Can Supreme Court direct imposition of financial emergency? – Constitutional contours in light of COVID-19

In light of COVID-19 multiple PILs are being filed in the Supreme Court, and one such PIL[1] by a think tank Centre for Accountability and Systemic  Change (CASC) was heard and adjourned by a Bench of L. Nageswara Rao and Abdul Nazeer, JJ. The petition due to its unique and unprecedented prayer makes one ponder, can the Supreme Court issue a writ of mandamus to the Union/Ministry of Home Affairs/President (though only the Ministry of Home Affairs is the respondent in the present PIL) directing imposition of financial emergency? 

According to Article 360(1) of the Constitution, ‘”If the President is satisfied that a situation has arisen whereby the financial stability or credit of India or of any part of the territory thereof is threatened, he may by a Proclamation make a declaration to that effect.”[2]

            (emphasis supplied)

It has also to be remembered in this connection that the power exercised by the President under Article 360 is on the advice of the Council of Ministers tendered under Article 74(1) of the Constitution. The Proclamation of emergency under Articles 352, 356 and 360 is dependent on the satisfaction of the President with regard to the existence of the relevant conditions precedent. [3]

The question which lies in the present scenario is can the Court sit in judgment over the satisfaction (or otherwise) of the President (to declare a financial emergency) and determine whether any other view of the situation is reasonably possible? The satisfaction (or otherwise) of the President is subjective in nature and certainly not something which can be based on “judicially discoverable” and “manageable standards”. It is rather a highly political judgment based on an assessment of various and varied facts and factors besides several imponderables and fast changing situations. Is the Court a fit body to enquire into or determine the correctness of the said satisfaction (or otherwise) of not declaring financial emergency?

In State of Rajasthan v. Union of India[4]Bhagwati, J. held (though in terms of Article 356) that the minimal area of judicial review is restricted to the mala fide/extraneous/irrelevant grounds on which satisfaction of the President is based. I am not contending that powers of declaring emergency are immune to judicial review. But a conjoint reading of Bommai[5], Minerva[6] and State of Rajasthan[7] would make one conclude that such scope of judicial review is narrow or minimal in nature. Furthermore, judicial review (if any) would only be of an exercise or a non-exercise of power wherein it is obligatory and binding. Whereas in the present scenario, the power has not yet been exercised, and the matter being completely non-obligatory, there stands no question of judicial review. The present scenario is not such that it has already been considered by the President for analysing the threat to financial stability or credit of India, and the materials considered lead the President to conclude that they were not enough to constitute such a threat. The aforementioned has not happened (going by lack of any official reports/correspondence, and further express denial of the same[8]) and thus the question of judicial review of the ‘satisfaction (or otherwise)’ does not arise.   

The judicial process also has certain inherent limitations. It is suited more for adjudication of disputes rather than for administering the country. The task of governance is the job of the executive, while the function of the judiciary is limited to ensure that the governance is carried on in accordance with the Constitution and the laws.

Article 360 of the Constitution confers a power upon the President to be exercised only when he is satisfied that a situation has arisen whereby the financial stability or credit of India or of any part of the territory thereof is threatened. If the subjective satisfaction (or otherwise) of the President in terms of Article 360 is construed to be justiciable and judicially manageable, then it will not only open the floodgates but prove to be a dangerous proposition. Because, if such PILs are maintainable to question the satisfaction (or otherwise) of the President in terms of proclamation of financial emergency, equally a declaration that a situation has arisen in the State to clamp emergency or to declare President’s rule by judicial order is permissible and cannot be wished away[9]. Could it be done?  If such pleas for declaration of emergency are allowed, and further directions made, would it not lead to management of executive functioning via writ (PIL) jurisdiction?

The scope of the powers of each organ in the scheme of governance has been broadly outlined by the Constitution. The constitutional limits are sacrosanct, and such PILs seek to usurp and manage executive functioning through the Courts. The Courts were meant to see that the other organs of Government do not cross the line while exercising power, and not to intervene in the exercise of powers within their domain. If the judiciary in the name of complete justice holds the sword and also takes the mantle of protecting the purse by declaring a financial emergency, then not only will it have the force and the will, but it will start acting as something on whose aid, the executive arm will have to run. The concern in the question is not the power of imposing emergency; rather the imposition of emergency upon a direction made by the Supreme Court based on a PIL. The option to use or not use this power lies at the dispensation of the executive, and not in the hands of the judiciary or even the legislature. They have their own marked scope of intervening as per the constitutional provisions and not otherwise; after the use of this discretionary power and not before that.

