International Centre for Alternative Dispute Resolution v. Union of India & Anr

1. Notice. Mr. Ripu Daman Bhardwaj, CGSC accepts notice on this application.

2. This petition has been filed by International Centre for Alternative Dispute Resolution (ICADR) inter-alia challenging the New Delhi International Arbitration Centre Ordinance, 2019 published in the Gazette of India Extraordinary Part II Section 1 in Gazette Notification dated March 02, 2019.

3. In effect, the Ordinance has been promulgated for the establishment and incorporation of New Delhi International Arbitration Centre for the purpose of creating an independent and autonomous regime for institutionalized arbitration and for acquisition and transfer of the undertakings of the ICADR and to vest such undertakings in the New Delhi International Arbitration Centre.

4. It is the submission of Mr. Dushyant Dave, learned Senior Counsel appearing for the petitioner Society that the petitioner society is an autonomous body now working under the aegis of the Supreme Court of India with its Headquarters at New Delhi and Regional Centres at Hyderabad and Bengaluru with objectives relatable to alternative dispute resolution and allied matters. According to him, in order to achieve its objectives, the petitioner society has been engaging in and has undertaken / successfully completed various types of works in the field of Alternate Dispute Resolution and till date received 55 cases for arbitration, which includes five International Commercial Cases and four cases for conciliation out of which the Arbitral Tribunals have disposed of 45 Arbitration Cases and hearing in the remaining ten cases is in progress. He has also referred to various international conferences organized by the petitioner society. He has drawn our attention to various other activities undertaken by the Society. He states that initially the petitioner Society had received an amount of `3 Crores as grant in aid from the Government of India and thereafter an amount of `27.72 Crores for the purpose of building infrastructure i.e purchase of land and construction of ICADR building, which grant in aid was fully utilized by the Society. However, its other source of finance includes grants from Asian Development Bank and even the World Bank apart from the public and institutional donations, membership fees, administrative fees, facilities charges, investment in FDRs and rental income etc.

5. Over a period of time, the petitioner Society has constructed well equipped and decent infrastructure with modern facilities of international standard. He lays stress on the fact that the Chief Justice of India is the Chairperson of the Society, who had constituted a Committee to propose administrative and infrastructural reforms for upgradation of the petitioner Society. The Committee has since given its concept paper for creation of a world class Arbitration Centre as part of ICADR.

6. He would submit that vide the impugned Ordinance, the respondents has sought to eliminate the very existence of the petitioner Society by providing for vesting of the entire assets and properties in New Delhi International Arbitration Centre, which are mostly, the owned properties and when there is no emergent situation existing to promulgate the same. He submitted, the power to promulgate the impugned Ordinance under Article 123 of the Constitution of India can be invoked in exceptional circumstances, not to be a substitute for law making Authority of duly elected Legislators. He submitted that the Ordinance has been promulgated during the existence of the Lok Sabha which has passed the New Delhi International Arbitration Centre Bill, but is still pending in Rajya Sabha, and as such not lapsed as per the provisions of Article 107(5) of the Constitution as in the absence of the dissolution of the Lok Sabha and only in the likelihood of the dissolution of the Lok Sabha, the provisions of Article 107(5) of the Constitution would not at all be applicable.

7. According to Mr. Dave, all the assets and properties of the petitioner Society have been created out of the subscription of its Members, rental income and other source of income from organizing training programmes, seminars, conferences etc and there is no contribution from the Government except grant in aid and a corpus of `3 Crores and grant of `27.72 Crores given in the year 1995. According to him, even the Reginal Centres have been established at Hyderabad from the corpus granted by the State Governments of Telangana and Andhra Pradesh. Similarly, in Bengaluru a Regional entre was established on a grant given by the State of Karnataka and which assets are being included in the Ordinance for taking over. According to him, it is not the case of the respondents that the petitioner Society is involved in financial irregularity or mismanagement. That apart, even the audit is being carried out by CAG. In substance, it is his submission that no case for taking over all the assets and properties of the petitioner Society, is made out. He would rely on the following judgments in support of his submission, that Ordinance cannot be promulgated in the facts of this case. (i) (1987) 1 SCC 378 Dr. D.C. Wadhwa and others v. State of Bihar and Others; (ii) (1985) 3 SCC 198 T. Venkata Reddy and Others v. State of Andhra Pradesh; (iii) (1985) 1 SCC 523 K. Nagaraj and Others v. State of Andhra Pradesh and Another and connected writ petition; (iv) (1981) 4 SCC 675 R.K. Garg and Ors. v. Union of India and Ors.

8. On the other hand, Ms. Maninder Acharya, learned ASG appearing for the respondents has vehemently opposed the petition by stating that the New Delhi International Arbitration Centre Bill was introduced in the Lok Sabha in November, 2017 pursuant to a report submitted by Justice B.N. Srikrishna and finally came to be passed on January 04, 2019. According to her, the Bill is still pending in the Rajya Sabha, and shall lapse on dissolution of the Lok Sabha. She submitted, the urgency in promulgating the Ordinance is that the Country is required to indicate to the World Bank as on May 01, 2019 the parameters depicting ease of doing business which includes establishment of a world class Arbitration Centre.

