Saturday, November 20, 2010

Andhra Pradesh Tourism Development Corpn. Ltd. & Anr. Vs. M/s. Pampa Hotels Ltd.
ITEM NO.1A                     COURT NO.4                 SECTION XIIA
             S U P R E M E      C O U R T   O F    I N D I A
                             RECORD OF PROCEEDINGS
                        CIVIL APPEAL NO(s). 3272 OF 2007
ANDHRA PRADESH TOURISM DEV. COPRN.& ANR                       Appellant (s)
M/S PAMPA HOTELS LTD.                                         Respondent(s)
Date: 20/04/2010      This Appeal was called on for judgment today.
For Appellant(s)        Mr. T.V. Ratnam,Adv.
For Respondent(s)       Mr. G. Ramakrishna Prasad,Adv.
             Hon'ble Mr. Justice R.V. Raveendran pronounced the
     judgment   of    the     Bench   comprising   of   His   Lordship   and
     Hon'ble Mr. Justice H.L. Dattu.
                Appeal is disposed of in terms of the signed
        ( Ravi P. Verma )                    ( M.S. Negi )
           Court Master                       Court Master
        [Signed reportable judgment is placed on the file]
                   IN THE SUPREME COURT OF INDIA
                     CIVIL APPEAL NO.3272 OF 2007
Andhra Pradesh Tourism Development
Corpn. Ltd. & Anr.                                 ... Appellants
M/s. Pampa Hotels Ltd.                             ... Respondent
                            J U D G M E N T
        The respondent is a company incorporated on 9.4.2003 under     the   Companies   Act,    1956.   The   appellant   (Andhra Pradesh    Tourism    Development   Corporation    Ltd.,   for   short `APTDC') is a "government company" within the meaning of that expression in section 617 of the Companies Act, 1956.
2.      According to the respondent, the parties had entered
into two agreements in regard to a property known as Hill
View Guest House, Alipiri, Tirupathi, measuring 1.08 acres.
The first was a lease agreement under which APTDC granted a
lease of the said property to the respondent for a term of
33 years; and the second was a development and management
agreement under which APTDC entrusted to the respondent,
the development of a Three-Star Hotel in Hill View Guest
House    property on    construction, operation and management

basis.     According      to    the        respondent,        both   agreements
contained a provision for disputes resolution (clause 17 of
the   lease     agreement      and    Article      18    of    the   management
agreement) providing that in the event of disputes, best
efforts     shall    be     made      to      resolve     them       by     mutual
discussions, amicably; and in the event of the parties not
finding an acceptable solution to the disputes within 30
days (60 days in the case of management agreement), the
same shall be referred to arbitration in accordance with
the procedure specified in the Act.
3.    APTDC     claims      that      it     had     terminated       the       said
agreements on 21.4.2004 and took possession of the property
on 21.8.2004. The respondent filed Arbitration Application
No. 24/2005 in March, 2005 before the Andhra Pradesh High
Court under section 11 of the Arbitration and Conciliation
Act, 1996 [`Act' for short], alleging that certain disputes
had arisen between the parties in regard to the said Lease
Agreement and Management Agreement, and the parties could
not arrive at a mutually acceptable solution in respect of
those disputes. The respondent therefore sought appointment
of a sole arbitrator for adjudication of the disputes and
differences between the parties (respondent and APTDC) in
regard     to    lease    agreement          dated      30.3.2002         and    the
management      agreement dated 30.3.2002 entered between the