Broadly speaking the usage of word ‘may’ in clause (1) of Article 360 indicates that there is no duty or obligation on the President to impose financial emergency and the scheme is largely based on the subjective satisfaction of the President through the Council of Ministers. The scheme discerns discretion vested in the President to consider whether the situation so contemplated has arisen or not. The use of the word ‘may’ shows us that even if the President is completely satisfied regarding the threat of financial stability he is not obliged to impose a financial emergency. The Government can choose to handle the situation accordingly without such declaration of financial emergency. There might be an extreme probability of financial instability, but the power to consider the same for proclaiming a financial emergency under the scheme of Article 360 rests with the President and not the Supreme Court acting through its writ jurisdiction. The decision to issue a proclamation containing such a declaration is also based on the subjective satisfaction of the President, but the Court would hardly be in a position to x-ray such a subjective satisfaction for want of expertise in regard to fiscal matters[10].

To further understand the nature of discretion involved herein, let’s take a scenario where ‘shall’ would have been used in the place of “may” in Article 360. Even in that case the basis of exercise of power would have been discretionary as the power could have been exercised only upon the subjective satisfaction of the President. The Court cannot, therefore, go way ahead of any issuance of proclamation under Article 360, put cart before the horse, substitute its own satisfaction for the satisfaction (or otherwise) of the President, and thus issue a writ of mandamus for declaration of emergency.

  It is very difficult to impose the “power plus duty” doctrine in the present scenario as the scheme of Article 360 is completely based on the prerogative and subjective satisfaction (or otherwise) of the President. Even though Article 360 confers the power/discretion on the President (couched in permissive language), it is not to be treated as a provision containing a power coupled with a duty. For the reason being that if the failure or conscious omission on the part of such authority i.e. the President to act would not nullify the effect of another/other constitutional provision, or render nugatory a constitutional principle. It is a matter of government policy as to how to handle financial crisis/armed rebellions, etc. If it were understood to be a power coupled with duty, then every time there is war, armed rebellion, external aggression or financial instability an emergency would have to be declared, and if the President chooses not to do so, courts would have to step in. But we know as a matter of fact that the scheme of affairs as far as Part XVIII is concerned doesn’t work like that. The existence or non-existence of the fact of financial stability, etc. is left to the judgment and discretion of the President and that fact involves a broad spectrum ranging from the obvious to the debatable to the just conceivable. It is the duty of the Court to leave the decision of that fact to the public body to whom the Constituent Assembly has entrusted the decision-making power. The Court cannot substitute its discretion for that of the President nor is it for the Court to play the role of an advisor as to what the President or the Council of Ministers should do in a particular event. The Central Government, through the Council of Ministers which advises the President is the best judge of facts to decide as to what course should be adopted in a particular case. The function of the Court is only to see whether the limits imposed by the Constitution on the powers of the President have been observed or there is transgression of such limits. The Court cannot go into the question of correctness or adequacy of the facts and circumstances on which the satisfaction (or otherwise) of the President is based. That would be a dangerous exercise for the Court, both because it is not a fit instrument for determining a question of this kind and also because the Court would thereby usurp the function of the executive and in doing so, enter the “political thicket” which it must avoid, if it is to retain its legitimacy with the people. Further, judicial review of satisfaction is allowed only if such conclusion is mala fide or is based on wholly extraneous and irrelevant grounds, because in that case there would be no satisfaction of the President in regard to the matter on which he is required to be satisfied. The Court cannot, however, substitute its own satisfaction for that of the satisfaction (or otherwise) of the President. It is said that Article 356 has proved to be a ‘death letter’ instead of a ‘dead letter’. Similarly, if the Supreme Court directs the President or the Union to impose a financial emergency, would not the ‘dead letter’ of Article 360 be awakened from the (untouched) coffin where it is resting since 1950?


*Pruthvirajsinh Zala, 2nd Year, BA LLB (Hons), Institute of Law, Nirma University. The author can be reached at pruthvirajsinh11@gmail.com. The author thanks Prof. Sukrit Garg for his valuable inputs.

[1]Centre for Accountability and Systemic  Change (CASC) v. Ministry of Home Affairs,  WP (Civil) Dairy  No. 10793/2020, order dt. 1-4-2020.

[2] Article 360(1)

[3] S.R. Bommai v. Union of India, (1994) 3 SCC 1, para 58.

[4].State of Rajasthan v. Union of India, (1977) 3 SCC 592.

[5] S.R. Bommai v. Union of India, (1994) 3 SCC 1.

[6]. Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625.

[7] State of Rajasthan v. Union of India, (1997) 3 SCC 592.

[8].Trisha Sengupta, PM Modi not declaring ’emergency under Article 360′. PIB calls out fake article, https://www.hindustantimes.com/it-s-viral/pm-modi-not-declaring-emergency-under-article-360-pib-calls-out-fake-article/story-YewF2c2o99UStlgealji1N.html (last visited 6-4-2020).

[9].S. R. Bommai v. Union of India, (1994) 3 SCC 1, para 215.

[10].S.R. Bommai v. Union of India, (1994) 3 SCC 1, para 34.

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