VIP defaulters

By Sondip Bhatlacharya

India is inhabited by two kinds of people the political and non-political classes. No law applies to people who belong to the "political class", but all draconian laws apply to the common man. This kind of political and social dichotomy has put the Republic at a discount. If a common man owes a paisa to the Government he will be grilled in a court of law, and finally made to cough up that small amount.

On the contrary hundreds of former MPs and ministers owe the national exchequer crores of rupees in the form of illegal house occupation rent and outstanding telephone, electric and water consumption bills to the tune of Rs. 886.47 crore as per the latest assessment made by the Estate Department. No government for the last 15- years has been able to recover such dues, and no legal proceedings have been initiated in that direction. It is a scandal which has no parallel anywhere in any democratic country.

The controversy regarding unauthorised occupation of government accommodation by VIPs has given rise to a question of considerable constitutional and legal importance whether the government can with the limits of its powers, waive rent dues from such occupants, and whether any rules made by Government authorising such a waiver would be constitutional.

The fundamental principle of law is that a claim to a debt is a right to property. Just as person can deal with his personal property as he likes, one having a claim to a debt can deal with it as he wishes. He can allow it to lapse by not initiating action for its recovery within time allowed by law. He can waive it according to his whim with no reason. He can also take recovery proceedings knowing full well that enforcing recovery from the debtor may involve risk and at the same time may not mean much for him. He is the master of the claim if it is a personal debt.

But unlike a personal debt there are cases in which the creditor is not the owner of the debt claim personally but has the obligation to recover it. If one forms a trust for the benefit of some persons and makes himself the trustee, he ceases to own it personally and gets only the right to manage it for fulfilment of the object of his own choosing. If somebody finds that the founder of the trust has done anything destructive of the trust property or the purpose for which he himself established the trust, through judicial proceedings he can be removed. Again if one appoints an agent to look after his business and gives him the authority to manage things, the agent will be presumed to act honestly in a way that will not be destructive of the property itself. While the owner of the business could waive a debt or allow it to lapse by law of limitation the agent by acting so may incur the liability to pay damages to the employer for the loss suffered by his omission or negligence.

In constitutional scenario of administrative action in a democracy it should be remembered by the holders of power that they are just agents of the people who have to work not as master but agents. Just as an agent cannot, but the credit-owner can, write off a debt, the Government cannot. To do that the state has to do it by distinct and articulated authorisation through legislation and not by self-appropriated guidelines framed by themselves under conduct of business rules. Conduct of business rules can cover procedural part of Government working. The rules cannot dilute the substantive part of legal obligation in a constitutional government. Unless it can be shown that the legislature in express terms has provided the right to waive a debt owned to the state, it cannot be presumed as a normal government function to do it. There are countless precedents in India, the US and the Great Britain holding that if by any administrative action a loss is caused to the state, such of the functionaries to whom the decision is traced was guilty of corruption.

In matters of debts due to the state, it has been held that only under two circumstances can the debt due to the state be waived. First, when it is felt that the cost of realisation may exceed the likely realisation. Second, when the debt has become bad or sticky or unrealisable. The debt cannot be waived by Government acting in a way as though it were the private property of the decision-taking authority. If the waiver of debt cannot be justified in terms mentioned, the waiver order can be quashed by appropriate writ or order.

In India, there is no statute providing that in appropriate cases a debt owed to the state by someone may be waived. If there were a statutory provision, the decision to waive the debt would be subject to judicial review for satisfaction that the right has been used reasonably. In the absence of any statutory conferment the power to do that is unthinkable. The waiver order will be beyond the powers of the Government, even if it be the authority of the Cabinet. The Government decision will be ultra vires in the absence of statutory right to do so. The Government arming itself with weaponry manufactured in its own dump of business rule making power to do it will be glaringly unconstitutional. It will amount to making an unauthorised gift to the debtor of the amount waived.

This theoretical constitutional landscape has been articulated in express terms in our Constitution. Even in the absence of any law made by the appropriate legislature, the Executive powers of the Government will extend to all matters on which the legislature has the right to make laws (Articles 53 and 154). In hypothetical case of legislature not having enacted the law appropriate Government can do in these matters what they like subject to the provisions of the Constitution and observance of the three principles of natural justice. But in matters of money, in other words imposing taxes which are the main source of state revenues, and incurring expenditures, the government is anchor bound to law.

Article 265 provides that no tax shall be levied or collected except by authority of law. "Article 266(2) provides that all public money received by or on behalf of the Government of India.shall be credited to the public accounts of India." (Article 266 (3) provides that "no money out of the Consolidated Funds of India shall be appropriated except in accordance with the law for that purpose and in the manner provided in the Constitution." It has, however, been provided under Article 266(1) that the condition of no disbursement without legislative approval will be subject to providing for contingencies, which has to be established under Article 267 providing that "Parliament may by law establish Contingency Fund in the nature of an imprest 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 such Fund shall be placed at the disposal of the president to enable advances to be made to him out of such fund for the purpose of meeting unforeseen expenditure pending authorisation of such expenditure by Parliament by law under Article 115." Article 115 provides for post factum approval of such expenditure by Parliament.

In pith the articulated constitutional limitations prohibited waiving off of an actionable claim except subject to its approval by Parliament. Writing off will require specific parliamentary approval which can be given only on satisfaction of two conditions already mentioned, namely, the debt being bad or irrecoverable, or sticky or its recovery expenditure being likely to exceed the amount due. The possibility of writing it off as a charge of Contingency Fund being off, the only way to help this luckless segment would be to transfer to the public accounts fund of the Government from the Prime Minister's Fund, which may not be difficult for them to manage.

It is a sad commentary on the working of our Government if the waiver is exercised for the benefit of a select few who have capacity to pay but lack decency to do it while day in and day out the government is kicking out the overstayed class III and IV employees, realising the arrears, and allowing the favoured group of political portages to live and continue to live at Government largesse. INAV