Can’t take PSUs out of courts’ purview,SG Parasaran tells govt

In his opinion sent to the law ministry,SG Mohan Parasaran has said any move to amend the constitution for this purpose would run afoul of the basic structure of the statute.

Parasaran gave his opinion in response to a request from the Department of Public Enterprises,which has prepared a draft cabinet note to amend Article 12 as recommended by a panel of experts on reforms in the central public service.

The note says the government wants to add an explanation to Article 12 saying that “a statutory corporation,a company formed and registered under the Companies Act,1956,or a society under the Societies Registration Act shall not be considered as state for the purposes of this article”.

This is not the first time that the government has tried to take PSUs out of the purview of entities defined under “state”. In 1992,a similar amendment was reviewed by the Law Commission of India,which said that not only would the amendment not serve any purpose,it would also in all likelihood be struck down by the judiciary for being in breach of the basic structure doctrine of the constitution.

In his latest opinion,Parasaran has said that although 20 years have passed since the Law Commission gave its report,the objections to the amendment “still stand,perhaps on even stronger footing”.

“There have been many developments in law,both statutory and judge-made since 1992 and almost all of them affirm the conclusion of the Law Commission that it would be ineffective and impermissible in law to remove PSUs from judicial scrutiny under Part III or Article 226 of the constitution,” the opinion reads.

The issue of amendment was examined by the Arjun Sengupta-headed committee of experts (2005) as well as a panel of experts to study reforms in PSUs headed by S K Roongta (2011),with both favouring revisiting the issue of amending Article 12 in light of the changed economic environment in a globalised world economy.

Parasaran’s opinion says that the amendment would “squarely fall afoul” of the basic structure doctrine as “it results in the complete abrogation of fundamental rights and nullifies judicial review over a wide range of activities”.