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Sanctioned by statue

Can the judiciary question government expenditure?...

Written by ARVIND P. DATAR |
October 10, 2009 3:55:36 am

Mayawati’s ambitious plan to change the landscape of Uttar Pradesh with massive statues has been temporarily stopped by the Supreme Court. The immediate question is whether UP can afford such spending. But the larger question is whether the Supreme Court and the high courts can interfere in decisions of elected governments to spend money in any manner they like. What is the constitutional foundation for judicial interference against wasteful expenditure? Article 282 of the Indian Constitution is an important provision that has seldom been invoked. It enables the Union or state governments to make grants for any “public purpose”. But who decides whether an expenditure is for a “public purpose” or not? In a democracy,can courts sit in judgment over the expenditure proposed by the ruling party?

In the US case of State of Missouri v Forrest Smith,the state Supreme Court was concerned with Article X of its constitution which provided that taxes could be levied and collected for public purposes only. It held that the primary objective of public expenditure should subserve public purposes and must not promote private ends. It also observed that if “public purpose” is set up as a mere pretext to conceal actual private purpose,the expenditure would be illegal and fraudulent.

A decision from United Kingdom in 1995 is even more remarkable. A consortium of British construction companies sought British government aid for the construction of a dam and hydro-electric power project in Malaysia,which was estimated to cost GBP 316 million. Officials of the Overseas Development Administration had concluded that it was an economically unviable project and there were cheaper ways of producing electricity in Malaysia. Despite this report,the foreign secretary went ahead and approved the aid on the ground that any withdrawal of economic assistance would adversely affect the United Kingdom’s political and commercial relations with Malaysia. This decision was challenged in a British public interest litigation by a non-partisan group,whose object was to improve the amount and quality of British aid to developing countries. Section 1(1) of the Overseas Development Act,1980 permitted granting of aid for the purpose of “promoting the development” of a developing country or territory. Could the British Government’s decision to grant aid be questioned before a court of law? In a superb judgment,the Court of Appeals held that it was a matter for the courts to examine the evidence and then decide whether a particular decision was or was not within the statutory purpose. It went on to hold that if the development of a project,on the evidence,was economically unsound then spending of public money for the project was not justified. On the facts,there was nothing that would justify the use of public money for the Malaysian project. The Court of Appeals held that the secretary of the state for foreign affairs had acted unlawfully in granting foreign aid! It is noteworthy that this decision was rendered in a country where the parliament is supreme.

Back home,our Supreme Court has held that courts can examine whether a particular purpose can constitute a “public purpose” or not,but so far the courts in India have never interfered in profligate political decisions. The DMK party,as part of its successful election strategy,had promised free colour television sets to any person who did not have one. The scheme was not restricted to persons below the poverty line. Lakhs of colour television sets have been distributed under the scheme resulting in serious allegations of misuse. The Madras High Court dismissed a PIL challenging such wasteful expenditure,but the Supreme Court has admitted the appeal which is still pending.

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The question that arises is whether the free distribution of washing machines,refrigerators or even 50 cc motorcycles can constitute “public purpose”? Is the free distribution of essential commodities a “public purpose”? Can the court interfere with the proposal to set up a statute of Chatrapathi Shivaji costing Rs. 300 crores? Where does one draw the line?

The Constitution was drafted on the assumption that our elected leaders would act with a sense of sagacity and public duty. The conflict arises where elected leaders assume that the purpose of their political party becomes synonymous with “public purpose” just because they have gained a majority for the time being in Parliament or in the state legislatures.

This is a golden opportunity for the Supreme Court to lay down guidelines for what constitutes “public purpose” under Article 282. An important yardstick could be to determine whether the expenditure is relatable to any of the Directive Principles of State Policy under Part IV of the Constitution. The Courts must step in when politicians throw caution to the winds and splurge scarce public money on grandiose,wasteful projects.

The writer is a Senior Advocate of the Madras High Court

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