To commemorate India’s 76th anniversary of its independence, one has to ask: how has the Indian Constitution shaped modern India’s legal identity? And with the Indian Constitution being deemed to be a living document, is its adaptability able to address contemporary challenges?
According to Richa Roy, Partner – Cyril Amarchand Mangaldas, “In its early years, the Indian Constitution was amended several times and that reflects its adaptability. It was an interpretation by the Supreme Court that created the doctrine of ‘basic structure’, which outlined that while the Constitution can be amended by the Parliament, there are certain principles considered sacrosanct, like federalism and separation of powers. And this ability to be malleable and be a living document deeply rooted in its original principles is something that has allowed the Indian constitution and legislation that has emerged from it to respond to the dynamic needs of an emerging nation”.
According to Yash Johri, Associate – Cyril Amarchand Mangaldas, “The average lifespan of written constitutions since 1789 is 17 years and our Constitution is already in its 77th year. This is because we have a truly imagined Constitution after spending 3 years framing it with the framers giving us a civic culture. With 395 articles, it’s one of the longest Constitutions. And at a time when the Partition had taken place, there was an impetus to divide people on the basis of groups or identities. But, at that particular point, when the burning embers of the Partition were still there, our leaders had the foresight to let the politics of a future day formulate identities, as we’re seeing it play out in today’s day and time”.
Roy remarks, “We were a fairly poor nation suffering from colonial excesses that had hollowed out our economy, so we had an important task before us to rebuild it. At that stage, the best avenue to do this was the State and this was the prevailing economic consensus that the commanding economies of the State was what could recreate the economy. So, in that context, we had a range of legislation that gave the power to the State to build important industries, allowing us to build important economic institutions and centers of excellence, the benefits of which we continue to reap today. So, that was Phase I. As we moved forward, there was private enterprise being exploited by nationalizing it. While there have been mixed reviews about the manner in which important industries were nationalized, there’s a lot of data that demonstrates that this may have been required. For instance, the nationalization of banks, which took place in the 1970s, may have led to a deepening of financial inclusion and allowed banks to penetrate through the hinterland of the country. So, that was Phase II. In 1991, there was liberalization and private enterprise and foreign investments were welcomed again in Phase III”.
And what about the IBC, which is seen as transformative legislation in India and which was introduced in 2016?
Roy declares, “It’s no secret that we were facing an NPA crisis at the time and so, we needed a framework to help resolve that. Prior to the IBC, there was a patchwork of legislation that dealt with the recovery of debt, but no one law to help resolve stress. So, what the IBC did was have one cohesive framework for the resolution of debt and one of the most important changes that it engendered was a creditor-in-control model. So far, there was a cliche that there are sick companies, but no sick promoters and that promoters had felt that they had a divine right to be in control of their companies despite having defaulted on their debt or not having paid their workers for long periods of time. The IBC changed that in one fell swoop and it said that the moment one makes a default, they could be taken into insolvency and at that very stage, a representative of the creditors would be in charge of the company, not the promoters. This engendered a sense of corporate accountability and instilled a sense of credit discipline. Another important thing the IBC did was treat all the creditors alike and it was a market-based solution, where potential bidders could try and revive the company and creditors would evaluate the best plan, vote on that and that would get approved by the NCLT. The IBC is, also, symptomatic of how the courts, the regulators and the legislature can come together to implement a really transformative reform”.
And what about the growing traction of climate litigation, which seems to be emerging as a powerful tool for environmental protection?
Johri states, “The cause of action for anyone bringing a suit against a company will be as to that company’s or the Board of Directors’ duty of care towards the party affected. But, the big issue, at the moment, that people are grappling with is how one could attribute harm if there’s climate change or if water levels are rising or if coastal communities are affected and how that could be attributed to a company… There are larger attribution challenges as to when one goes to court. There’s something called ‘standing’, where one has to show they’ve been negatively affected by something, so there’s a whole science developing as to how climate change actually affected a particular person or community and how they can bring an action against a particular corporate. So, this is still a developing field, but I’m sure we’ll see more progress on this in the future”.
Watch the entire interaction here:
