M J Antony: In the name of public policy

OUT OF COURT

The executive cannot invoke it to suit its own whims

Public policy" is a grand phrase used by statesmen and politicians to stonewall their opponents during debates in Parliament and outside. But for Basant Nahata, an agricultural tenant in Bikaner, it was a vexatious term that the executive coined to harass him.

He could not get a routine power of attorney registered because the sub-registrar thought the deed was "opposed to public policy". He had to fight in the Rajasthan High Court and the Supreme Court for six long years to prove that the law was arbitrary and unreasonable.

The Supreme Court wrote a 40-page judgement last week in State of Rajasthan vs Basant Nahata to prevent state governments from passing such rules in the name of public policy.

The Rajasthan government amended the Registration Act in 1976 to give power to its officers to refuse to register any document that they think was opposed to public policy. Notifications were also issued in terms of that. No one challenged it for quarter of a century.

It was not Rajasthan alone which had such a rule. When the case reached the Supreme Court, it found that several other states had identical rules that benefit the employees of the registrar's office.

Among them were Maharashtra and Karnataka, the home-states of the stamp scam; Bihar, Gujarat, Meghalaya and Jharkhand. So the court issued summoned all those states.

They argued that every statute should be presumed valid and it was for the citizen to prove that it violated his fundamental right. No court can interfere in the right of the states to allow or refuse registration of documents if they were opposed to public policy. The phrase has precise meaning and is used in several legislations.

The Supreme Court did not think that the phrase was capable of a precise definition. The words "public policy" or "opposed to public policy" are found in laws like the Indian Contract Act, the Foreign Awards Act and the Arbitration and Conciliation Act.

However, it is the judiciary that has been vested with the power to determine the factors outlining public policy. It cannot be decided by the executive, least of all by officials like a sub-registrar.

Asserting that this power belonged only to the judiciary, the judgement said: "What is opposed to public policy would be a matter depending upon the nature of the transaction. The pleadings of the parties and the materials brought on record would be relevant so as to enable the court to judge the concept as to what is for public good or in public interest at the relevant point of time, as distinguished from the policy of a particular government. A law dealing with the rights of a citizen is required to be clear and unambiguous."

The literary imagination of judges and jurists have been fired by this vague but significant term. A constitution bench of the Supreme Court, in Central Inland Water Transport Corporation Ltd vs Brojo Nath Ganguly (1986), sounded a note of caution that the phrase being an "unruly horse", means that when one gets astride, one does not know how far it would carry one.

In Rattan Chand vs Askar Nawazjung (1991), the court cited Prof Winfield: "Some judges appear to have thought it more like a tiger, and refused to mount it at all, perhaps because they feared the fate of the young lady of Riga. Others have regarded it like Balaam's ass which would carry its rider nowhere. But none, at any rate at the present day, has looked upon it as a Pegasus that might soar beyond the momentary needs of the community."

The Supreme Court, while deciding the ban on gutka, said in Godwat Pan Masala Products Ltd vs Union of India last year that the phrase "in the interest of public health" could not operate as an incantation or mantra to get over constitutional difficulties.

In the present judgement, the Supreme Court asserted that a doctrine so vague and uncertain could not provide any guideline whatsoever. Moreover, such power could not be put in the hands of the executive while making subordinate legislation. New heads of public policy could not be created to suit the whims of the executive.

According to the court, registration of a power of attorney could not be burdened with the requirement to prove public interest. However, the transaction done by the deed may be regulated and it is done by statutes like the Transfer of Property Act.

This judgement has invalidated not only the Rajasthan law but also those of other states which have inserted similar terms in the Registration Act, which is a Central legislation.