9. It is her submission that this Ordinance is only a temporary phase, till such time the Bill is passed in Rajya Sabha, so as to be made a Statute. She states that pursuant to the promulgation of the Ordinance, the custodian has taken over the assets of the ICADR and the Court would not grant the prayer as made in this application. She also relies on the following judgments in support of her contention that the scope of judicial review is very limited only where the satisfaction was actuated by an oblique motive or satisfaction in a particular case constitutes a fraud. (i) 1982(1) SCC 271 A.K. Roy v. Union of India; (ii) (2017) 3 SCC 1 Krishna Kumar Singh and Ors. v. State of Bihar and Ors.

10. In rejoinder submission, Mr. Dave has submitted that the petition is listed for admission and the justification of Ordinance on the grounds laid down by the Supreme Court can only be considered if the respondents are called upon to file a counter affidavit. He further states that the petitioner Society has no objection if the respondents continue to use the facilities of the petitioner Society, for their needs, during the pendency of the petition.

11. Although Mr. Dave and Ms. Acharya have taken us through various judgments cited by them in support of their submissions, we are of the view that it may not be necessary to refer to those judgments at this stage as those judgments have been referred to and considered by the Constitution Bench of the Supreme Court in its latest judgment in the case of Krishna Kumar Singh and Ors. (supra), wherein in para 105, the Constitution Bench of the Supreme Court held as under:-

105. In summation, the conclusions in this judgment are as follows: 105.[1] The power which has been conferred upon the President Under Article 123 and the Governor Under Article 213 is legislative in character. The power is conditional in nature: it can be exercised only when the legislature is not in session and subject to the satisfaction of the President or, as the case may be, of the Governor that circumstances exist which render it necessary to take immediate action; 105.[2] An Ordinance which is promulgated Under Article 123 or Article 213 has the same force and effect as a law enacted by the legislature but it must (i) be laid before the legislature; and (ii) it will cease to operate six weeks after the legislature has reassembled or, even earlier if a resolution disapproving it is passed. Moreover, an Ordinance may also be withdrawn; 105.[3] The constitutional fiction, attributing to an Ordinance the same force and effect as a law enacted by the legislature comes into being if the Ordinance has been validly promulgated and complies with the requirements of Articles 123 and 213; 105.[4] The Ordinance making power does not constitute the President or the Governor into a parallel source of law making or an independent legislative authority; 105.[5] Consistent with the principle of legislative supremacy, the power to promulgate ordinances is subject to legislative control. The President or, as the case may be, the Governor acts on the aid and advice of the Council of Ministers which owes collective responsibility to the legislature; 105.[6] The requirement of laying an Ordinance before Parliament or the state legislature is a mandatory constitutional obligation cast upon the government. Laying of the ordinance before the legislature is mandatory because the legislature has to determine: (a) The need for, validity of and expediency to promulgate an ordinance; (b) Whether the Ordinance ought to be approved or disapproved;

(c) Whether an Act incorporating the provisions of the ordinance should be enacted (with or without amendments); 105.[7] The failure to comply with the requirement of laying an ordinance before the legislature is a serious constitutional infraction and abuse of the constitutional process; 105.[8] Re-promulgation of ordinances is a fraud on the Constitution and a sub-version of democratic legislative processes, as laid down in the judgment of the Constitution Bench in D C Wadhwa; 105.[9] Article 213(2)(a) provides that an ordinance promulgated under that Article shall "cease to operate" six weeks after the reassembling of the legislature or even earlier, if a resolution disapproving it is passed in the legislature. The Constitution has used different expressions such as "repeal" (Articles 252, 254, 357, 372 and 395); "void" (Articles 13, 245, 255 and 276); "cease to have effect" (Articles 358 and 372); and "cease to operate" (Articles 123, 213 and 352). Each of these expressions has a distinct connotation. The expression "cease to operate" in Articles 123 and 213 does not mean that upon the expiry of a period of six weeks of the reassembling of the legislature or upon a resolution of disapproval being passed, the ordinance is rendered void ab initio. Both Articles 123 and 213 contain a distinct provision setting out the circumstances in which an ordinance shall be void. An ordinance is void in a situation where it makes a provision which Parliament would not be competent to enact (Article 123(3)) or which makes a provision which would not be a valid if enacted in an act of the legislature of the state assented to by the Governor (Article 213(3)). The framers having used the expressions "cease to operate" and "void" separately in the same provision, they cannot convey the same meaning;

105.10 The theory of enduring rights which has been laid down in the judgment in Bhupendra Kumar Bose and followed in T Venkata Reddy by the Constitution Bench is based on the analogy of a temporary enactment. There is a basic difference between an ordinance and a temporary enactment. These decisions of the Constitution Bench which have accepted the notion of enduring rights which will survive an ordinance which has ceased to operate do not lay down the correct position. The judgments are also no longer good law in view of the decision in S.R. Bommai;

105.11 No express provision has been made in Article 123 and Article 213 for saving of rights, privileges, obligations and liabilities which have arisen under an ordinance which has ceased to operate. Such provisions are however specifically contained in other articles of the Constitution such as Articles 249(3), 250(2), 357(2), 358 and 359(1A). This is, however, not conclusive and the issue is essentially one of construction; of giving content to the 'force and effect' Clause while prescribing legislative supremacy and the Rule of law;