4.     APTDC resisted the application. One of the contentions
urged by APTDC was that there was no arbitration Agreement
between them and therefore the question of appointing an
Arbitrator under section 11 of the Act did not arise. It
was    pointed    out    that    according      to     the     respondent,     the
arbitration       agreement     came    into    existence        on    30.3.2002,
when parties executed the Lease Agreement and Management
Agreement on 30.3.2002 containing the arbitration clause;
that admittedly the respondent was not in existence on that
date, as it was incorporated more than a year thereafter
on 9.4.2003; and that when it is alleged that the parties
to the petition had entered into contracts which contained
arbitration agreements on 30.3.2002, and one of the parties
thereof     had not     even come into existence on that date,
obviously there was no contract much less any arbitration
agreement between the parties.
5.     The Designate of the Chief Justice of Andhra Pradesh
allowed     the    application      filed      by    the     respondent     under
Section     11    of    the   Act   by    order        dated    16.8.2005      and
appointed     a    retired      Judge    of    the     said    High    Court    as
Arbitrator, with the observation that the appellant herein
is entitled to raise all its pleas including the validity
of    the   arbitration       agreement       before    the     Arbitrator.     He
however      noticed      the     contention         that      there     was    no
arbitration agreement. He held that having regard to the

decisions    in    Konkan    Railway   Corporation        Ltd.    v.   Mehul
Construction      Co.   [2000   (7)   SCC   201]    and   Konkan    Railway
Corporation Ltd. v. Rani Construction Pvt. Ltd. [2002 (2)
SCC 388], he had only a limited administrative role under
section 11 of the Act, that is, to appoint the                    arbitrator
as per the agreed procedure, leaving all contentious issues
including whether there was any arbitration agreement or
not, to be decided by the Arbitrator. The said order is
challenged in this appeal by special leave.
6.    On   the    contentions     urged,    two    questions      arise   for
(i) where the party seeking arbitration is a company which
was not in existence on the date of the signing of the
contract containing the arbitration agreement, whether it
can be said that there is an arbitration agreement between
the parties ?
(ii) whether the question as to the existence or validity
of   the arbitration        agreement, has to be decided by the
Chief Justice/Designate when considering the petition under
section 11 of the Act        or by the Arbitrator ?
Re : Question (i) :
7.    Section 7 of the Act defines an arbitration agreement.
Sub-section       (1)   thereof    provides       that    an     arbitration
agreement means an agreement           by the parties to submit to
arbitration all or certain disputes which have arisen or
which may arise between them in respect of a defined legal

relationship, whether contractual or not. Sub-section (2)
provides that an arbitration agreement may be in the form
of an arbitration clause in a contract or in the form of a
separate      agreement.       Sub-section      (3)        provides     that   an
arbitration agreement shall be in writing. Sub-section (4)
inter alia provides that an arbitration agreement is in
writing if it is contained in a document signed by the
parties. The specific and clear case of the respondent is
that the arbitration agreement between the parties, is in
writing     contained    in    the    Lease    Agreement      and     Management
Agreement signed by them on 30.3.2002.
8.    The     Lease    Agreement      was    made    on    30.3.2002     between
`APTDC'      (Lessor)    and    Pampa       Hotels    Ltd.     (Lessee).       The
opening      part   containing       the    description      of   the    parties
describes the lessee as follows:
          "M/S   Pampa    Hotels   Limited,    a  company
          incorporated   under the    provisions of   the
          Companies Act, 1956, and having its registered
          office at 209, T.P.Area, Tirupati through its
          Managing Director Sri S. Jayarama Chowdary
          hereinafter referred to as "Lessee", promoted
          inter alia for the purpose of implementing the
          project by M/s Sudalagunta Hotels Limited the
          successful bidder, of the other part."
Similarly the Management Agreement which was also made on
30.3.2002 between APTDC (the first party) and Pampa Hotels
Ltd   (the    second    party).      described       the    second    party    as
       "M/S Pampa Hotels Limited (promoted for the
       purpose of implementing the project by "the
       Bidder" Sudalagunta Hotels Limited) a company
       incorporated under the Companies Act, 1956,
       having its registered office at 209, T.P.Area,
       Tirupati represented by Sri S.Jayarama Chowdary,
       Managing Director (hereinafter referred to as
       "Company" which expression unless repugnant to
       the context or meaning thereto include its
       successors, administrators and assigns on the
       second part)."
It    is    not   disputed       that    both     the    agreements   contain   a
provision for arbitration. It is also not disputed that
both       of   them    were    signed     by     Mr.    C.Anjaneya   Reddy     as
Chairman of APTDC and Mr. S.Jayarama Chowdary as Managing
Director of Pampa Hotels Ltd.
9.     Pampa Hotels Ltd., (with the registered office at 209,
TP Area, Tirupati, Chittoor District, represented by its
Managing Director Shri Jayarama Chowdary), the applicant in
the    application            under     section     11     of   the   Act,    was
incorporated           only     on      9.4.2003.        The    certificate     of
registration issued by the Registrar of Companies shows the
date of its incorporation as 9.4.2003. Section 34(2) of the
Companies Act, provides that from the date of incorporation
mentioned in the certificate of incorporation, such of the
subscribers of the memorandum and other persons, as may
from time to time be members of the company, shall be a
body corporate by the name contained in the memorandum,
capable forthwith of exercising all the functions of an

