24 June, 2024

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Can Courts Review Domestic Debt Restructuring?

By Jayampathy Wickramaratne

Dr Jayampathy Wickramaratne PC

President Ranil Wickremesinghe‘s statement that the Government would not heed orders or advice from any other party except Parliament with regard to the debt optimisation measures or domestic debt restructuring (DDR) has been condemned by Opposition parties, civil society groups, and lawyers’ groups as an attempt to undermine the judiciary. Lawyers for Democracy stated that “for one arm of government, which has considerable power in the form of an executive presidency, to make public statements that deny the power of the courts to review any complaint in relation to executive or administrative action is an abuse of power.”

The Cabinet of Ministers decided on the DDR measures on 28 June 2023, clearly a decision of the executive. Legislation would be needed to give effect to some of the measures. Already, a Bill for the amendment of the Inland Revenue Act has been presented to Parliament on 08 August 2023. It proposes changes to the tax rate for employees’ trust funds, provident, pension or gratuity funds and termination funds. Citizens would have the right to challenge the constitutionality of the Bill, including its impact on fundamental rights, within two weeks of its presentation. 

On 01 July 2023, Parliament resolved to “grant all requisite approvals to implement this arrangement of domestic public debt optimisation”. The resolution was only an endorsement of the decision without any legal consequences.  

The Cabinet decision itself is open to challenge under the fundamental rights jurisdiction of the Supreme Court. Several cases have been filed. Leave to proceed was refused in two cases.

On 09 August 2023, upon a matter of privilege being raised by Minister Harin Fernando, Speaker Mahinda Yapa Abeywardena made an order that no court is empowered to issue orders or judgments of any nature against the resolution passed by Parliament. Any such order or judgment of courts would amount to a violation of item 1 of Part B of the Parliament (Powers & Privileges) Act. Item 1 reads: ‘The wilful failure or refusal to obey any order or resolution of Parliament under this Act, or any order of the President or Speaker or any member which is duly made under this Act.’

It might straightaway be said that a judicial ruling on whether a Cabinet decision is constitutional or not is not a failure or refusal to obey any order or resolution of Parliament. In any event, the resolution passed on 01 July 2023 was only an endorsement of the Cabinet decision and was superfluous. 

The Speaker relied on Article 148 of the Constitution, which says that “Parliament shall have full control over public finance”, but did not elaborate. How does Parliament exercise such control? The same Article states that “no tax, rate or any other levy shall be imposed by any local authority or any other public authority, except by or under the authority of a law passed by Parliament or of any existing law.” This provision has no application to the instant issue as Parliament has not yet made any law on DDR. By Article 149(1), the funds of the Republic not allocated by law to specific purposes shall form one Consolidated Fund into which shall be paid the produce of all taxes, imposts, rates and duties and all other revenues and receipts of the Republic not allocated to specific purposes. Article 150 provides that no sum may be withdrawn from the Consolidated Fund except under a warrant issued by the Minister of Finance. No such warrant shall be issued unless the sum has by resolution of Parliament or by any law been granted for specified public services for the financial year during which the withdrawal is to take place or is otherwise lawfully charged on the Consolidated Fund. There are special provisions for the President to authorise expenditure if Parliament has been dissolved before the Budget has been passed and when expenditure is necessary to conduct a Parliamentary general election. Where expenditure has not been provided for in the Budget or any other law, such expenditure is authorised by Parliament by a supplementary estimate. Clearly, the resolution passed on 01 July 2023 does not come with any of the above constitutional provisions.

In any event, a Parliamentary resolution does not have the protection that Article 80(3) offers to a law passed by Parliament, namely that “where a Bill becomes law upon the certificate of the President or the Speaker, as the case may be being endorsed thereon, 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.” If a Parliamentary resolution cannot be challenged on the ground that it violates the Constitution, citizens would be left without a remedy. What, then, of the supremacy of the Constitution? 

For example, Article 68(1) provides that the salaries of Ministers and Members of Parliament be determined by Parliament by law or resolution. If a law is to be passed, citizens could challenge it at the Bill stage. Could a resolution arbitrarily increasing the salaries of Members of Parliament be challenged? 

This issue arose in Lanka Railway Trade Union v. Wickramanayake (SC FR 29/2007, SC Minutes 30.01.2007), a fundamental rights application challenging a more than 100% salary increase to Members of Parliament. The case was reported in the Daily Mirror on 31 January 2007 and referred to by Justice Mark Fernando in ‘Defeating the Dragon: Weapons for Fighting Corruption‘, a paper he wrote while in retirement. A preliminary objection was taken on behalf of the Attorney-General that ‘although the increase did shock the conscience of everybody, the question was one of law and not of morality’, and the Supreme Court had no jurisdiction to review the resolution passed by Parliament. Leave to proceed was refused, but with the presiding lady Judge dissenting as she was of the view that there was an arguable point. 

Justice Fernando pointed out that had Parliament attempted to fix remuneration by law, a Bill for that purpose would have to be published in the Gazette, citizens would have the right to challenge the Bill, and the Supreme Court would have to make a determination with reasons given. The Bill would have to be passed in accordance with the determination, and once passed, the Act could not be challenged. “A resolution fixing remuneration does not have any of those safeguards, and correspondingly does not enjoy the immunity from challenge which an Act of Parliament enjoys. A resolution under Article 68 is therefore a form of Parliamentary action inferior to legislation, and enjoys no immunity from legislative scrutiny,” Justice Fernando opined. He also emphasised the necessity for the Supreme Court to give reasons for refusing leave to proceed with a fundamental rights application, as “refusing leave is a final decision – an unequivocal decision that there is no merit at all in the petitioner’s case; that he has failed to make out even an arguable case.”

