President's Rule, the best option

Cleofato Almeida Coutinho & Prabhakar Timblo

4 March 2002  

As March has set in 31^st March is not far away. Various alternatives are being discussed for the passing of the Goa budget i.e. the Annual Financial Statement and the Appropriation Act. Passing of these bills is a pure legislative function and the Governor cannot convert the financial bill and the appropriation bill into "laws" through executive ordinances.

Though Article 213 empowers the Governor to promulgate Ordinances during recess of the legislature or when the State Assembly is not in session, there is a clear embargo on the power of the Governor to enact the Finance Act or the Appropriation Act through the Ordinances.

To quote the constitutional luminary, M. P. Jain "An ordinance has the same force and effect as an Act of Legislature. The power of the Governor to issue ordinances is co-extensive with the legislative power of the Legislature. An ordinance can make any provision which Legislature can enact, except that an appropriation from out of the Consolidated Fund cannot be made by an ordinance."

A perusal of the Indian constitution shows that the Governor has very limited choices to solve the Goa budget deadlock.

We are given to understand that a recourse to Article 267(2) may be taken to meet the imminent needs of expenditure pending the constitution of the new Assembly in Goa. This article empowers the Governor of the State to extend advances for the purposes of meeting unforseen expenditure from the Contingency Fund of the State. It may be necessary during a financial year to spend some money on a service which was not foreseen at the time of presentation of the Budget. There may not be enough time to convene the Assembly to secure its sanction for incurring the expenditure. This fund is in the nature of an imprest and is used to defray expenditure pending, an in anticipation of sanction by the Assembly.

The provisions of this article in the constitution cannot be used as a substitute for the budget or the annual financial statement. The provisions cannot be used to postpone the presentation of the budget and at the same time providing funds to the government to incur the expenditure in the new financial year. Contingency is related to a pre-prepared or pre-determined or pre-sanctioned financial statement. In the absence of the financial statement or budget, the contingency cannot be assessed. The Contingency Fund cannot be construed as providing funds in lieu of the budget. The purpose is to provide funds since the expenditure was not visualised in the budget or exceeded the norms and limits fixed. The purpose is to meet unforeseen needs of expenditure.

In short, it is invoked for contingency expenditure. To invoke this clause to solve the constitutional deadlock or political contingency would be perverse and a fraud on the constitution. The Governor is ill-advised to invoke the powers under Article 267(2).

Articles 205 and 206 deal with supplementary, additional, excess and exceptional grants. However, all these provisions can be invoked only if the money spent during a financial year is in excess of the amount granted for the service by the State Legislature. This again pre-supposes that the annual financial statement has been prepared, passed by the House and the necessary appropriations have been effected.

However, 206(c) speaks of "an exceptional grant which forms no part of the current service of any financial year". The purpose of this facility is to lubricate the wheels of funds, to make matters possible and certainly not to stall the submission of the annual financial statement. Probably, the caretaker Chief Minister and his Council desires to exploit this particular constitutional provision to evade Presidents’ Rule and at the same time ensure the resource life-line for the interim period.

A closer reading of Article 206 reveals that the power to make the exceptional grant under sub-clause(c) is of the Legislative Assembly. The article clearly states that the Legislature of the State shall have power to authorise by law the withdrawal of moneys from the Consolidated Fund. Article 206(2) states that whilst making such grant the provisions of Article 203 and 204 shall have effect to any law to be made for the purpose of the exceptional grant. This means that the procedure prescribed under Article 203 will have to be strictly followed if the government desires to mobilise resources under Article 206. The power, therefore is of the Legislative Assembly only and cannot be usurped by the Governor by invoking Article 213.

Secondly, Article 204(3) states that "no money shall be withdrawn from the Consolidated Fund of the State except under the appropriation made by law passed in accordance with the provisions of this article.". If the law in this case has to be passed in accordance with the provisions of Article 203 and 204, it can only be done by the Legislative Assembly and not through the Ordinance-law of the Governor. This also applies to Votes on account. The general rule that ‘law’ means also an Ordinance does not apply in this matter due to the strict meaning of ‘law’ provided under the said Article.

The position of the power of the Governor to promulgate ordinances needs to be further clarified. The Governor can make any provision through ordinances which the State Legislature can enact except an appropriation from out of the Consolidated Fund of the State. Governor can also refuse to issue ordinances when the authority is convinced that it amounts to political corruption, violates constitutional provisions and would be held as perverse. Further, the ordinances should not be issued for ‘administrative conveniences".

However, there have been two infamous instances, which cannot be taken as constitutional precedents. On February 24, 1961, the Governor of Orissa passed the budget of the State through the Ordinance while President Rule was imposed on February 25. This action was taken by the Governor owing to sudden resignation of the State Ministry during the budget session. This act was declared by the Union Law Ministry as invalid under the constitution and the Governor of the State was immediately informed not to take any step under the Ordinance. The first United Front ministry in West Bengal passed the budget through an ordinance in 1967. A. K. Sen opined in the Lok Sabha that no taxation and no demands should be passed through an Ordinance. As a whole, this practice cannot be called as fair in a democratic set-up.

Prof. Mohan Lal observed "In no democracy, does the executive branch of the government possess the power of raising and spending money without the express and prior approval of the Legislature. The authority of the Legislature, the responsibility of the Executive, all hinge upon the power of the purse that must belong to the Parliament alone. The raising and spending of money shape and mould the economic structure of the society and where money is raised and spent by an Ordinance though Parliament or Assembly may approve or disapprove such motion of the President or Governor, it cannot demand the refund of taxes or revenues raised or recall the money spent"

These views point out that Executive legislation is bad enough, worse and much more repugnant to the basic principles of democratic government are the fiscal ordinances by the Governor. A democratic government cannot resort to ordinances and official fiats in the fiscal area and present the same to the Legislative Assembly as a fait accompli.

And coming to an issue over which we do not wish to comment. Is it necessary that the budget should be presented and votes on account taken before 31^st March since Articles 202 and 204 of the Constitution do not indicate the date of presentation or passing of the budget or votes on account? To this, we only wish to place on record that in the 52 years of our Republic the Central Governments have always presented the Union Budgets and all the State Governments have presented their State budgets before the close of the financial year.

There is no harm even if an interim budget is presented. Even two budgets can be presented during a financial year. But an estimated statement of revenue and expenditure has to be presented by democratic governments before commencement of the new financial year since the government is prohibited from incurring any expenditure before obtaining Parliamentary/Legislative sanction. One can test the luxury of not presenting the annual financial statement only at the cost of paralysing the government and administration.

However, the Constitution has cast the duty on the Governor of laying before the House of Legislature the statement of estimated receipts and expenditure. The Governor is under oath to preserve, protect and defend the Constitution and the law and to devote to the service and well-being of the people of the State.

The Honourable Mohd. Fazal has only two options. Take recourse to Article 356. If this option is harsh, explore the power of Parliament under Article 249. The constitution offers no scope to set any new rules.

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