Day 12: Arguments before the Karnataka HC on validity of Health Warnings for Tobacco Product Packaging

November 30, 2016

The Counsel for the Tobacco Institute of India continued with his arguments on Day 12. He attempted to answer a question raised in the previous day’s hearing, as to what the position would have been, had the ex-parte interim order by the Rajasthan High Court not been passed.


The Counsel began by explaining that, as on 28th September 2015, the Ministry of Health and Family Welfare (MHFW) had stated that the impugned 2014 Amendment Rules would come into force on the 1st of April 2016. After the Parliamentary Committee on Subordinate Legislation (PCSL) gave its Final Report against the implementation of the impugned 85% health warnings, the Counsel submitted that the MHFW should have rescinded its notification. The Counsel said that a similar action had been taken on the 26th of March, 2015 when a corrigendum was issued to defer the date on which the impugned 2014 Amendment Rules were to come into force.


Justice Nagarathna indicated that the question actually was whether the impugned Rules would have been enforced, had the interim order by the Rajasthan HC not been passed. The Counsel replied in the negative. Justice Patil asked that what needs to be focused upon is what would be the legal implication if the report of the PCSL were followed or not followed. The Senior Counsel stated that the MHFW, ought to have said that they were not complying with the Report of the PCSL, in due consideration of the Transaction of Business (ToB) Rules.


Justice Nagarathna replied by saying that as after the Interim Report, it was indeed decided that the Rules be kept in abeyance.


The Counsel, again referring to the ToB Rules, argued that there is a prescribed procedure when two or more ministries have differing opinions, such as was between the MHFW and the Ministry for Commerce & Industry (C&I). It requires that the matter be given deeper consideration. The Counsel also pointed out that given that the Group of Ministers (GoM) had given a stand as regards the earlier 40% health warnings, this could not have been overturned as the set procedure would require that the matter be sent back to the Cabinet for consideration.


The Counsel then referred to the Rules of Business of the Lok Sabha. As under Rule 108, the Ministry would have to furnish to the Lok Sabha, a statement of the action taken subsequent to the report of the PCSL, along with its recommendations. The PCSL would then consider these views and present a further report. The Counsel submitted that this procedure incorporating governmental accountability to the Parliament was entirely dispensed with.


Justice Nagarathna asked if these were permanent directives. The Counsel responded saying that the PCSL itself is a permanent body that considers these and other matters. Justice Patil asked whether there was any direction as to how the Parliament should apply its mind in considering the recommendations of the PCSL, given that under Section 31 of the COTPA (as pointed out by Mr. Dixit, the A.S.G.), the legislation, once laid before the Parliament for 30 days, is deemed to be approved. The Counsel replied that the recommendations of the PCSL are taken into account at a nascent stage, prior to the laying before Parliament. The Counsel submitted that the MHFW completely ignored the Final Report of the PCSL and hence circumvented this essential procedure. The Counsel highlighted the ground of manifest arbitrariness, wherein it is seen that the legislature never intended to give the authority to make rules and the violation of constitutional provisions. Hence, the Counsel submitted that the MHFW never had the authority to make rules by discarding the Constitutional provisions of Articles 77 and 118.


The Counsel thus submitted that the procedure for incorporating the Final Report of the PCSL was circumvented by the MFHW, even though a procedure for incorporation of the recommendations exists.


Justice Patil asked whether the tenor of the Rajasthan HC order would have prevented the MHFW from having a re-look. The Counsel argued that the order does not indicate the correct position of law. He stated that the MHFW should have opposed the order and resorted to Article 226(3). The Counsel for ITC, Mr. Poovayya stepped in to say that the ad-interim ex parte order did not even exist, as by virtue of Article 226(3), over 15 days had passed.


The A.S.G. then described the 2 kinds of laying procedure. One where the delegated legislation comes into force immediately on being promulgated, and the other when it is subject to the considerations advanced in the laying (before Parliament) process. He submitted that the text of Section 31 of the COTPA does not prescribe this.


The Counsel then went to considering the response of the MHFW in its affidavit before the Rajasthan HC, upon being notified by it to bring the 2014 Rules into force. The Counsel for ITC said that the MHFW submitted that the Final Report of the PCSL was being examined, but at the same time, did not attempt to defer the implementation of the Rules, in consideration of the recommendations of the Final Report. Thus, again, Cellular Operators was cited to compare the situation wherein, despite being aware of a (technical) report, which endorses a position contrary to the legislation, not giving it any consideration points to manifest arbitrariness. The A.S.G. argued that the judgment cited proceeds on the assumption and understanding that the scheme of the TRAI Act requires that the delegate provide an opportunity of hearing before finalizing the regulations. Thus, the application of mind was considered a sine qua non. The Counsel for ITC differentiated this viewpoint by saying that it only addresses the ‘transparency’ aspect of the judgment, and not the requirement that a consultative process that is conducted must be reflected in the final decision.


Justice Patil stressed once again that, given the health considerations and public interest involved in the matter, the effect of not following, or non-application of mind as to the recommendations of the Final Report, of the PCSL, must be considered.


The Senior Counsel thus drew the attention of the Court to Rules 77 and 118. The A.S.G. , however interrupted saying that the effect of these Rules is for the Houses to consider, as it is for the conduct of their business. Justice Patil replied that if the non-following of such procedure result in the violation of fundamental rights, how can one say that it is only for the House to regulate and follow? The A.S.G. in turn replied that it is for the House to consider whether the legislation should be modified, as stated under Section 31 of the COPTA, and that this action of the House cannot be pre-empted by any other requirement. Thus, if any modification is required, the House could take either of 3 options: Either repeal the entire legislation, leave the provisions as they are or modify them in the desired manner. The A.S.G. later, on the same point, also stated that procedural ultra vires is only related to the making of the rules and not post drafting. He submitted that he hasn’t come across a single decision wherein subordinate legislation was rendered unconstitutional because of any consultation process post its being drafted.