Courts in Sri Lanka have struck down actions of Parliament not amounting to legislation when such actions were violative of the law. The Industrial Disputes Act, as originally enacted, did not prescribe a time limit for a workman to file an application in the Labour Tribunal. The Minister of Labour, purporting to act under the rule-making powers conferred on him by certain sections of the Industrial Disputes Act, made a regulation fixing the time limit at three months of the date of termination of the services of a workman. The regulation was approved by Parliament. 

The validity of the regulation was challenged in the 1968 case of Ram Banda v. River Valley Development Board (71 NLR 25). It was submitted on behalf of the respondent that the requirement of approval by Parliament rendered the regulations so approved tantamount to an Act of Parliament itself, the validity of which is not justiciable by the courts. It was further submitted that such regulations are law because Parliament says they are law and that they draw their validity not from the law-making power of the authority which made them but from the fact of Parliamentary approval. Justice Weeramantry held that section 39(2) of the Industrial Disputes Act which provides that every regulation made by the Minister should be placed before Parliament for approval and that, on such approval and publication in the Gazette, it shall be “as valid and effectual as though it were herein enacted” did not confer validity on a regulation which is outside the scope of the enabling powers. “The mere passage of such regulation through Parliament does not give it the imprimatur in such a way as to remove it, through the operation of section 39 (2), from the purview of the courts.”

In 1971, Ram Banda v. River Valley Development Board was overruled by the majority of a three-member Bench of the Supreme Court in River Valleys Development Board v. Sheriff (74 NLR 505). The latter decision was, in turn, overruled in 1973 by the then Court of Appeal, which was the highest court of the land at that time after appeals to the Privy Council were abolished, in Ceylon Workers’ Congress v. Superintendent, Beragala Estate (76 NLR 1). Restoring the decision in Ram Banda, the Court of Appeal held that the provision in section 39(2) that every regulation made by the Minister and approved by Parliament shall be valid and effectual as though it was enacted in the principal Act cannot preclude the courts from examining the validity of such a regulation. 

If, as our courts have held, Parliamentary approval of a regulation does not prevent the validity of a regulation from being reviewed, it is not necessary to labour the point that the resolution passed by Parliament on 01 July 2023 merely endorsing the Cabinet decision on DDR cannot prevent the courts from reviewing the validity of the Cabinet decision in a fundamental rights application. 

Speaker Abeywardena also relied on a ruling given by former Speaker Anura Bandaranaike in the context of the Supreme Court’s interim order restraining the Speaker from appointing a select committee to inquire into allegations against the then Chief Justice, Sarath N. Silva. Relying heavily on the provisions of the Parliament (Powers and Privileges) Act, Speaker Bandaranaike stated that the Supreme Court had, in several decisions, laid down the principle that it had no jurisdiction to entertain an application under Article 126 if the alleged infringement is not by executive or administrative action.

The issue of whether appointing such a select committee amounted to executive or administrative action was later decided by a five-member Bench of the Supreme Court in Chandraguptha Thenuwara v. Chamal Rajapakse (SC FR 665–7, 672/2012, SCM 24 March 2014) a case on the impeachment of Chief Justice Shirani Bandaranayake. Marsoof J, with Ekanayake, Hettige, Eva Wanasundera, and Marasinghe JJ agreeing, stated that all organs of government, including the courts and other tribunals or institutions administering justice, must always bear in mind Article 4(d) of the Constitution, which expressly provides that “the fundamental rights which are by the Constitution declared and recognized shall be respected, secured and advanced by all the organs of government and shall not be abridged, restricted or denied, save in the manner and to the extent hereinafter provided.” The learned Judge came to the following finding: “It is the solemn duty of this Court to honour the trust placed on it to respect, secure and advance the fundamental rights enshrined in the Constitution, and in doing so, I have examined very carefully all the provisions of the Constitution and principles of law referred to by learned Counsel in the course of submissions. Having done so, I am inclined to the view that the impugned act of the Speaker of the House of Parliament to appoint a Parliamentary Select Committee was indeed ‘executive or administrative action’ within the meaning of Article 126 of the Constitution.” 

Marsoof J also held that it was manifest that the legislative powers of Parliament are dealt with in Article 75 of the Constitution, which along with certain other procedural and ancillary provisions, are contained in Chapter XI of the Constitution, which is headed ‘The Legislature’. There is no reference in that entire Chapter to any ‘Select Committee’ nor is there any such reference in Article 107(2) and (3), which deal with the impeachment of a Judge of a superior court. The writer submits that the judgment fortifies the position that only a law passed by Parliament is protected by Article 80(3). A resolution of Parliament does not have the same protection and is, therefore, reviewable by the courts.

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Latest comments

  • 4
    0

    The issue is not just domestic debt restructuring, it’s much more than that. Ranil openly threatened the Judiciary and the ever-constitution-violating Speaker followed through. This is a dangerous situation. The pillars of power are the Presidency, the Parliament (not the Speaker), and the Judiciary. Constitution is very clear on the powers of these three powers and also is clearly stated the people are more powerful than all these three powers.

    What the opposition parties should have done was start a signature campaign to censure the President and the Speaker. This was not done. Unfortunately, the opposition is not progressive at all. Opposition is more interested in attacking each other without joining hands and campaigning against the illegal activities and decisions of the Police, Judiciary, President, Speaker, and Ministers.

  • 0
    0

    President that the Government would not heed orders or advice from any other party except Parliament
    The only place where Ranil can get approval is, the present parliament,
    The judiciary he cannot approach any country regarding money matter need people to voted president to handle it countries money, Judiciary approved his president for a certain period but Ranil is prolonging them, When it comes to this debt restructuring I believe The judiciary will think to bring a civilized society, they need an independent judiciary will bring the right policies that. That’s why Ranil prefers vote from parliament

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