Friday, October 21, 2011

Do Kiran Bedi's refund claims amount to corruption?

As someone who is pleased with the unprecedented attention that Anna's movement has brought to the issue of corruption in our public discourse, but critical of certain tactics of the movement which I fear can cause lasting damage to democratic institutions, and also of some of the provisions of the JanLokpal Bill, I have watched the 'revelations' about the members of Team Anna with interest. Some of it is indeed in the nature of a witch-hunt, and underscores the need for a strong anti-victimisation law to protect whistle-blowers and activists. Some attention obviously comes with being prominent in public life.

It was easy for liberals to condemn the attack on Prashant Bhushan for holding controversial views on Kashmir. Whatever the merit of his proposals, social censorship by vigilante groups has become a huge problem in India and we are still groping for a legal response.

The case of Kiran Bedi's inflated reimbursement claims for air travel to give lectures is less clear cut. Bedi seems not deny the facts, but has two defences:
1. Business class travel fare is an entitlement (almost contractual entitlement which is agreed upon by her acceptance of the invite), and in any case claimed with the knowledge ('deemed consent'?) of the organisers.
2. That the 'savings' have been used for a good cause (i.e. by her Trust for educating children).

I think it will be an interesting exercise to see whether this would amount to 'corruption' under the Jan Lokpal Bill. I must enter the caveat that I have no expertise in contract law except what I remember from the first year in law school, and much of the analysis to follow may depend on a good understanding of contract law. Nor have I looked at case-law to see how judges have interpreted the relevant legal provisions. I hope a wiser reader will show how I have completely misunderstood the law. So, I am just thinking aloud and not committed to these views:

The definition clause of the Jan Lokpal Bill borrows the definition of 'corruption' from the Prevention of Corruption Act 1988, with a proviso which is not relevant for this analysis.
The most directly relevant provision of the 1988 Act seems to me to be section 11:

Whoever, being a public servant, accepts or obtains or agrees to accept or attempts to obtain for himself, of or any other person, any valuable thing without consideration, or for a consideration which he knows to be inadequate, from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by such public servant, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned, shall be punishable with imprisonment for a term which shall be not less than six months but which may extend to five years and shall also be liable to fine.

Prima facie, this definition applies only to public servants, and since Bedi was not acting as a public servant, she would be exempt. It is also not clear whether the people who invited her to give lectures would qualify as the relevant givers of the 'valuable thing'. But for our purposes of discovering whether Bedi has practised what she preaches, these technical exemptions based on the identity of the people involved in the transaction must be ignored for the moment (they do have a bearing on the question, to which I will return later). First we must focus on the substance of the offence of corruption in this provision (which I have highlighted in bold in the provision).

The provision demands that the accused by obtain 'any valuable thing without consideration, or for a consideration which he knows to be inadequate'. Presumably, the concept of 'consideration' is borrowed from contract law.

It seems clear to me that there was indeed some consideration (Bedi was after all taking a flight in order to provide a service in the form of a lecture). I am not a contract lawyer, but it does appear to me that the consideration in this case was indeed inadequate, and Bedi herself appears to accept this. The question is whether her two defences - consent and good purpose - apply.

That the organisers knew about inadequate consideration seems to be irrelevant since the law does not appear to accept consent as a defence. So, Bedi's first defence falls. The provision makes no reference whatsoever to the 'purpose' for which the valuable thing was obtained, so Bedi's second defence that it was for a good cause would be quite irrelevant in the eyes of the law.

Now we return to the fact that Bedi is not a public servant. Indian contract law, as far as I can recall, does not require adequacy of consideration, only that there must be some consideration. Thus, private citizens are indeed allowed by law to enter into transactions where one party gets too little consideration for what they have put in (except in some extreme cases of unfairness). The PCA 1988 modifies these rules in the special context of a public servant, and demands that consideration must also be adequate, and in fact attaches criminal liability to inadequate consideration. If Bedi had done what she has done as a public servant, her actions would most probably amount to corruption. As a private citizen, it is not illegal. Of course, if NGOs are covered by the LokPal, a suggestion that 'Team Anna' has opposed, and similarly stringent rules were applicable to NGO functionaries as they are to public servants, then Bedi may well have committed the offence of corruption.

I must reiterate that I have no personal knowledge of this case beyond what has been reported in the cited links, and I do not know enough to be able to tell whether Bedi's motives were benign. It appears from reports that her motives were indeed benign (again, no defence under this provision). This is just a technical analysis of applying a legal provision to some reported facts. Perhaps the law should take motives and purposes into account. But surely politicians deserve the benefit of this nuanced approach to corruption as much as Bedi?

Thursday, October 06, 2011

Regulatory Barriers to Litigating in India

This interesting short paper "Regulatory Barriers to Litigation in India" by Prashant Narang recently came out in the Asian Journal of Law and Economics. The basic argument is that the regulatory framework of the legal profession in India frequently biases against new entrants to the profession and favors those with preexisting family connections.

Take the ban on advertising - Narang argues this clearly favors those with well-established family names limiting new entrants from building up a reputation through advertising. Or the ban on contingency fees? Again, it favors well-established players and means new entrants, who can't bank on getting cases through family connections, that are willing to take a risk on a case by using contingency fees are banned from doing so. The ban of moonlighting, or having another profession? This also favors those who can use family connections to catapult their reputation and enter the top tiers of the profession quickly. It limits the options of others without these connections to be academics or start their own business, etc. on the side, while they slowly build their reputation in court during the same period. Finally, he argues that restrictions on the size and nature of the law firm in India mean that they are more likely to be family dominated, and so less professional and meritocratic.

All these bar council rules might have been well-intentioned, and several may clearly have benefits, but it seems clear to me that the Bar Council has likely not taken into account these unintended negative consequences. This is in part because of the rather insular nature of the Bar Council (those who couldn't break into the profession because of the above mentioned barriers aren't going to be leading it and have a chance to reform the rules). Narang argues that there needs to be a rethink of the composition of the Bar Council, or at least those who make its rules, to make sure a more diverse set of interests are represented and to avoid regulatory capture.

I couldn't agree more. My limited experience with the Bar Council's regulation of Indian legal education is similar (and deserves a separate post). Essentially, it is a story of well-intended regulation having unintended and deleterious consequences because the rule making process is not carried out by a body that is representational enough or that receives (or actively seeks out) enough critical feedback.