CJI Kapadia's court eschews heroic activism for simple law

The Sarosh Kapadia-led Supreme Court is sticking to the straight and narrow. Recent judgments and orders indicate that it is following a conservative line by largely restricting itself to interpreting the law instead of trying to reshape it by taking on an activist role. Consider three cases. In the Vodafone tax case, on which judgment was pronounced on Friday, the court rapped the IT department on the knuckles for trying to tax a bonafide overseas transaction. In two recent public interest litigations (PILs) – the row over the army chief’s date of birth and the one involving the appointment of the Sebi chief – the Supreme Court sent both groups of petitioners packing. It’s a clear message: don’t waste the court’s time by bringing one man’s grievance or another man’s complaints as public interest litigation. [caption id=“attachment_189550” align=“alignleft” width=“380” caption=“The Sarosh Kapadia-led Supreme Court is sticking to the straight and narrow. Prakash Singh/AFP”] [/caption] In the Vodafone judgment, the court ruled in favour of the company for a variety of reasons, but the key one was that the government’s own tax laws were ambiguous on whether overseas transactions could be taxed for capital gains in India. The court said: “Certainty is integral to rule of law. Certainty and stability form the basic foundation of any fiscal system. Tax policy certainty is crucial for taxpayers (including foreign investors) to make rational economic choices in the most efficient manner,” reports The Indian Express. In ruling that the “offshore transaction” that enabled Vodafone to buy a controlling stake in Hutchison Essar did not come within the territorial jurisdiction of the Indian tax authorities, the three-judge bench seemed to be suggesting that government cannot tax such deals. But this is probably a misreading. The judgment is actually telling the government something else: if it wants to tax overseas deals involving underlying Indian assets, it must change the law first. “It is for the government of the day to have them (tax laws) incorporated in the treaties (with tax havens and other countries) and in the laws so as to avoid conflicting views,” the court said. (Words in italics inserted by author for clarity). The court could, quite easily, have taken the view that since the Hutchison deal involved an operating company in India, the transaction was effectively Indian in substance if not under the letter of the law. Instead, it merely said that the law cannot be so vague as to treat a genuine transaction as an attempt to evade India taxes. This is clearly a focused interpretation of the law, and the court has not tried to read meanings into it in order to favour the government. The upshot: the government will have to make it explicit that such deals will attract Indian tax in future. In the PIL filed by the Grenadiers Association (Rohtak), the Supreme Court on Friday said there was no public interest involved, since the matter involved a serving army chief seeking justice. Among other things, Hindustan Times quoted the court, again with Chief Justice Kapadia in the chair, as saying that it was a pure “service matter” before dismissing it. In fact, the court was annoyed that the petitioners tried to append the opinions of former chief justices on the army chief’s age. It said: “We are not concerned with the opinions of former CJIs. It is most improper and it is most unfortunate. We will not consider the opinion of former CJIs." This does not mean the court will also rule against the army chief when his own petition on the age issue comes up for hearing. It means the court does not want to make one man’s grievance into a general cause célèbre. Once again, this is a conservative approach to the law. Two months ago, the Supreme Court threw out a PIL against the appointment of the Sebi chief, UK Sinha, saying it raised no constitutional issue. The petitioners claimed that previous Sebi chief CB Bhave had been unfairly denied an extension and that the independence of the current incumbent (Sinha) was under threat from the finance ministry. They used a letter sent by former Sebi member KM Abraham to the PMO alleging that Sinha was being pressured by the finance ministry to favour groups like Reliance and Sahara (Read about it here ). But the court was not amused. According to a report in The Hindu , Chief Justice Kapadia called the PIL, filed by former air chief S Krishnaswamy, former IPS officer and supercop Julio Ribeiro, and several others, a “publicity-seeking” mission. The chief justice said: “I am sorry this petition is all for publicity. This court will strictly go by constitutional issues.” When the petitioners’ counsel claimed that the PIL was about the appointment of regulators, the court observed that it seemed to be aimed against one individual (the Sebi chief): “You say the question is about regulatory independence, but I don’t find a single sentence on it. The averments are leading to some pending matter which we cannot touch in this petition, which lacks the constitutional points.” The conclusion is clear: Chief Justice Kapadia is running a no-nonsense court with no activist pretensions.