incorporated        company.       Sub-section          (3)     of       section    149
provides       that      Registrar        shall,         on     the       filing    of
declaration/statement as stated therein, certify that the
company is entitled to commence business. Section 149(4) of
the Companies Act provides that any contract made by a
company (which is already registered) before the date at
which     it   is     entitled      to        commence        business      shall   be
provisional only, and shall not be binding on that company
until that date, and on that date it shall become binding.
A certificate under section 149(3) of the Act was issued by
the Registrar of Companies only on 6.6.2003 certifying that
respondent is entitled to commence business. It is thus
clear that the applicant in application under section 11 of
the Act was non-existent on 30.3.2002 when the arbitration
agreement was entered into.
10.     Section 7 of the Act as noticed above, defines an
arbitration agreement as an agreement by the parties to
submit    to   arbitration.         The       word    `party'       is    defined   in
section    2(h)     of      the   Act    as    a     party    to    an    arbitration
agreement. An agreement enforceable by law is a contract.
An    agreement       has    to   be    between        two     or    more    persons.
Therefore if one of the two parties to the arbitration
agreement was not in existence when the contract was made,
then obviously there was no contract and if there was no
contract, there is no question of a clause in such contract

being an arbitration agreement between the parties. The two
agreements        dated    30.3.2002      categorically        refer      to     Pampa
Hotels      Ltd.    as    an    existing       company     (promoted       for     the
purpose of implementing the project by Sudalagunta Hotels
Ltd.) incorporated under the provisions of the Companies
Act,    having      its    registered       office      at   209,       T.P.     Area,
Tirupati and represented by its Managing Director Sri S.
Jayarama Chowdary. The agreements are not entered by the
promoters of the company, but purportedly by the company
itself, represented by its Managing Director. Admittedly on
30.3.2002         there     was    no     such     company         in    existence.
Admittedly there was no such company having its registered
office       at    209,     T.P.       Area,     Tirupati     on        that     date.
Admittedly,        S.     Jayarama      Chowdary     was     not    the    Managing
Director of any company of that name on that date. When one
of    the    parties      to    the     Lease    Agreement     and       Management
Agreement, was a non-existent imaginary party, there is no
contract. This is not a case of one of the parties being in
existence, but being under some legal disability to enter
into contracts. This is a case where there was no `party'
at all, but someone claiming that there was an existing
company capable of entering into contracts.
11.    The    position         would    have     been    different,        had     the
agreement been entered by the promoters of the respondent
company before its incorporation for the purposes of the
company and such contract was warranted by the terms of

