Conflict of interests

Conflict of interests


Investment in shares by judges of the supreme court has become a major impediment in the dispensation of justice as judges are recusing themselves from cases one after another on the ground of conflict of interest.

This follows the brouhaha created by some lawyers over the issue of conflict of interest when Justice Kapadia did not withdraw from a case involving Vedanta after making a blithe announcement in the court that he too has shares in Sterlite, Vedanta’s sister concern, and Justice R V Raveendran went ahead with the hearing of a case involving Mukesh Ambani’s Reliance India and Anil’s RNRL on the ground that he had shares of both companies and that none of the parties in either case had objected to the presence of either after disclosure.

Disclosure of assets by the judges of the supreme court has made a significant revelation that out of 21 judges who declared their assets 18 have invested in shares and mutual funds. This is going to make the debate over the conflict of interest in the judiciary more intense whether judges should be allowed to invest in shares.

Justice S H Kapadia pulled out of a case concerning ITC Limited as his wife and he own large numbers of shares of the company. The case was listed seventh time before the bench, but the disclosure did not come earlier. Before it, he recused himself from another case related to acquisition of shares by London-based Vedanta Resources in Sesa Goa, an iron ore exporting company on the ground that he owned shares in Sterlite Industries, a sister concern of Vedanta. Justices Raveendran and Markandeya Katju recused from different cases.

Even before the controversies veering around Justices Kapadia and Raveendran could die down, a fresh revelation about Karnataka High Court Chief Justice P D Dinakaran, already under cloud, jolted the nation that he passed orders in favour of a family whose hospitality he had enjoyed in Canada.

The issue of conflict of interest is not new. When supreme court was hearing the bank nationalisation case, Justice Shah announced in the court at the outset that he and some other judges owned shares of private banks. But since the counsel of the Union government did not object to their presence, they did not pull out of the case. Two days later, advocate R K Garg filed an intervention petition supporting the ordinance by which 14 banks were nationalised. The judges expressed amazement as to how such a petition could be entertained as a law was valid until set aside by the court.

Garg then questioned the legitimacy of their being on the bench when they held shares of some banks. The court took him to task that they had made the disclosure. However, the court struck down the ordinance. Indira Gandhi was so convinced about the prejudice of Justice Shah that later, during the Janata regime, she refused to appear before the commission headed by him alleging bias. However, Justice M H Kania set a good precedent in 1988 when he recused himself from the Bhopal gas leak case after disclosing that he owned Union Carbide shares. He did not consult lawyers either. In fact, no-objection certificate from lawyers is not a convincing plea for a judge to hear a case with conflict of interest as lawyers are tongue-tied in alleging bias against a judge.

Automatic recusal

The principle of automatic recusal in a case of the conflict of interest is well-settled. The first case of judicial review in the world (Dr Bonham’s case, 1607) has its genesis in this very conflict. In Britain, the regulation prescribed that no doctor would practise unless registered with the College of Physicians — which was also empowered to prosecute and punish the violators of the rule.

One Dr Bonham was prosecuted and imposed a fine of 10 pounds, out of which half went to the state and the remaining half remained with the college. Bonham challenged it on the ground of bias that the college had a pecuniary interest in it and so, it could not be the judge. Allowing his petition, the court invalidated the regulation. Again, in Dines vs Proprietors of Grand Jn Canal (1852), the House of Lords spelt out that the dictum that no one could be a judge in his own cause was “not to be confined to a cause in which he is a party, but applies to a cause in which he has an interest”.

The supreme court of India upheld this principle in A K Kraipak and Ashok Kumar Yadav. In fact, the concept of curative petition, introduced by the supreme court in Rupa Ashok Hurra case (2002), when all other avenues of appeal and remedy are exhausted, was taken from a judgment of the House of Lords (Pinochet 2) which upheld the same principle. A person was prosecuted at the behest of the Red Cross. After the arrest warrant was issued, it came to light that one of the law lords was a member of the Red Cross who had not disclosed it. The case was heard afresh without that law lord.

In fact, the virus of the ‘conflict of interest’ seems to have crept inside the belly of the whole system of government and is gnawing at its flesh. None of the three wings — the executive, the legislature, and the judiciary — seems to be immune to it. Recently, parliamentary committee on public undertakings asked its members to disclose their business interests. The move came against the backdrop of objections raised by some members under Rule 255 of the Rules and Procedures of Conduct of Business in the Lok Sabha about the presence of some members in the committee who have huge stakes in infrastructure business.

In the executive, the conflict is rampant. However, just one example will suffice. Genetic Engineering Approval Committee (GEAC) of the Union ministry of environment is the competent body to grant approval for the GM food. Indian Council of Agricultural Research (ICAR) applies for approval to the GEAC as its institutes are preparing GM food, but the DG, ICAR, is its ex-officio member.