In response to Haseeb A Drabu’s observations about right to property & JKB vis a vis State Govt published in GK

jk parliment article 35A

(A) Right to property:

First, in his article “Article 35 A: Myth or Reality” , published in GK on 03-04-2019, Mr. Drabu has written: “In 1950, when the J&K government initiated ‘land to tiller’, it was not legally possible to do so under the Indian Constitution. Till 1978, Right to Property under Article 19 was a fundamental right. It was only with the 44th amendment that it became a statutory right under Article 300A. What prevented the J&K Big Landed Estates Abolition Act, 1950, from being annulled on the grounds of infringing Article 19(1) (f) was Article 35A”.

These statements do not reveal full truth about land reform laws. It is factually incorrect statement since land reform laws had been started all over India right after 1947 but, as right to property was a Fundamental Right, there were legal hitches that were removed first by Fist Amendment to the Constitution in 1951 followed by a number of Constitutional Amendments till it culminated in abrogation of this right in 1978. So, before 1978 Amendment there is a long history of legal developments which is missing in Drabu’s narrative. It is true that right to property was a ‘fundamental right’ under Article 19(1) (f) read with Article 31 of the Indian Constitution & that it was finally taken out of Part III by 44th Amendment of 1978 to the Constitution & recast as a Constitutional Right under Article 300-A. But it is factually incorrect to say that “land to tiller” or “agrarian reforms” were not possible in other Indian States under the Indian Constitution till 44th Amendment of 1978.  In fact, agrarian measures had started in all provinces before independence of India but as right to property was a ‘fundamental right’, the abolition of Jagirdari or Zamindari system or absentee landlordism couldn’t succeed till first amendment was effected to the Constitution as early as in 1951 whereby this right was brought within the doctrine of Eminent Domain. The doctrine recognises “the inherent power of the State to take privately owned property especially land for public use” subject to the compensation for the taking. But as Right to Property was a Fundamental Right in Article 19 (1) (f) read with Article 31, action of several State governments taking property/land by abolishing Zamindari/Jagirdari was challenged in the SC. So, to facilitate the abolition of Zamindari/Jagirdari, 9th Schedule along with Articles 31-A( saving of laws providing for compulsory acquisition of property by State ) & 31-B (validation of certain Acts and Regulations) were inserted in the Constitution by the Constitution (First Amendment ) Act, 1951 that put 13 State Acts taking away land from Zamindars & Jagirdars & distributing it among landless farmers ,beyond challenge before Courts of Law. By the Constitution (Fourth Amendment) Act, 1955 State’s right of compulsory acquisition & requisition of private property was allowed by amending Article 31. Article 31-A was amended by Constitution (7thAmendment) Act, 1964. All these steps were felt necessary to carry out the land reforms in the country in accordance with the socialistic economic philosophy of the State to distribute land among peasants & tenants after taking it away from the landlords & Jagirdars. After a plethora of judgments of the SC in AIR 1952 SC 252, AIR 1958 SC 328 , (1984) 1 (SSC) 515; Bank Nationalisation case (1970) 1 SCC 248 , (1996) 2 SCC 226, (2007) 8 SCC 705 & many others, the Parliament ultimately made the Constitution ( 44th Amendment) Act, 1978 that removed right to property under Articles 19 (1) f & 31 by repealing these provisions, abolishing right to property as a Fundamental Right & reincarnating it as a statutory/constitutional right only under newly incorporated Article 300-A which states that no person shall be deprived of property except by the authority of law; to note, authority of law was already recognised vide earlier amendments as mentioned supra.

