Revival of the 'Underperforming Enterprises Bill'
by Sarath N. Silva, Former Chief Justice
Nov 7, 2011
“A shocking mockery of the Legislative process, constitutionality and the Rule of Law”
The government which controls a two-third majority in Parliament is rushing through a convoluted Bill bearing the title Revival of Underperforming Enterprises and Underutilized Assets Act. Ordinarily, in terms of Article 78 (1) of the Constitution, every Bill should be published in the Gazette at least 7 days before it is placed on the Order Paper of Parliament. This publication is done to enable any citizen to challenge the constitutionality of the Bill (proposed law) by a petition to the Supreme Court, filed within 7 days of the Bill being placed on the order paper in terms of Article 121 (1) of the Constitution. When such a petition is filed, proceedings cannot take place in Parliament for three weeks to enable the Supreme Court to determine the constitutionality of the Bill at a notified public hearing. This process of what is called “pre enactment review” has been introduced since the terms of Article 80 (3) of the Constitution after the Speaker has certified that a Bill has been passed by Parliament, no court can in any manner call in question the validity of the constitutionality of such law. The harsh exclusion of what is called ‘post enactment review’ was not there in the Soulbury Constitution of 1947. It is thus seen that the prior publication and notification of a Bill is a vital safeguard in the scheme of the Constitution to ensure that the people who are sovereign are involved in the process of making a law and more importantly that any person affected or concerned, is afforded an opportunity to challenge the validity and constitutionality of any Bill.
The Bill in question has not gone through the process of publication and notification described above; instead the government has had recourse to an exceptional provision in Article 122 which states that when the Cabinet of Ministers decides that a Bill is “urgent in the national interest” the President refers it to the Supreme Court for a special determination as to its constitutionality to be done within 24 hours! Thus no one got an opportunity to challenge the validity and constitutionality of the Bill which upon enactment by Parliament to be done in a day viz on November 9, will be irreversibly binding on everyone.
The decision of the Cabinet of Ministers that the Bill is “Urgent in the national interest” is manifestly wrong and lacking in bona fides. The Cabinet is making use of exceptional provisions in the Constitution intended to deal with highly charged and volatile situations where immediate legislative intervention is demanded in the national interest. The question whether an Enterprise is underperforming or an Asset is underutilized, has to be decided on a careful analysis of all relevant data and essentially after affording an opportunity to those engaged in the control and management of the Enterprise or Asset to establish that it is not so. This is the vital requirement of the principles of Natural Justice that form part of the Rule of Law which underpins our Constitution and the legal order of the civilized world. According to clause 2 (1) of the Bill the Cabinet has already decided that one enterprise specified in schedule I is ‘underperforming’ and thirty six assets specified is schedule II are ‘underperforming’ and: are having an adverse impact on the national economy and thereby in the public interest such enterprises and assets shall with effect from the date of coming into operation of this Act stand vested in the Secretary to the Treasury for and on behalf of the Government of Sri Lanka”. Although clause 9 of the Bill has interpretations of the terms, “underutilized asset” and ‘underperforming enterprise’, these definitions would not be operative since by clause 2 (1) a decision has already been made that one Enterprise is underperforming and thirty six Assets are underutilized, worse still, that they are having an adverse impact on the national economy. The cabinet has made this decision without a proper investigation and inquiry and significantly without affording an opportunity to persons who are affected to show cause against it, in blatant violation of the principles of natural justice. Having made such a mala fide, the Cabinet has abused the process reserved for urgent bills to rush through the bill to Parliament to have it enacted as a law, in a day. Why? Because, when the speaker certifies that a Bill has been duly passed by Parliament, in terms of Article 80 (3) of the Constitution “no court or tribunal shall inquire into, pronounce upon or in any manner call in question, the validity of such Act on any ground whatsoever”. Hence, those affected by the mala fide decision of the Cabinet endorsed by Parliament, have to weep in silence.
On no reasonable hypothesis can one contend that this Bill is urgent in the national interest. Does the government have a “magic potion” to enhance the economic viability of these Enterprises and Assets? If so such ‘magic potion’ should be first applied to the 249 government ventures that have accumulated losses of over Rs. 19 billion from 2007 to 2009 according to the senior minister who is the Chairman of the Committee on Public Enterprises (COPE) of the Parliament. “Physician heal thyself” is the best advice to the Executive. The only two enterprises producing 20% of the sugar requirements of the country are to be deprived of their land building, fittings and stock in trade. These enterprises were owned by the government, hopelessly mismanaged and turning at a loss. They were privatized nearly ten years ago and the private sector managers have turned these enterprises into hugely successful and profitable ventures. Can the government which ran the enterprises to the ground claim that these assets are underutilized? On the other hand, the government owns two large sugar plantations and factories at ‘Kantale and Hinguarna’ that are non-functional. Therefore government should first enhance its own nonperforming assets in the industry.
The only underperforming enterprise to be vested in Hotel Developers (Lanka) is that which owns the Hilton hotel. The government has always been the majority shareholder (over 60%) throughout the period the hotel has been in operation. Therefore, if the enterprise has been underperforming the chairman and directors appointed by the government are responsible. According to the definition in clause 9, it is being vested since “the government is engaged in protracted litigation with regard to such enterprise”. Can a government engaged in litigation, put an end to that litigation by vesting the enterprise itself in the government? What a preposterous state of affairs!
Viewed from a constitutional perspective the Bill is inherently flawed. Assuming that the Executive has decided that these are enterprises and assets that are underperforming or underutilized and in the interest of the national economy they should be vested in the State, a Bill may be drafted specifying objective criteria which could be rationally related to enhancing the national economy on the basis of which a designated authority (eg. a minister/officer) may decide that a particular enterprise or asset should be vested on an application of such criteria. The designated authority could carry out inquiries including the hearing of any affected party and make a decision which would be subject to judicial review. That is this delineation or separation of legislative, Executive and Judicial power postulated by Article 3 and 4 being the basic structure of our Constitution.
In the Bill in question that criteria for the vesting is being laid down by Parliament which in the same breath is applying the criteria and deciding that one enterprise and thirty six specified assets vest in the government. The decision of the Parliament is not subject to judicial review. Thus the Parliament is being thrust by the Executive by a deft move to the role of exercising Legislative Executive and judicial power in contravention of Article 3 and 4 of the Constitution. The Bill also violates the fundamental rights guaranteed by Article 12 (1) of the Constitution which reads as follows. ‘Any persons are equal before the law and are entitled to the equal protection of the law”. Quite apart from affording protection, the proposed law directly denies to specified persons their right to property. There is no question of a rational classification on objective criteria when the law itself specifies the persons and their property that would be denied to them. It is the most obnoxious form of ad hominem legislation. The Bill further denied to specified persons their right to engage in a lawful enterprise in violation of the fundamental right guaranteed by Article 14 (1) (g) of the Constitution. Above all the Bill denies to the specified persons their Human rights guaranteed by Article 17 of the Universal Declaration of Human rights which reads as follows; “(1 )Everyone has the right to own property alone as well as in association with others. (2) No one shall be arbitrarily deprived of his property” Any decision made without affording a hearing to the affected party is arbitrary. The Universal Declaration is now considered to be Public International Law and it is a maxim of interpretation that domestic legislation should be in conformity with Interntional Law. Thus the Bill in question is a shocking mockery of the legislative process, constitutionality and the Rule of Law.
Source: Daily Mirror - Sri Lanka