16 March 2021
In Kalpana Mehta v Union of India (‘Kalpana Mehta judgment’)[1], a Constitution Bench of the Supreme Court (‘SC’) pronounced a detailed judgment on whether Courts can place reliance on the Report of a Parliamentary Standing Committee (‘PSC’). The SC also examined whether the factual observations made in a PSC Report can be contested or challenged by the parties, during a judicial proceeding.
This decision arose from a referral order issued by a two-judge bench of the SC. The two-judge bench took the view that this was a ‘substantial question of law’ – that should be adjudicated by a Constitution Bench in accordance with Article 145(3) of the Constitution. While the Constitution Bench took a unanimous view, three separate concurring opinions were issued by Justice Dipak Misra, Justice Dr. D Y Chandrachud and Justice Ashok Bhushan.
In this blog, we have examined the common conclusions of the Constitution Bench, and have highlighted the relevance of this important judgment from a corporate law perspective.
The Kalpana Mehta judgment – common conclusions
1. Reliance on PSC Reports as ‘external aids’ for statutory interpretation.
The Constitution Bench held that the Court can rely on a PSC Report as an ‘external aid’ for statutory interpretation. When the words of a statute are ambiguous, a PSC Report serves as an ‘external aid’ to interpret a statutory provision.
It was held that a PSC Report can be used to evaluate the historical background of a law, or the nature of the problem that a statute sought to cure. A PSC Report has persuasive value while resolving an ambiguity in the wording of a statutory provision.
The Court also agreed with the conclusions of two earlier Constitution Bench decisions – in R.S. Nayak v. A.R. Antulay (1984)[2], and State of Mysore v. R.V. Bidap (1974)[3]. In both these decisions, it was held that the reports and recommendations of Committees/Commissions which preceded the enactment of a statute can be used as ‘external aids’ to interpret the meaning of ambiguous words in a statutory provision. It was also clarified that such reports cannot be decisive, and the Court is free to arrive at a different conclusion.
These decisions also expressed disagreement with the approach adopted by British Courts – which had on many occasions taken a view that parliamentary materials are not legitimate tools of statutory interpretation. In Antulay’s case (1984) – the SC noted that across multiple jurisdictions, there was a growing trend of using committee reports as a tool for statutory interpretation, and even British Courts had begun reversing their earlier position.
It is interesting to note that the decision in Antulay’s case had already settled the legal position – by concluding that committee reports can be used as external aids of statutory interpretation. To this extent, there was no ‘substantial question of law’ that required a reference to another Constitution Bench.
2. Reliance on PSC Reports is not a breach of parliamentary privilege.
It was held that mere reliance on a PSC Report does not constitute a breach of parliamentary privilege under Article 105 of the Constitution, as the Report is a document available in the public domain. It was also held that no Member of Parliament can be made liable for any statements made before a ‘Select Committee’ or a ‘Standing Committee’ of Parliament.
3. A PSC Report cannot be independently challenged before the Court.
The Court noted that as a PSC Report was not binding in nature, it cannot be independently challenged before a Court. The PSC Report cannot be subjected to judicial review. In accordance with the doctrine of separation of powers, a party cannot independently challenge any observation made in a PSC Report.
4. The Court is not bound to agree with the factual findings given in a PSC Report.
The Court referred to Section 57(4) of the Indian Evidence Act, 1872 (‘Evidence Act’) to state that a Court can take ‘judicial notice’ of a PSC Report. This Report shall also be admissible under Section 74 of the Evidence Act, as it is a ‘public document’. But, the mere fact that a document is admissible as evidence would not automatically lead to a presumption that the contents of the document are accurate.
In other words, although a PSC Report is admissible as evidence, the Court is not bound by any factual observation or finding made in the PSC Report. The Court can arrive at its own factual finding based on the evidence adduced by the parties. The Bench noted that especially in situations where an issue of fact is contentious, the Court can arrive at its own findings based on the other evidence produced by the parties.
Hence, while a PSC Report cannot be independently challenged before a Court, the Court is also not bound by any of its findings.
5. The parties to a judicial proceeding are also not bound by the factual findings given in the PSC Report.
While the parties to a judicial proceeding cannot independently challenge the factual findings given in a PSC Report, the findings also do not have any binding value between the parties. The parties can independently adduce evidence before the Court, and are not bound by the findings of the PSC. Hence, along with the Court, even the parties to a judicial proceeding are not bound to accept any factual findings made in a PSC Report.
When a factual finding of a PSC Report is contentious, the petitioner or respondent can independently collect the facts from different sources, and produce such facts by way of affidavits.
Relevance of the Kalpana Mehta judgment from a corporate law perspective
While the Kalpana Mehta judgment specifically dealt with PSC Reports, it also has relevance in the context of various Committees set-up by regulators – such as the Ministry of Corporate Affairs (‘MCA’), SEBI and RBI. These regulators have appointed a number of Committees and Working Groups for suggesting legislative amendments to the Companies Act, 2013 (‘2013 Act’), LODR, Takeover Code, PIT Regulations etc.
In accordance with the Kalpana Mehta judgment, the Reports submitted by such Committees/Working Groups shall have persuasive value while interpreting a statutory provision. For instance, the Report of the Company Law Committee, 2016 (‘CLC 2016’) shall have persuasive value while interpreting any amendment made to the 2013 Act, via the Companies (Amendment) Act, 2017.
The observations made in the CLC 2016 Report shall have persuasive value while examining the objective behind any of the amendments made, and can be referred for the purpose of resolving any ambiguity in the wording of a provision. The relevance of the Report shall only be persuasive, as an ‘external aid’ of statutory interpretation.
In accordance with the spirit of the Kalpana Mehta judgment, two other conclusions can also be drawn from such Reports submitted by Committees appointed by regulators:
-
The Court is not bound by any factual finding or observations made in the Committee Report. The Court can arrive at its own independent finding based on the evidence adduced by the parties.
-
The parties to a judicial proceeding are also not bound by any factual findings or observations made by the Committee. The parties are free to independently adduce evidence on any issue of fact which is contentious.
Concluding Thoughts
The Kalpana Mehta judgment assumes relevance as Committee Reports are frequently used as a tool for statutory interpretation. As noted in A.R. Antulay’s case – Courts in multiple jurisdictions across the world have been relying on Committee Reports for resolving ambiguity in statutory provisions.
Even UK Courts have reversed the strict legal position they had adopted earlier -and have begun relying on parliamentary material for interpreting statutes. For instance, in Pepper v. Hart[4], the House of Lords held that reference can be made to parliamentary materials and Law Commission proposals for resolving ambiguity in statutory provisions.
For further information, please contact:
Bharat Vasani, Partner, Cyril Amarchand Mangaldas
bharat.vasani@cyrilshroff.com
[1] Kalpana Mehta v. Union of India, AIR 2018 SC 2493.
[2] R.S. Nayak v. A.R. Antulay, (1984) 2 SCC 183.
[3] State of Mysore v. R.V. Bidap, (1974) 3 SCC 337.
[4] Pepper v. Hart, [1993] AC 593, [1993] 1 All ER 42.
