118 years of Trust THE TRIBUNE

Sunday, November 29, 1998
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Public accountability and
judicial response

By I. P. Massey

UNFORTUNATELY, today, though there is too much talk about public accountability, too little coherent institutional response is available, and whatever response is available, that of the judiciary, it is also slow and variegated. Furthermore, when the system speaks in double tongue it further erodes its credibility.

Accountability simply means that if a public officer abuses his office, either by an act of omission or commission, and in consequence of that there is an injury to an individual or the public at large, he must be held responsible for it.

Once a top bureaucrat casually remarked that the main problems of the administration in India are: (i) Faulty planning, (ii) corrupt execution and (iii) absence of public accountability. No one would perhaps disagree with this statement. Out of these three problems, public accountability is basic, in the sense that if the guilty are punished quickly and adequately, it will take care of the other two problems. Unfortunately, today the procedures of accountability are either non-existent or are very feeble and fragile, besides being dilatory, and any person with sufficient money power or personal connections can bend them in any manner he likes. When it comes to accountability, the system, as it exists today at different levels, proves to be so strong and powerful that it defeats every real attempt in this direction. In other words, the politico-bureaucratic wall proves so strong that it defeats all possible attempts at enforcing liability.

Therefore, in the name of enforcing liability, what one sees is merely shadow-boxing. The manner in which the Central Vigilance Commission Ordinance pulled down the directives of the apex court is a pointer in that direction. It is for this reason alone that the Lok Pal Bill has failed in its every attempt since 1968 to see the light of the day. Today everyone reads with interest Monica-Clinton writeups in the newspapers for various reasons but a few are able to appreciate the public accountability system which that country has perfected in which even the President of the USA cannot escape accountability to the nation. Such a system is not possible in our wildest dreams.

The basic purpose of the doctrine of public accountability is to check the growing misuse of power by the administration and to provide speedy relief to the victims of such exercise of power. The doctrine is based on the premise that the power in the hands of administrative authorities is a public trust which must be exercised in the best interest of the people. Therefore, the trustee (public servant) who enriches himself by misusing his office must hold the property/benefit acquired by him as a constructive trustee.

The celebrated decision of the Privy Council in the A.G. of Hong Kong V. Reid (1993) case has greatly widened the scope of this principle. Lord Templeman observed that engaging in bribery is an evil practice which threatens the foundations of any civilised society. Any benefit obtained by a fiduciary, through a breach of duty, belongs in equity to the beneficiary (the state). All legal principles require to be interpreted subject to this basic norm.

The Privy Council further observed that when a bribe is accepted by a fiduciary (public servant) in breach of his duty, then he holds that bribe in trust for the person to whom the duty was owed. If the property representing the bribe decreases in value, the fiduciary (public servant) must pay the difference between that value and the initial amount of the bribe because he should not have accepted the bribe and incurred the risk of loss. If the property increases in value, the fiduciary is not entitled to any surplus in excess of the initial value of the bribe because he is not allowed by any means to make a profit out of a breach of duty.

It was further held that a gift accepted by a person in fiduciary position as an incentive for breach of duty constituted a bribe, and although in law it belonged to the fiduciary, in equity he not only becomes a debtor for the amount of the bribe to the person to whom the duty was owed but he also holds the bribe and any property acquired therewith in constructive trust for the person.

In this case, the respondent, Reid, who was a Crown prosecutor in Hong Kong, took bribes as an inducement to suppress certain criminal prosecutions, and acquired properties in New Zealand in his name, in the name of his wife and his solicitor. The administration of Hong Kong claimed these properties on the ground that the owners thereof are constructive trustees for the Crown. The Privy Council upheld the claim. It observed that if the theory of constructive trust is not applied and properties attached when available, the danger is that properties may be sold and proceeds whisked away to some ‘numbered bank account’. It further observed that one can understand the immorality of the bankers who maintained numbered bank accounts but it is difficult to understand the amorality of the governments and their laws which sanction such practices — in effect encouraging them.

Judicial response in India is based on this concept of trust and equity which was developed in Reid’s case. Thus while deciding the constitutionality of clause (c) of Section 3 (1) of the Smugglers and Foreign Exchange Mani-pulators (Forfeiture of Property) Act, 1976 (SAFEMA), which provided for the forfeiture of properties earned by smuggling or other illegal activities whether standing in his name or other parties, the apex court took recourse to the principle of trust and equity. The Supreme Court in D.D.A. V. Skipper Construction Co., (1996), not only further followed the above principle but enlarged its scope by stating that even if there was no fiduciary relationship or no holder of public office was involved, if it is found that someone has acquired properties by defrauding the people, and if it is found that the persons defrauded should be restored to the position in which they would have been but for the said fraud, the court can go ahead with the necessary orders.

