Plea asks SC to impose Financial Emergency due to COVID-19 outbreak: Court can't intervene to such extent, it can only ask, not direct Centre

Siddharth Sonkar and Aditya Prasanna Bhattacharya

Last week, the Center for Accountability and Systemic Change (CASC) filed a writ petition by way of Public Interest Litigation (PIL) before the Supreme Court, seeking the declaration of a financial emergency.

The petition argues that while the 21-day lockdown to tackle the outbreak of the novel coronavirus is welcome, such a lockdown must be imposed through the procedure written in our Constitution. This petition was perhaps filed in the light of finance minister Nirmala Sitharaman's announcement that there is "no move to impose a financial emergency as was claimed by some reports."

According to the petition, the restrictions imposed on civil liberties through the lockdown are tantamount to an emergency. Curtailing such liberties without following the prescribed procedure and declaring an emergency results in circumventing the Constitution.

The plea raises an important question: Can the Supreme Court issue directions to the Centre to impose a Financial Emergency? In this article, we answer this question in the negative and explain the extent to which the Court can intervene i.e. the court cannot issue directions to the Centre to declare an emergency. It can only ask the Centre to reconsider its decision.

How is a Financial Emergency envisaged in our Constitution?

Since a Financial Emergency has never been imposed in India before, the power under Article 360 of the Constitution has remained unchartered territory since Independence. This is in contrast to allied powers under Article 352 (power to declare an emergency in case of war et al), Article 356 (power to impose President's Rule in case of failure of constitutional machinery in a state), and Article 123 (power to promulgate ordinances) of the Constitution respectively.

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Article 360 enables the president to proclaim a Financial Emergency upon satisfaction that the "financial stability or credit" of India is under threat. The satisfaction of the president in reality means the satisfaction arrived at on the aid and advice of the Council of Ministers (Rameshwar Prasad v. Union of India).

The Proclamation of Emergency must be placed before both Houses of the Parliament, and the Emergency will operate for a period of two months unless it is extended through resolutions passed by both Houses.

Extent to which courts can review government's decision

Even though courts have extraordinary powers, the doctrine of separation of powers requires that determining the feasibility of a financial emergency is a policy prerogative of the administration. If unelected representatives (i.e. judges) begin determining policy questions, the outcome may be undemocratic, undermining the legitimacy of such a decision.

The Supreme Court over time (in the S.R. Bommai case, et al) has categorically established that the satisfaction of the president can only be scrutinised in limited situations. These include when the decision is taken in bad faith, when no material is available on record which can give rise to the president's satisfaction, if the decision is taken arbitrarily or if it is based on irrelevant considerations. In these situations, the court is competent to intervene and strike down the President's decision.

At present, media reports do not conclusively indicate that the Union government has actively considered and rejected the possibility of a financial emergency. However, even if this was the case, this has not been communicated to the people. This being an administrative decision (albeit to not do something), the court can review the manner in which it was arrived at by the president.

As already established, this does not mean that a financial emergency will be deemed to have been declared as a consequence of judicial review. It only means that the court could check whether the government, in arriving at its decision (to declare or not declare a financial emergency) looked at relevant considerations in a non-arbitrary manner.

To conclude, even if, hypothetically, the court strikes down the government's decision to not declare a financial emergency, it cannot direct the Centre to declare one. To this extent, the petition before the court may not achieve its purpose.

Siddharth Sonkar is a final year student of National University of Juridical Sciences (NUJS), Kolkata. Aditya Prasanna Bhattacharya is a penultimate year student of National Law School of India University (NLSIU), Bangalore.


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