incorporation.         Section 15 of the Specific Relief Act, 1963
provides as follows:
       "Except as otherwise provided by this Chapter,
       the specific performance of a contract may be
       obtained by ­ x x x x x (h) when the promoters of
       a company have, before its incorporation, entered
       into a contract for the purposes of the company,
       and such contract is warranted by the terms of
       the incorporation, the company, provided that the
       company   has accepted the contract and has
       communicated such acceptance to the other party
       to the contract."
It is evident from section 15(h) of Specific Relief Act
that if the lease agreement and the management agreement
had   been    entered        into    by     the           promoters      of     the    company
stating that they are entering into the contract for the
purpose      of   the        company       to        be        incorporated,      in     their
capacity as promoters and that such contract is warranted
by    the   terms      of    the    incorporation                of    the    company,       the
agreement would have been valid; and the term regarding
arbitration       therein         could     have           been       enforced.       But    for
reasons best known to themselves, the agreement was entered
not by the promoters of Pampa Hotels Ltd., on behalf of a
company proposed to be incorporated                             by them, but by a non-
existing company claiming to be an existing company. This
clearly      shows      that       there        is        no     arbitration      agreement
between the respondent (applicant in the application under
section      11   of        the    Act)     and           APTDC       against    whom       such
agreement is sought to be enforced.

Re : Question (ii) :
12.     Let us next consider the question as to who should
decide     the      question         whether      there        is        an    existing
arbitration agreement or not. Should it be decided by the
Chief Justice or his Designate before making an appointment
under section 11 of the Act, or by the Arbitrator who is
appointed under section 11 of the Act? This question is no
longer    res    integra.       It   is    held    in    SBP    &    Co.      v.     Patel
Engineering Ltd. [2005 (8) SCC 618] and National Insurance
Co. Ltd. v. Boghara Polyfab Pvt. Ltd. [2009 (1) SCC 267]
that the question whether there is an arbitration agreement
and whether the party who has applied under section 11 of
the Act, is a party to such an agreement, is an issue which
is to be decided by the Chief Justice or his Designate
under     section       11     of    the    Act     before          appointing           an
arbitrator. Therefore there can be no doubt that the issue
ought to have been decided by the learned Designate of the
Chief     Justice      and     could      not     have    been       left       to      the
arbitrator.      But    as     noticed     above,       the    learned        Designate
proceeded on the basis that while acting under                                  section
11 of the Act, he was not acting under a judicial capacity
but only under an administrative capacity and therefore he
cannot    decide       these    contentious         issues.         He    did      so    by
following the two decisions in Konkan Railway (supra) which
were then holding the field.

13.   In   SBP   (supra),   a   seven-Judge   Bench   of   this    Court
overruled the two decisions in Konkan Railway. The decision
in SBP was rendered on 26.10.2005, a few weeks after the
impugned   decision   by    the   Designate   on   16.8.2005.     Having
regard to the fact that several decisions rendered under
section 11 of the Act had followed the decisions in Konkan
Railway, this court, when it rendered its decision in SBP,
resorted to prospective overruling by directing as follows:
      "(x) Since all were guided by the decision of
      this Court in Konkan Rly. Corpn. Ltd. v. Rani
      Construction (P) Ltd. [2002 (2) SCC 388] and
      orders under Section 11(6) of the Act have been
      made based on the position adopted in that
      decision,   we   clarify  that   appointments   of
      arbitrators or Arbitral Tribunals thus far made,
      are to be treated as valid, all objections being
      left to be decided under Section 16 of the Act.
      As and from this date, the position as adopted in
      this   judgment    will   govern    even   pending
      applications under Section 11(6) of the Act."
                                              (emphasis supplied)
This Court in Sarwan Kumar v. Madan Lal Aggarwal [2003 (4)
SCC 147] observed:
      "The doctrine of "prospective overruling" was
      initially made applicable to the matters arising
      under the Constitution but we understand the same
      has since been made applicable to the matters
      arising under the statutes as well. Under the
      doctrine of "prospective overruling" the law
      declared by the Court applies to the cases
      arising in future only and its applicability to
      the cases which have attained finality is saved
      because the repeal would otherwise work hardship
      to those who had trusted to its existence.
      Invocation    of    doctrine   of    "prospective
      overruling" is left to the discretion of the
      court to mould with the justice of the cause or
      the matter before the court."
                                                  (emphasis supplied)
14.    Learned counsel for the appellants contended that the
impugned      order    was    rendered    on   16.8.2005;   that       as   on
26.10.2005 when the decision in SBP was rendered, the time
for filing a special leave petition under Article 136 of
the Constitution had not expired; that the special leave
petition was filed by the appellant on 22.11.2005, which
has    been   entertained      by   granting    leave.   The     appellants
therefore contend that this appeal should be considered as
a continuation of the application under section 11 of the
Act or as pending matter to which the decision in SBP would
apply, even though the Designate had rendered the decision
on    16.8.2005.      The    appellants   submitted      that    a    pending
matter would refer not only to the original proceedings but
also    would    include      any   appeal     arising    therefrom         and
therefore any proceeding which has not attained finality is
a pending matter.
15.    What   the     appellants    contend,     would    have       been   the
position if there was a statutory provision for appeal and
SBP had directed that in view of prospective overruling of
Konkan Railwa,y pending matters will not be affected. But
sub-section (7) of Section 11 of the Act makes the decision
of the Chief Justice or his designate final. There is no
right of appeal against the decision under Section 11 of