Thus, the concept of public accountability was extended to the private sector which is very relevant in this age of privatisation and globalisation of economy. The court further held that all properties must be immediately attached. The burden of proof to prove that the attached properties were not acquired with the aid of monies/properties received in the course of corrupt deals shall lie on the holder of such properties. This is what equity means and in India courts are not only courts of law but also courts of equity. In this case a private company had purchased a plot of land in a auction from the Delhi Development Authority but did not deposit the bid amount. When the DDA proposed cancellation of the allotment, the company obtained a stay. Meanwhile, the company started selling space in the proposed building. Thus, prospective buyers of space were cheated to the tune of about Rs 14 crore.

Further elaborating the principle of public accountability, the court applied the doctrine of "lifting the corporate veil" in order to fix accountability on persons who are the actual operators of the corporate legal entity. The court observed that the concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegality or to defraud people. In such cases the court would look behind the corporate veil so as to do justice between the parties. The court further held that in order to compensate those who are defrauded or cheated, it can pass necessary orders under Article 142 of the Constitution.

Though the court certainly put the right foot forward, it did not take a long stride. It missed the opportunity of providing the doctrine of public accountability its due reach. The court did not express any opinion on the question whether the misdeeds of public servants, which are not only beyond their authority but done with mala fide intent, would also bind them personally or the state corporation would be vicariously liable. It cannot be over-emphasised that if the doctrine of accountability is to be given its full sweep, the concept of state/corporation liability should be shifted to the officer’s liability where possible, so that it may have an inhibiting effect on the temptation of public servants to misuse power for personal gains.

However, the court observed that a law like the SAFEMA has become an absolute necessity, if the cancer of corruption is not to prove the death-knell of this nation, and suggested to Parliament to act in this matter.

In order to strengthen public accountability further in the State of Bihar V. Subash Singh case (1997), the court held that the head of the department is ultimately responsible and accountable unless there are special circumstances absolving him of the accountability. The court has strengthened accountability procedures by applying the contempt law against those who deliberately violate court orders. The court has also imposed cost personally against erring officers for delay in the discharge of duties. In the same manner where the public servant has caused a loss to the public exchequer, the court has allowed the government to recover such loss personally from the erring officer. It has now become an established law that the courts can award compensation and exemplary cost for the abuse of power and violation of human rights by the state.

Thus a claim in public law for compensation in cases of violation of human rights and abuse of power has become an acknowledged remedy. Every individual has an enforceable right to compensation when he is a victim of violation of his Fundamental Rights and abuse of power. Certainly, leaving the victim to the remedies available in civil law in such situation limits the role of constitutional courts as protector and guarantor of human rights of the people. Thus courts are under obligation to make state or its servants accountable to the people by compensating them for the violation of their human rights. The Supreme Court’s recent decision in the Vineet Narain V. Union of India case (1998) separating the CBI from the executive by vesting its superintendence in the statutory Central Vigilance Commission (CVC), is a significant step in the direction of enforcing public accountability.

Moving swiftly in the direction of enforcing accountability, the apex court in another pace-setting judgement (JMM bribery case) held that members of Parliament and legislative assemblies are public servants under the Prevention of Corruption Act. The Court further observed that these members cannot also claim exemption from prosecution under Article 105 (2) of the Constitution regarding protection of privileges of M.Ps and M.L.As for any offence committed outside Parliament/legislature. The Court held that Article 105 (2) could not be interpreted as a charter of freedom of speech and also freedom for corruption. Parliamentary privilege cannot provide immunity against corruption and bribery. Thus, by redefining the role of the state, fixing accountability at all levels and transparency in the administration, the court is simply trying to make government function better in the interest of the people. It is unfortunate if it is being considered by the government as interference in its area of operation.

No narrative on judicial response on public accountability is complete unless a classical observation of the apex court is reproduced. The court observed that some persons in the upper strata (which means the rich and the influential class of society) have made ‘property career’ the sole aim of their life. The means have become irrelevant in a land where its greatest son born in this century said "means are more important than the ends". A sense of bravado prevails. Every thing can be managed. Every authority and every institution can be managed. All it takes is to ‘tackle’ or ‘manage’ it in an appropriate manner. They have developed an utter disregard for law, nay, a contempt for it. The feeling is that the law is meant for lesser mortals, and not for them.

The courts in this country have been trying to combat this trend, with some success, as the recent events show. But how many matters can courts handle? The real question is how to swing the polity into action, a polity which has become indolent and soft in its vitals? Can the courts alone do it? Even so, to what extent, in the prevailing state of affairs?

The fact remains that corruption is not a crime of passion. It is a cool calculated crime. Before indulging in it, a person carefully calculates the amount/benefit involved, chances of being caught and the quantum of punishment, if caught. If the chances of being caught and the amount of punishment are certain and high, a person normally would not indulge in it. Unless judicial response is supported by an effective and adequate response from every other institution of governance, the danger is that we loose democracy itself, and God forbid, if it happens, it carries in its deluge all the fine values of life which we so dearly cherish.

Therefore, in the present-day context, strengthening of the public accountability system should be the top priority of the government. Any system has three components: structures and procedures; persons who manage the system; and environment in which the system works. Improvement is required in all the three components. Every holder of public power, where public element is present, should consider himself a trustee of society and must exhibit honesty, integrity, sincerity, faithfulness and transparency in all facets of public administration. Back

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