The doctrine of Eminent Domain enabled the States to pass their own Zamindari Abolition Acts. By 1956, the entire system of Jagirdari or Zamindari system & absentee landlordism was abolished in all States in India (See Ramchandra Guha, India After Gandhi (Picador, 2008) pages 219-220) with certain constitutional hiccups still remaining with huge number of cases challenging validity of the State Acts in the Supreme Court. As the Fundamental Rights Part III of the Indian Constitution did not apply to the JK State till the Constitution (Application to Jammu and Kashmir) Order, 1954 extended them to the State w.e.f 14th  May 1954 & as the State’s right of making laws with respect to permanent residents , their property rights & land reforms were already accepted under the Delhi Agreement of July, 1952  & several changes were  being contemporaneously made to the right to property under Article 19 read with Article 31 by Indian State, the JK State was simply following its earlier programme of land reforms under its own property laws later recognised in Delhi Agreement followed by the Constitution (Application to Jammu and Kashmir) Order, 1954 .  So, land reforms measures were nothing confined to JK only, as wrongly stated by Mr. Drabu. As Right to Property, though originally a Fundamental Right was made otiose by a number of Constitutional Amendments as cited above, that had already paved the way for land reforms in Indian States long before 44th Amendment till it was finally, as a formality, taken out of the Part III of the Constitution. By 1978, right to property was relegated to empty shell by a number of Constitutional Amendments & SC judgments.

(B) Redefining relationship between J&K Bank & State Govt:

Second, in his another article “Redefine the relationship” carried in GK dated 13-06-2019, Mr. Drabu has made several statements about the JK Bank & its position vis a vis State Government. He mentions of how its Chairmen have been disgracefully removed or sacked by both Elected & non-Elected governments of the State and that the same, although “administratively decisive” actions of the State [meaning cannot be interfered with] “are procedurally improper” and “violates the Banking Regulation Act of 1949.” He further writes as Bank’s Chairman is Government nominee Director, “withdrawing the nominee directorship [referring to sacked ex CEO Mr. Parvez Ahmad] by invoking Article 69 (III), cannot annul the appointment [of Bank’s Chairman] made under Banking Regulation Act which also lays down the procedure for removal”. First point that arises here is if removal or sacking of Chairman was/is “procedurally improper” against the Banking Regulation Act, 1949, why didn’t he as a “removed” Chairman in 2010, question the decision of the State Government at that time? Why he kept mum if his “removal” or asking him step down, which comes to the same, whether you read it one way or other, was, in his opinion, against the procedure of the BR Act, 1949? Why didn’t he write against then Elected Government action when he too was “disgracefully” removed by them? No imputations as in this article were leveled by him against the Elected State Government’s action then. Had he challenged & objected against his “procedurally wrong” removal, when Elected Government was in power, may be, it might have set a deterrent against non-Elected Government to “violate Banking Regulation Act”. Article 69(III) of the Article of Association of the Bank provides “Government Directors [which includes Chairman too] will continue in        their office so long as their appointment is not  cancelled by the Government. Appointment of the Chairman was cancelled by the State Government. Where is the procedural irregularity? Second, under section 10B (6) of the BR Act, 1949, RBI has full powers to remove Chairman of any banking company even before expiry of his tenure if RBI finds him “not a fit and proper person to hold such office.” Read this responsive comment of mine together with the press conference of CS, BVR Subramanyam & Governor Shri Satpal Ji, where CS stated “RBI wrote to the governor administration about the complaints …[decisions of sacking] were after the RBI wrote to the State about governance issues in the Bank”.  Third, Mr. Drabu though seemingly dissatisfied with the decision of the Government, ultimately, tries to wriggle out of confusion by saying “Be that as it may. The deed has been done”. Which prima facie means it is OK now.