the Act. Further, the seven Judge Bench in SBP issued the
categorical direction that appointment of Arbitrators made
till then are to be treated as valid and all objections are
to be left to be decided under Section 16 of the Act.
16.   On account of the prospective overruling direction in
SBP, any appointment of an arbitrator under Section 11 of
the Act made prior to 26.10.2005 has to be treated as valid
and all objections including the existence or validity of
the   arbitration     agreement,    have   to     be   decided   by   the
arbitrator under section 16 of the Act.            The legal position
enunciated in the judgment in SBP will govern only the
applications to be filed under Section 11 of the Act from
26.10.2005 as also the applications under section 11(6) of
the Act pending as on 26.10.2005 (where the Arbitrator was
not yet appointed). In view of this categorical direction
in SBP, it is not possible to accept the contention of the
appellant that this case should be treated as a pending
application.    In    fact   we   may   mention   that   in   Maharishi
Dayanand University v. Anand Coop. L/C Society Ltd. & Anr.
[2007 (5) SCC 295], this Court held that if any appointment
has been made        before 26.10.2005, that appointment has to
be treated as valid even if it is challenged before this
17.   In view of the above, we are not in a position to

accept the contention of the appellant. But the arbitrator
will have to decide the issue as to whether there is an
arbitration agreement, with reference to the legal position
explained by us in regard to the existence of arbitration
agreement. Though such an exercise by the arbitrator will
only be an academic exercise having regard to our decision
in this case, such an exercise becomes inevitable in view
of    the    peculiar    position       arising     out    of   the   specific
direction contained in para 47 (x) of the decision in SBP
and    the     subsequent         decision     in     Maharishi       Dayanand
18.    We    accordingly          dispose     of    the     appeal      without
interfering with the appointment but with a direction to
the    Arbitrator       to   decide     the   issue    in    regard     to    the
existence/validity           of   the    arbitration        agreement    as     a
preliminary issue relating to jurisdiction in the light of
what has been stated above.
                                                            (R V Raveendran)
New Delhi;                                                ................J.
April 20, 2010.                                                  (H L Dattu)

Saturday, September 25, 2010

Bar council of India exam

The All India Bar Examination will have one hundred (100) multiple-choice questions spread across various subjects. The subjects are taken from the syllabi prescribed by the Bar Council of India for the three-year and five-year Ll.B. programmes at law schools in India (as set out under Schedule I to the Bar Council of India Rules).
These subjects are divided into two categories: the first comprises subjects that may be considered ‘foundational’ in nature, those that form the basis for large areas of law; the second comprises other subjects, which a new entrant to the legal profession must also have a basic understanding of. Schedule I to this document contains the list of subjects that would be tested in the All-India Bar Examination and the weightage ascribed to each of these areas.
The All India Bar Examination shall be structured with multiple-choice questions (that is, the correct answer would have to be marked out in the Optical Mark Recognition (‘OMR’) format answer sheet provided, and no writing of an answer would be required.) These questions will be divided into ‘knowledge-based’ and ‘reasoning’ questions, and advocates will be allowed a maximum of three hours and thirty minutes (3 hours 30 minutes) to complete the All India Bar Examination. The emphasis throughout is on assessing an advocate’s understanding of an area of law, rather than on the ability to memorise large texts or rules from different areas of law.
The All India Bar Examination will be ‘open-book’, which means that advocates may bring in any reading materials or study aids that they choose, such as the preparatory materials provided for the All India Bar Examination, textbooks and treatises, and even handwritten notes. Advocates may not bring in any electronic devices, such as laptop computers, mobile phones, or any device equipped with a radio transceiver (such as pagers) at the examination centre.
The results generated after the answer scripts are corrected will simply state whether an advocate has or has not qualified for practice (that is, whether the advocate has passed or failed the All India Bar Examination); no percentage, percentile, rankings, or absolute marks will be declared.

