Government Largesse in India: Some paths through and around the swamp
With the independence of India government has emerged
and developed into a major source of wealth and regulatory authority over
various sectors. The form of government in India is a welfare state which
protects and promotes the economic and social wellbeing of the citizens. The
government has to follow certain principles while benefiting the citizens, i.e.
equal opportunities shall be provided to all irrespective sex, race, religion,
gender and caste. Along with this, the principle of equity shall also be taken
care of by the government, which is guaranteed by the constitution of India. So,
in a welfare state, the government has to provide a large number of benefits to
the citizen in the form of contracts, license, quotas, subsidies, free-food,
loans, mineral right etc. The valuables which are received from the government
by the citizens are mostly in the form of wealth in the form of subsidy,
pension schemes etc, while others are in the form of license, franchise, quotas
etc. Hence in this way the government keep a proper check over the distribution
of wealth in the country and provide the resources to the needy citizens for
the sake of protecting and maintain public interest. This whole concept is
known as the largesse of government.
Issue
Can the government act as an individual while
dispensing its function under governmental largesse?
In a democracy when the government is trading with the
public, it has to be done with the absence of arbitrariness end discrimination.
The government cannot act arbitrarily like any private individual player but
rather the public interest shall be maintained by the government while dealing
with the public. The government deal with the public in the form of providing
license entering into contract issuing license etcetera and this has to be done
with a predetermined standard norm which is fair and not arbitrary. Public
authorities while dealing with the public shall have to be fair, non-arbitrary,
transparent, objective and non-discriminatory[1]. if the state is acting on
the basis of favouritism or discriminatory it will be a violation of article
14. The actions of the government would be struck down if the government fails
to prove that it has acted on the valid principle like rational, relevant,
reasonable and non-discriminatory[2].
There are various functions performed by the
government to serve the citizens. Thousands of people are employed in government
jobs. Licensee is granted by the government in many occupations and businesses
to an individual and hence controlling and regulating such sectors. Many people
enjoy largesse in the form of government contracts, like subsidies, MSP etc.
Many corporations are existing with the primary object of doing business with
the government. Government has control over vast acres of public land across
the state, which are used for various purposes like mining etc. This all shows
the increasing magnitude and role of the government largesse. And in the welfare
state, the government do not hold the same position as any other private
individual and cannot act arbitrarily and discriminatory. Public interest is
the matter related to the general public and something by which certain rights
and liabilities of the class of the community is affected.[3]
Government contracts are the contracts in which one of
the parties to the contract is government. Though While entering into a
government contract the article 299 of the constitution shall be complied with,
it cannot be negated that the provision of the Indian contract act will not be
equally applicable. There can be no implied contract between the government and
an individual u/a 299[4]. But while entering into
government contract the government is bound to follow the underline principles
1. Reasonableness and fairness – the public
authorities must act in good faith and without bias. Pick and choose of a person
is not allowed to do form contract with and everybody shall be treated equally.
2. Public interest – absolute discretion of
the executive shall not be used but the public interest is also of utmost
importance.
3. Non-arbitrariness – if the contract is
arbitrary it will be held to be invalid u/a 14 of the constitution.
4. Contractual liability – though the
president would not be personally liable, the government cannot evade forming
the contractual liability arising out of the contract.
The case of Centre for Public Interest Litigation and Ors. vs.
Union of India[5]
also known as 2G spectrum case is one of the important cases when we deal with
the with the concept of government large easy in this case during 2008 the
telecom ministry was A Rajappa. The telecom Ministry sold the 2G spectrum which
was used by various mobile and telecom industries at extremely low prices which
prevailed in 2001 almost 7 years before 2008. This was beneficial to various
other telephone companies as they used to buy the spectrum at such low prices
and then sell them at higher prices for example if they bought at Rs.40 they
sold the same at Rs. 100 which gave them a profit of Rs. 60. To sell these to
2G spectrum connection licenses, the government came up with the idea of
auctioning only from 3 PM to 4 PM and this was done on first come first basis. Due
to this, various companies who had nothing to do with telecom also started
taking this these licenses and the companies who are actually involved in
telecom couldn’t get the licences as they were late in auctioning due to the
first come first basis. The total amount of scam was 2,867,800,000,000 rupees,
making it the highest scam in the history of India.
The Supreme Court authorised CBI to investigate the
matter and held that all the policy decisions that were made by the government
by giving first come first basis in telecom licences was absolutely arbitrary
and that the government had not applied their mind while coming up with this.
The court held that the auctions that were kept selling
these licenses what is against public interest and the government went beyond
their powers. Therefore, the court quashed all the 122 licenses that were given
during that period. And A Rajappa was jailed. The court ordered to make changes
and provide new licenses.
From this case, we can understand how government
largesse needs to be considered and how the government cannot function and use
their powers arbitrarily which is completely against the harmony of the society
and public policy.
In the case of Kasturi Lal Lakshmi Reddy vs State of
Jammu And Kashmir & Ors[6],
the government orders the respondent to blaze raisins from the chir forest
in the state for the period of 10 years. The auctioning held in April 1979 went
as high as Rs. 720 per quintal but the government gave the contract for 3 years
to the 2nd respondent, who auctioned for Rs. 350. This impugned
order was totally arbitrary and against the concept of public interest and was
released in order to please a particular person. the government argued that the
petitioner had very little experience of extraction of resin and also that they
have not got their registration renewed for the following year. The petitioner
has no distillation factory for the extracted raisins and they also have not
participated in any auction that happened in the past.
The discretionary power to the government under
government largesse is not unlimited, there are primarily 2 basic limitation,
i.e. the term on which the largesse is granted and second is the person to whom
largesse is granted. The government hence cannot act as a private individual
and act for the purpose of self-interest. There are obligations over the government,
and it cannot act freely. Any government contract or lease would be tested on
the touch-stone of reasonableness and public interest and if the government
fails to satisfy it, then the action of the government will be invalidated. The
concept of public interest receives its orientation from DPSP. DPSP which gives
shape to the concept of reasonableness envisaged u/a 14, 19 and 21 of the
constitution.[7]
The impugned order provides the state with the help of
generating employment and revenue. It is
not favouring the respondent at the cost of the state. Hence the government was
not supporting favouritism from the impugned order, but the decision was taken
on merits.
Conclusion
The private individual would be guided by economic
consideration but a government while functioning and using its power cannot act
as a private individual, it also has to consider the public interest and
reasonableness and fairness. When the government is dealing with the public via
governmental contract or other means, it has to provide equal opportunities to
every equally competent person. There have to be certain pre-decided reasonable
guidelines which shall be followed, and adequate time shall be allotted to
everyone to get access to the same. Government has a major control and
regulation over various sectors of the country and hence the concept of government
largess becomes a very important concept that should go in line with the
constitution for securing the objectives laid down in the constitution
itself.
[1] Rupa & Co. Ltd. & Anr vs
The State of West Bengal & Ors, 2019
[2] Sabita Beng & Ors vs State of
West Bengal & Ors, 2015
[3] A. Vijaya Sekaran vs The Secretary
to Government, 2019
[4] Chandra Bhan Singh v State of
Bihar, AIR 1967 SC 203
[5] MANU/SC/0089/2012
[6] 1980 AIR 1992
[7] Maneka
Gandhi vs Union of India, 1978 AIR 597
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