It would be trite to say: "We live in interesting times." Perhaps a more appropriate thing to say would be: "We live in an era of lawlessness." One is not speaking about khap panchayats, or Maoist insurgency here, but about the violence to the rule of law that is rearing its ugly hood.
Consider:
First, the ambassador's arrest. An ambassador is the highest-ranking envoy from a fellow nation. Italy has not been declared an enemy state. Through the history of civilisations, even terrible dictators have been ashamed of shooting the messengers, which is what an envoy is. You may expel him, declare his country an enemy, break diplomatic ties, deny his nation's people the right to have business interests, refuse them airspace to fly over, or even wage war. However bad the news he purveys, you do not arrest him. The same principle ought to have been applied by the Supreme Court. Denying liberty to a person to move about, is "arrest". One does not have to be in a dingy cell to be arrested - one may be detained within a jail, a home, a different house, a township, a city, or a country. Asking a diplomat, legally immune from arrest, not to leave the country is illegal detention.
Italy behaved like a banana republic by going back on a promise made to a court. However, in retaliation, India has acted like another banana republic. Patriots, including otherwise erudite lawyers, who argue that the Italian ambassador is deemed to have waived his immunity the moment he filed an affidavit in the court, are essentially making the specious argument that an envoy may be harmed on the ground of misbehaviour in the court. At one stroke, they have supported making the workplace dangerous for Indian diplomats worldwide. They support the breakdown of the rule of law. Other nations hosting Indian diplomats can quote precedent and repay in the same coin - a classic outcome of the breakdown of rule of law.
Next, the Sebi request. The real issue between Sebi and Sahara was a fine question of securities law: Whether the issuance of debentures by two Sahara companies to millions of investors, purporting to count to less than 49 persons in a day, was a private placement, or a public offering, and whether the securities ought to have been necessarily listed and would have to comply with Sebi regulations. Sebi wrote an order ruling that all the amounts were illegally raised, and directed that the debentures should all be redeemed. Sebi asked Sahara to demonstrate the refund. The Securities Appellate Tribunal (SAT) upheld the order. So did the Supreme Court.
Now, the question has moved to a new plane. Sahara claims it has redeemed all debentures and it cannot prove to Sebi's satisfaction that the debentureholders have been paid because many of them do not have conventional home addresses and known places of work. The claim arouses legitimate doubt about whether the investors exist at all. If they exist, their protection is Sebi's look-out. If they do not exist, the debenture scheme could be doubted to be a money-laundering mechanism.
That would make the case fit for being referred to the "Financial Intelligence Unit" under the Prevention of Money Laundering Act (PMLA). The authorities under the PMLA have powers to attach properties, and to legitimately effect arrests. Sebi officers are duty-bound under the PMLA to assist the PMLA authorities. Yet, there is not a whisper of interest from the authorities under the PMLA. They should be intervening in the court, drawing the attention of the court to their powers, and should be asking the court to move the case to them. Neither are they doing what the law entails, nor is the court being made aware of law. Meanwhile, Sebi is taking a grand-stand asking the court to do what the law does not permit the court to do - arrest a man despite a complete lack of powers.
One fundamental principle of the rule of law is that only designated horses should run designated courses. Had the lack of Sebi's powers to get into money laundering issues been raised before the SAT, it may have even ruled that Sebi cannot get into that territory. The net effect is that the legal framework is made to look like a theatre stage, for the Sebi-Sahara thriller to be played out: The hero taking the law into his own hands; the anti-hero throwing a birthday party for his granddaughter; powerful guests ranging from the Lok Sabha Speaker, to the Rajya Sabha Leader of Opposition, to the retired Supreme Court judge heading the Press Council, all in attendance. Today, Sebi is asking for "civil detention" (one will have to first legislate what that means) without powers. If the court chooses to ignore legislation due to public passion, the power-packed company Sahara gets to keep will not be of much help to the group.
This is precisely what happens when the rule of law breaks down - the law matters the least.
Consider:
- The ambassador of Italy was placed under arrest by the Supreme Court. The court couched it as a direction to the ambassador not to leave India without permission - equal to impounding a foreign passport. Funnily, the Government of India had just threatened to send the ambassador home. The Italian ambassador had threatened not to leave unless India officially declared him "persona non grata" - in simple terms, an "unwelcome person", who would but be replaced by another ambassador.