Saturday, September 11, 2010

Federal Principle under the Indian Constitution – a perspective

Federal Principle under the Indian Constitution – a perspective

-Mohan Rao B. former Principal, Rajiv Gandhi Institute of Law, Kakinada

[“ Indian Constitution is neither Federal nor Unitary, but it is a mixer of both ….”
-this paper attempts to comment on the statement and to suggest measures to strengthen the Federal principle under the Indian Constitution.]

Constitution is the legal document in which various governing principles are established functions and procedural aspects of the government are specified under which different organs of the government are specified under which different organs of the government work .Constitution is the supreme law of the land which is ascertained by Kelsen as the “ Grund Norm“ in his Pure theory of law.

American Constitution is the pioneer of all the federal constitutions followed by the Canadian and Australian constitution respectively. It may be traced that the Federal principal was adopted in the Government of India Act 1935 and the same was reinserted in the draft constitution by the Constitution Assembly Dr. B. R. Amedkar feels it convenient to describe Indian constitution as both Federal and Unitary. He opines that it works as a federal constitution under the normal condition and as Unitary during the war or crisis.

Federal Principle:

The principle may be understood as ‘the method of dividing powers , so that the general and regional governments are each within a sphere of co-ordinate and independent; and not sub-ordinate to each other- Professor Wheare . The existence of co-ordinate authorities independent of each other is the gift of the federal principal where as the supreme sovereign power is vested with the only central organ which ultimately controls the state in a unitary form of government. Federalism is not static but a dynamic concept. It is always in the process of evolution and constant adjustments. It is also recognized that federalism is one of the basic features of the Constitution in Kesavananda Bharathi’s case .

Federal Features:
• There must be a written and rigid Constitution. Constitution being the supreme law of the land, it must be rigid so as to uphold its supremacy.
• Written constitution is essential if federal government is to work well.
• Distribution of powers, between the central Government and State governments is the most essential and ordained feature of a federal constitution. The distribution must be such that both the governments should exist in a co ordinate and independent in their own spheres.
• Independent and impartial judiciary is to uphold the supremacy of the constitution by interpreting the various provisions and settling the disputes between the laws made by the governments and the Constitution.
In order to be called federal it is not necessary that a Constitution should adopt federal principle completely. It is enough if the federal principle is the pre-dominant principle in the constitution. The mere presence of Unitary features in a constitution which may make the Constitution ‘quasi federal’ in law, does not prevent the Constitution from being pre-dominantly federal in practice. ( H.M.Seervai). Professor Whear described India as neither Federal nor Unitary but ‘Quasi Federal’.

Indian Constitution came into existence on 26th January 1950 adopting the federal principle pre dominant. The doctrine of pre dominance as ascertained by HM Seervai does not hold good as the degree of pre dominance is negligible compared to that of other Federal Constitutions. According to M.C Setalvad, “ the constitution of India having been drawn in mid 20th Century presents a modified form of federation suitable to the special requirements of the Indian society.”

Article 1 of the Constitution describes as a Union of States. Dr B.R. Ambedkar justifies it to be advantageous to describe India to be a union of States, though it is federal in nature. Accordingly, during the crisis it shall be Unitary in nature.

