecuniary relationships or transactions with the company, its promoters, its directors, senior management or its holding company, subsidiaries and associates.
Yes, the lawmakers chose not to define ‘material pecuniary relationship’ – that is 3 words undefined and a decent lawyer can play havoc with such a lacunae.
In the Companies Bill 2009 it has been suggested that an independent director is allowed to have a ‘pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or its promoters, or directors amounting upto10 % of its gross turnover or total income during the two immediately preceding financial years (strange, by no stretch of imagination – a person who is interested in 10% of the turnover can be termed ‘independent’).
Interestingly, the Parliamentary Standing Committee, reviewing the Bill completely bans pecuniary relationship - material or otherwise with the company. This committee goes on to recommend that the appointment process should also be made independent of the company management by constituting a panel or a data bank to be maintained by the Ministry of Corporate Affairs, out of which companies may choose their requirement of Independent Directors. Now this whole panel concept is not just a folly – but a disaster in waiting.
In effect, there is again no consensus or clarity - which leads to further confusion.
But, all is not lost – recent spate of judicial activism in this area, where the role is being looked at more seriously offers some relief and hope.
To cite a couple of instances,
Case 1- Lawyer Peter Madhavan, a former independent director at scandal-hit air cargo firm Airocean, was sentenced to four months' jail for his part in making a misleading statement to the Singapore Exchange. He was also fined $120,000. This is believed to be the first time an independent director here has been sentenced to jail for breaking securities laws. Of course, he is on bail pending appeal.
Case-2- SEBI in an order in the Pyramid Saimira issue, restrained 3 directors from being independent directors or a member of audit committee of any listed company for a period of two years. The order stated that these independent directors overlooked numerous red flags in the trend in revenues, profits, receivables, advances, etc. which could not escape the attention of an independent director, who is also a member of the audit committee. The order went on to state that by failing to ask the right questions at the right point of time, these independent directors failed in their duty of care as an independent director. It is also pertinent to note that they were held guilty under the provisions of SEBI prohibition of fraudulent and unfair trade practices relating to securities market.
With this emerging trend of going beyond the letter of law to understand the actual intent - the current crop of independent directors who were taking their role lightly might find the going tough in the times to come.
It’s definitely a welcome change – which promises to ensure that the role of independent director will be taken more seriously and not as a mere time pass.
What was happening hitherto? With due respect to few Corporates who try to implement this in spirit, majority of the companies were filling this position with people known to them – Alas! They did technically qualify as independent director as many of them were truly independent of the Company to the extent that they may not even know what the business of the company was!
But the culprit here is not the companies but the Law itself, which fails to provide a clear elucidation on the roles and responsibilities of an Independent Director in a corporate set-up
When we talk about technicality, the current law governing the appointment of Independent Director in listed companies finds its place in clause 49 of the listing agreement and stipulates that an Independent director should not have any material pecuniary relationships or transactions with the company, its promoters, its directors, senior management or its holding company, subsidiaries and associates.
Yes, the lawmakers chose not to define ‘material pecuniary relationship’ – that is 3 words undefined and a decent lawyer can play havoc with such a lacunae.
In the Companies Bill 2009 it has been suggested that an independent director is allowed to have a ‘pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or its promoters, or directors amounting upto10 % of its gross turnover or total income during the two immediately preceding financial years (strange, by no stretch of imagination – a person who is interested in 10% of the turnover can be termed ‘independent’).
Interestingly, the Parliamentary Standing Committee, reviewing the Bill completely bans pecuniary relationship - material or otherwise with the company. This committee goes on to recommend that the appointment process should also be made independent of the company management by constituting a panel or a data bank to be maintained by the Ministry of Corporate Affairs, out of which companies may choose their requirement of Independent Directors. Now this whole panel concept is not just a folly – but a disaster in waiting.
In effect, there is again no consensus or clarity - which leads to further confusion.
But, all is not lost – recent spate of judicial activism in this area, where the role is being looked at more seriously offers some relief and hope.
To cite a couple of instances,
Case 1- Lawyer Peter Madhavan, a former independent director at scandal-hit air cargo firm Airocean, was sentenced to four months' jail for his part in making a misleading statement to the Singapore Exchange. He was also fined $120,000. This is believed to be the first time an independent director here has been sentenced to jail for breaking securities laws. Of course, he is on bail pending appeal.
Case-2- SEBI in an order in the Pyramid Saimira issue, restrained 3 directors from being independent directors or a member of audit committee of any listed company for a period of two years. The order stated that these independent directors overlooked numerous red flags in the trend in revenues, profits, receivables, advances, etc. which could not escape the attention of an independent director, who is also a member of the audit committee. The order went on to state that by failing to ask the right questions at the right point of time, these independent directors failed in their duty of care as an independent director. It is also pertinent to note that they were held guilty under the provisions of SEBI prohibition of fraudulent and unfair trade practices relating to securities market.
With this emerging trend of going beyond the letter of law to understand the actual intent - the current crop of independent directors who were taking their role lightly might find the going tough in the times to come.
It’s definitely a welcome change – which promises to ensure that the role of independent director will be taken more seriously and not as a mere time pass.
Thursday, March 10, 2011
CSR or Tax?
can you force people to indulge in charitable activities?
the answer is yes.
at least, this is what is envisaged by way of a provision in the companies bill - which mandates that 'companies to earmark 2% of the average profit of the preceding three years for corporate social responsibility activities'.
that's lot of money - especially for big corporates.
oh yes, there is a recent dilution - which says 'companies to disclose to the shareholders what their CSR policy has been and if they have not been able to fulfill the target - why have they not done so!
the whole concept does'nt make any sense. you pay all kind of taxes (can't list down as the type and kind is huge) and there is no accountability on how these tax collections are used.
plus, how are we going to define CSR activity. who is going to certify these CSR earmarking. are we looking at a scenario where book entries are made to satisfy these requirements?
let's wait n watch!
the answer is yes.
at least, this is what is envisaged by way of a provision in the companies bill - which mandates that 'companies to earmark 2% of the average profit of the preceding three years for corporate social responsibility activities'.
that's lot of money - especially for big corporates.
oh yes, there is a recent dilution - which says 'companies to disclose to the shareholders what their CSR policy has been and if they have not been able to fulfill the target - why have they not done so!
the whole concept does'nt make any sense. you pay all kind of taxes (can't list down as the type and kind is huge) and there is no accountability on how these tax collections are used.
plus, how are we going to define CSR activity. who is going to certify these CSR earmarking. are we looking at a scenario where book entries are made to satisfy these requirements?
let's wait n watch!
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