- The Securities and Exchange Board of India (Sebi) has requested the Supreme Court to arrest Subrata Roy of the Sahara Group for questioning. Sebi couched it as "civil detention". The law does not give Sebi power to arrest people. The law gives Sebi sweeping powers to issue any direction so long as it can justify that it is necessary "in the interests of investors in the securities market". Sebi had already issued directions against the Sahara Group, and even the Supreme Court had eventually upheld those.
First, the ambassador's arrest. An ambassador is the highest-ranking envoy from a fellow nation. Italy has not been declared an enemy state. Through the history of civilisations, even terrible dictators have been ashamed of shooting the messengers, which is what an envoy is. You may expel him, declare his country an enemy, break diplomatic ties, deny his nation's people the right to have business interests, refuse them airspace to fly over, or even wage war. However bad the news he purveys, you do not arrest him. The same principle ought to have been applied by the Supreme Court. Denying liberty to a person to move about, is "arrest". One does not have to be in a dingy cell to be arrested - one may be detained within a jail, a home, a different house, a township, a city, or a country. Asking a diplomat, legally immune from arrest, not to leave the country is illegal detention.
Italy behaved like a banana republic by going back on a promise made to a court. However, in retaliation, India has acted like another banana republic. Patriots, including otherwise erudite lawyers, who argue that the Italian ambassador is deemed to have waived his immunity the moment he filed an affidavit in the court, are essentially making the specious argument that an envoy may be harmed on the ground of misbehaviour in the court. At one stroke, they have supported making the workplace dangerous for Indian diplomats worldwide. They support the breakdown of the rule of law. Other nations hosting Indian diplomats can quote precedent and repay in the same coin - a classic outcome of the breakdown of rule of law.
Next, the Sebi request. The real issue between Sebi and Sahara was a fine question of securities law: Whether the issuance of debentures by two Sahara companies to millions of investors, purporting to count to less than 49 persons in a day, was a private placement, or a public offering, and whether the securities ought to have been necessarily listed and would have to comply with Sebi regulations. Sebi wrote an order ruling that all the amounts were illegally raised, and directed that the debentures should all be redeemed. Sebi asked Sahara to demonstrate the refund. The Securities Appellate Tribunal (SAT) upheld the order. So did the Supreme Court.
Now, the question has moved to a new plane. Sahara claims it has redeemed all debentures and it cannot prove to Sebi's satisfaction that the debentureholders have been paid because many of them do not have conventional home addresses and known places of work. The claim arouses legitimate doubt about whether the investors exist at all. If they exist, their protection is Sebi's look-out. If they do not exist, the debenture scheme could be doubted to be a money-laundering mechanism.
That would make the case fit for being referred to the "Financial Intelligence Unit" under the Prevention of Money Laundering Act (PMLA). The authorities under the PMLA have powers to attach properties, and to legitimately effect arrests. Sebi officers are duty-bound under the PMLA to assist the PMLA authorities. Yet, there is not a whisper of interest from the authorities under the PMLA. They should be intervening in the court, drawing the attention of the court to their powers, and should be asking the court to move the case to them. Neither are they doing what the law entails, nor is the court being made aware of law. Meanwhile, Sebi is taking a grand-stand asking the court to do what the law does not permit the court to do - arrest a man despite a complete lack of powers.
One fundamental principle of the rule of law is that only designated horses should run designated courses. Had the lack of Sebi's powers to get into money laundering issues been raised before the SAT, it may have even ruled that Sebi cannot get into that territory. The net effect is that the legal framework is made to look like a theatre stage, for the Sebi-Sahara thriller to be played out: The hero taking the law into his own hands; the anti-hero throwing a birthday party for his granddaughter; powerful guests ranging from the Lok Sabha Speaker, to the Rajya Sabha Leader of Opposition, to the retired Supreme Court judge heading the Press Council, all in attendance. Today, Sebi is asking for "civil detention" (one will have to first legislate what that means) without powers. If the court chooses to ignore legislation due to public passion, the power-packed company Sahara gets to keep will not be of much help to the group.
This is precisely what happens when the rule of law breaks down - the law matters the least.
The author is a partner of JSA, Advocates & Solicitors. Views expressed are his own.) Email: somasekhar@jsalaw.com