Mr. Drabu then continues to say that there is a need for redefining relationship between J&K & the State Government. Before putting forth his suggestions how this “complicated” relationship could be redefined, he makes such averments which will confuse a layman & as such need an elaboration. JK Bank is only State owned bank in India & a Government company, but it is “old generation private sector bank”, he writes. These statements are correct but confusing as State Owned cannot be Private Owned. Point needs a further elaboration. What he wants to convey is that under section 22 of the BR Act, 1949, RBI has granted bank license as “old private-sector bank”. But that license will not change the status of Bank from its being State Owned Banking Company to a Private Owned Banking Company. Neither by laws applicable nor by the Bank’s own Constitution. He writes that Bank survived “nationalisation” so far as “the Union Government feels the Bank is outside its ambit of control. So too does the State government”. If State Government Owns Bank, holding 59.3% share equity in it, controlling constitution & composition of its BODs including all important functionary post of CEO cum Chairman, how State Government can be said to feel that they do not have “control” over it? Central Government does not have any direct stake in the Bank except through RBI & under related banking laws. But for “nationlisation”, Central Government, not State Government, must have at least 51% & above share capital in a banking company & “nationalisation” is done by passing what is called the Banking Companies (Acquisition & Transfer of Undertakings) Act by the Parliament. Going by the “background” of “nationalization” of 19/20 major banking companies in 1969 & 1980, there is no such factor existing till date to take over the Bank by the CG. Nor such intention. CS sitting next to Governor of the State made it clear in press conference on 12-06-2019. Furthermore, in  India,  while J&K is the only State [Government] Owned Bank, there are two more banks, SBI & IDBI Bank Ltd, where although Central Government has over 50% share , as yet, these “State/CG owned” Banks are not nationalised.

Well that said, he then makes some good suggestion about that the State Government’s role “for the capital structure of the bank as required by prudential and regulatory norms…….. This will set the rules for performance evaluation”. However, he begins his this suggestion by saying that the State “must rid itself of the mind-set that it is the owner of the Bank. It is not” [owner].  But this claim being too stretched beyond the point is conflicting with his earlier statement that it is “only State owned Bank” of the country. Under the Companies Law, ownership in companies rests with shareholders. Since the State holds overwhelming Share Equity in Bank, being also promoters of the Bank,  together with its “absolute control” on its administration & functioning, in that sense, it unambiguously owns the Bank. Second suggestion he makes about rebuilding BODs of the Bank that should be “the supreme authority; not the government, not the chairman”. First question that arises here is why he didn’t as a Chairman cum CEO or post-stepping down under Government Orders in 2010 made such suggestions to the State Government? Why now? Further, is it possible that State Government that holds “absolute control” over the Bank, which is proven beyond doubt now, under equity holding & by constituting BODs & appointing most powerful functionary, Chairman cum CEO, under the Bank’s Charter, will be ready to convert it into something like private enterprise where it will lose its control on it? Certainly not!

He pleads for corporatization of J&K Bank that is to make it an Independent Organisation of State control? Under Memorandum and Articles, State Government owns Bank administratively & functionally together with financial control by equity of 92% which it had when Bank was promoted in 1938, subsequently reduced to 79% & then by de-investment, this equity was reduced to 53% at most crucial time when Firdous Tanki was pending in the Apex Court & presently State has 59.3% share holding in Bank. State Government ‘s equity in Bank was reduced to 53% when in 2016-2017, Mr Drabu as then FM of the State inducted additional 532 Cr in it to raise State’ s equity  to present 59.3% thereby reassuring & tightening “financial control” of State on the Bank. According to a report published in GK dated 12th January, 2017 (Government of J&K today announced an amount of Rs. 532cr as additional capital infusion in two tranches during next financial year to retain its strategic equity share of 53). It was done by Mr. Drabu to retain State Government’s strategic control in equity share of the Bank, in his own words. His present column conflicts with it. Today he pleads for decreasing & redefining this control under a new relationship between State & Bank. How strange? Here a wrong impression has been created in the minds of the readers that State Government is on par with other shareholders & customers of the Bank. To call, & plead to change, Master to a subordinate is illogical, one can say least.

He makes a good suggestion that government should have no say in appointment of Independent Directors on the Board & that they “must be selected through a formal process” [without mentioning that that same is a statutory requirement under section 150 of the Companies Act, 2013] which “should be a matter for the Board”. Again, one is within one’s right to ask Mr. Drabu if such was scenario in the Bank, since ex-CMs’ time, as mentioned by him in his cited column, why didn’t he raise objections to it then? Since he was a part of the State-cabinet then, how could he have raised objection to these happenings, is so simple to understand. After all, all know that the new Companies Act that provides for appointment of Independent Directors was passed well in 2013. He has again, though very lately now, raised some genuine concerns in tailpiece of his write up which are well-taken, hopefully by all.

M J Aslam is  Author, academic, story-teller & freelance-columnist:  


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