Prof. Alexandrowitz says that India is supposed to have quasi federation mainly because of the articles 3, 249, 352 to 360 and 371. It may be aptly be stated that he supports Lord Ambedkar’s view.

Power to alter the boundaries:

Article 3 empowers the Parliament to alter the boundaries of states even without the consent of the states which dilutes the federal principle. State of West Bengal in its memorandum submitted to the President of India compares article 3 to be a damocle sword hanging over the heads of the states. HM Seervai defends the power of the Parliament to alter the boundaries of the states that “ by extra constitutional agitations the states have forced parliament to alter the boundaries of States” In practice, therefore the federal principle has not been violated.” But, Seervai agrees that the power vested in the Parliament was a serious departure from the federal principle. History reveals that there has been no answer or rationale basis for such a serious departure.

Distribution of powers:

Distribution of powers is one of the pre requisites of a federation of states. The object for which federal state is formed involves a division of authority between the national government and the separate states- Prof. A.V.Dicey.

Parliament can legislate with respect to a matter under the State List
a) in the national interest(Art . 249) or
b) if a proclamation of emergency is in force (A250).

The provisions resolving inconsistency between central and state laws is also weighed in favour of the centre (A251 and 254)-AG Noorani.

Gwyer C.J. observed that the conferment of residuary power upon the centre has been done following the Canadian constitution. The U.S and the Australian constitutions which are the indisputably federal confer the residuary power on the states. The non congress opposition parties conferences [held in 1986-87] resolved to demand for the conferment of residuary power on the states as a measure to strengthen the federal principle.
• Under the present provisions of our Indian Constitution the States are entitled to a share of the centers revenues derived from only a few taxes principally income tax and excise duties ( @ 45% approximately)
• Finance Commission constituted under Article 352 as the balance wheel of the Indian Federal financial relationship
• Article 365 dilutes the Federal Principle by imposing President’s Rule in the State which fails to comply with or direction of the Center. Seervai defends the power as it is open for judicial review. But it may be noted that the imposition of President’s Rule effects the independence of the States. However, practically speaking when once a democratically constituted government is de throned through such imposition of President’s Rule it is not only un- democratic but it costs burden on the exchequer of the State for conducting re-elections. The judicial review is a time consuming process and sometimes, by the time the decision is given the tenure of office of the government may expire. Therefore, conferment of such blanket power on the Center is undesirable as its effects the democratic process and dilutes the Federal Principle.

• President is competent proclaim Emergency in any part or whole of the country under Article 352 if he is satisfied that grave emergency exists. The 44th Amendment to the Constitution replaced the words,” internal disturbance” and inserted “ armed rebellion”. The proclamation of Emergency in 1975 by the unilateral decision of the then Prime Minister of India Mrs Indira Gandhi, led to the Amendment of the Constitution and the power has been much mis used during the emergency.

• In Rajasthan v Union of India the Supreme Court has re iterated its dictum in West Bengal v. Union that the extent of Federalism is largely watered down by the needs of progress and development of the country.

• State of West Bengal submitted a memorandum suggesting certain changes in our Constitution to strengthen the Federal principle. Parliament’s power to alter the boundaries of a state under Article 3 should be subject to the State’s approval. Residuary power under Article 248 of the Constitution should be conferred upon the States. Deletion of Article 249 and Article 356 to 360 would likely to strengthen the federal Principle.

• It is unfortunate to note that there has not been proper utilization of Article 263 of the Constitution.

This is high time to re constitute the inter state council as an autonomous independent and high powered which must be entrusted with the responsible to deal with all the issues between the center and the states. Finance Commission and Planning commission should be made independent autonomous authorities and the appointments shall be made in consultation with the States. Adequate autonomy must be facilitated to the States through the conferment of power on the States and by suitable amending Articles 3, 249 and 346. Conferment of residuary power on the States is also desirable. Governors shall be appointed by the Inter state council. Disputes if any between the Center and the States shall be expeditiously decided through constitution of Special Constitutional Benches.