The Senior Counsel then continued with his arguments and cited the case of Agricultural Market Committee v. Shalimar Chemicals 1997 (5) SCC 516. This case was relied upon in support of the position that the Parliamentary Committee is a living continuity that considers delegated legislation and is a Constitutional necessity. Thus the Counsel submitted that the Parliament could have decided to put a hold on the implementation of the 85% health warnings in consideration of the findings of the PCSL and the states adverse impact on tobacco growers and manufacturers.


Justice Nagarathna said that while the recommendations of the PCSL could be disregarded, one does need to see if there was due application of mind.


The Counsel then drew the attention of the Court to the aspect of authentication of orders and instructions, in light of Article 77. He contended that the impugned 2014 Rules, being signed by a certain joint secretary, are devoid of authentication, as thought the Central Government may have authorised the legislation, it was not notified in the name of the governor, or the President, as is required.


Justice Patil then asked if the requirement of authorisation should be governed by the form or substance of the matter. The Counsel replied that rigorous implementation of the form is important, as orders that are authenticated cannot be challenged or called into question. Thus, the Counsel stated that Article 77(1)(a) itself states to the effect that all executive action shall be expressly taken in the name of the President.


The Counsel then cited M.R.F Ltd. V. Manohar Parrikar 2010 (11) SCC 374, to elucidate his arguments on the effect of Section 77(3) of the Allocation of Business (AoB) Rules, which must be mandatorily complied with. This case was cited in support of the argument that the Minister for Health and Family Welfare could not have taken a decision unilaterally and it would have to go back to the Cabinet. Thus the Counsel invited the Court’s attention to Article 74, as per which the Council of Ministers is to aid and advice the President.


On authority to draft and implement the delegated legislation, the Counsel referred to the attempt of the MHFW to seek for an amendment to the Allocation of Business (AoB) Rules, such that entries pertaining to the field of tobacco legislation be brought within its ambit. The Counsel submitted that given this filed is under the purview of the Cabinet, it not being expressly mentioned anywhere in the AoB Rules, the MHFW sought to take control of it from the purview of the Cabinet.


Justice Patil then sought to clarify whether tobacco legislation, with its aspects on regulation of its trade and commerce, would come under the Ministry of Commerce and Industry. The Counsel responded in the affirmative that those aspects would lie under the Ministry of C&I. However, as the COTPA itself does not belong to the ambit of any one Ministry, the only legal inference is that it would lie with the Cabinet.


The Counsel then cited the case of Delhi International Airport v. International Lease Finance Corp. & Ors. (2015) 8 SCC, which related to the pending dues of the Kingfisher Airlines. The minutes of a meeting wherein it was decided to release some of the aircrafts was held to have no force, as it was not a general or special order passed by the Central Government, which had the sole prerogative to take a decision in lieu of statute. Thus, each Ministry can only make rules in terms of the functions allotted to it in the Rules of Business.


The Counsel thus stressed that Article 77 (corresponding to Article 166 for the State), deals with the Conduct of Business of the Govt. of India, and actions are expressed to be taken by the President in whom executive power of the Union vests. Neither of these Articles provide for delegation of power. The Counsel thus submitted that decisions must be taken as per the Constitutional scheme.


The Counsel then referred to another case, namely Association of Management of Private Colleges v. All India Council for Technical Education & Ors. 2013 (8) SCC 271. This was relied on to submit that if the Constitution prescribes a particular procedure, action must be taken in accordance with it, otherwise the action is taken to not have been done at all.


The Counsel cited a few more cases to emphasise that when executive power is vested with the government, it can either be expressed directly, or by officers subordinate – the Chief Minister and his officers merely lend advice [Gullapalli Nageshwara Rao v. Andhra Pradesh State Road Transport Corporation (AIR 1959 SC 308)]. He also argued that differences between two departments must be resolved at the government level, and that however every post in the government hierarchy is not a juristic person [Chief Conservator of Forests, Govt. of A.P. vs. The Collector and Ors.2003 (3) SCC 472].


Towards the end of the day, the lawyer from the Calcutta High Court, representing petitions from the Beedi Manufacturing industry put forth his arguments. His main contention was that the legislative scheme under the COTPA clearly recognises two different industries, namely the beedi and cigarette industry. In addition, the nature of both these industries is very different. While the cigarette industry is a mechanised one, the manufacture of beedi is based completely on manual labour. The 2014 amendment rules are a common set of rules applicable to the entire tobacco industry including beedi. The counsel argued that there should therefore be separate rules for cigarettes and beedis. He pointed out the definition of cigarette under section 3(b) of the COTPA specifically excludes ‘beedi’ from the meaning of ‘cigarette’. Instead, beedi is classified as a ‘tobacco product’ under the Schedule to the legislation.


At this point, Justice Nagarathna asked what the difficulty with the 2014 amendment rules is in respect of beedis. The counsel argued that the prescribed health warning of 3.5x 4 cm is not possible to comply with, since a substantial number of beedi packets are of a smaller size measuring 2.5 cm X 7cm. Additionally, nowhere in the COTPA or the rules is a particular minimum size of the beedi packet prescribed. Justice Patil stated that the rules were not required to be made keeping in mind the size of beedi packets but instead, the beedi manufacturers had to manufacture their packs in such a way so as to ensure that they complied with the specified warning requirements.


The Counsel, in response, reiterated his arguments and submitted that the 2014 amendment rules seemed to have been drafted without the application of mind and that they are impracticable and impossible for the manufacturers of the beedi industry to comply with and therefore need to be struck down.


This argument will be further continued.