Volume 29 - Issue 13 :: Jun. 30-Jul. 13, 2012INDIA'S NATIONAL MAGAZINE
from the publishers of THE HINDU
V.VENKATESAN
Two legal luminaries try to present Nani Palkhivala’s illustrious legal career in the form of a book.
Nani Ardeshir Palkhivala, who passed away in 2002, was an outstanding lawyer, an expert on taxation, and a diplomat. Not much is known, however, about his humble origins, perseverance against all odds in the early days of his profession, and contribution to the development of law and society. The book under review, authored by two of his eminent admirers, is, no doubt, a hagiography. But that is not a reason for a critical reader not to try to benefit from the book and also ask questions that the authors seem to have missed.
The book, intended to trace his legal journey, is a substantial contribution to the understanding of Palkhivala even though the authors, because of their awe and reverence for their subject, did not seek a balanced assessment of his world view.
Soli J. Sorabjee, former Attorney General of India, was at one time a junior to Palkhivala and assisted him in a number of cases, including the historic Kesavananda Bharati case. Arvind P. Datar, a Senior Advocate of the Madras High Court, is a trustee of the Palkhivala Foundation, Chennai, and a director of the Nani Palkhivala Arbitration Centre, Chennai.
Right at the outset, the authors identify the many paradoxes that dotted Palkhivala’s life: his meteoric rise as an advocate, lack of a privileged family background, absence of a godfather in the legal profession, lack of a degree from Oxford or Cambridge or any foreign university, not being a barrister (as was fashionable at that time), and handicap of a severe stammer in his childhood. How he overcame each of these obstacles must be lessons in self-improvement to any aspiring individual in any walk of life.
The authors set out to explain how Palkhivala reached the pinnacle of success in the legal profession in less than 20 years and sum it up in one word: practice. He worked harder and with greater speed than most of his contemporaries. His talent led him to believe, correctly, that the Income Tax Act lacked good books, and he had the competence, interest and energy to fill the void. What followed was a daily output of writing for four hours, early in his career, ably assisted by his brother, Behram, in the night, irrespective of his busy schedule as a lawyer during the day and the evening. The result, in the form of a book that ran into several editions in subsequent years, propelled him to the front ranks of his profession.
Young Palkhivala joined the chambers of Sir Jamshedji Kanga, like most other successful lawyers of his time (H.M. Seervai and Fali S. Nariman were others). Kanga had been the Advocate-General of the State of Bombay and had returned to private practice, appearing for income tax assessees. Palkhivala’s accounting knowledge and mastery of the income tax laws placed him in good stead in assisting Kanga. Considering that a good senior can make all the difference to the career of a young lawyer, a reader may be left to wonder why the authors do not think Kanga was Palkhivala’s godfather in the profession. Kanga had substantially reduced his practice, because of his age, by the time Palkhivala entered the profession.
Among his lawyering traits which inspired several lawyers, the book mentions two: giving examples in the course of submissions before the court as to what would happen if his point of view was not accepted by the court and showing that the stand taken by the opposing counsel would lead to unintended or absurd consequences. His style was persuasive and he almost never raised his voice or interrupted the other side. His felicity of expression made dry legal arguments very interesting and often left judges spellbound. To these, the authors add two personal qualities which made him different from others: he never indulged in gossip and never criticised people behind their backs.
Palkhivala was born on January 6, 1920. His surname, like many Parsi surnames, was based on the business carried on by his ancestors, who manufactured palkhis, or palanquins. Horse-driven carriages made palkhis redundant, but the family surname survived. Palkhivala’s father ran two laundries, which were renowned for superb quality and customer service. The family was not affluent, and the kind of background associated with easy professional success was missing at home.
Yet, Palkhivala and his two brothers gained by parental affection and interest, which made them claim later in their lives that they studied in school but were educated at home. Palkhivala was determined to get over his childhood stammer. His father made him run on the beach with an almond under his tongue. The authors guess that he, perhaps, took a cue from Demosthenes, who placed pebbles in his mouth and practised shouting at the waves to clear his stammer. They speculate that he may not have been such a great speaker if he had not had the stammer. Great achievements, they say, have often come from men and women who were driven to overcome insurmountable odds.
Palkhivala joined Kanga’s chambers in 1944. Within three years at the Bar, he had an annual income of Rs.60,000, the equivalent of more than Rs.50 lakh today, according to the authors. Within seven years of joining the Bar, he purchased a large flat of about 5,000 square feet at Commonwealth Building on Marine Drive, Bombay (now Mumbai). He lived there until the end of his life. With his increasing involvement with the Tata group of companies, his court appearances became less frequent after the 1970s, but he continued to appear in landmark cases. In his later years, he remarked that he was more interested in causes than in cases.
Considering that Palkhivala’s meteoric rise in the profession coincided with the final phase of the freedom struggle, which culminated in India gaining independence in 1947 and was followed by nation-building, what impact did it have on Palkhivala’s career graph? The authors may say that the book is not concerned with the issue at all as the focus is here on the cases that he fought in the courts. While such a claim would be perfectly justified, readers may still wonder whether the ambitious Palkhivala, who exploited every opportunity that unfolded to achieve faster professional growth than others, remained insulated from the historical and political events of the day. The inauguration of the new Constitution in 1950 did have an impact, with a sharp rise in the writ petitions before the High Courts and the Supreme Court testing the legal skills of lawyers like Palkhivala.
But the Palkhivala of the 1950s and the 1960s was a much changed man. He had views on almost every issue. On the subject of the Income Tax Act (ITA), Palkhivala, as the book shows, repeatedly protested against the chronic tinkering with the Act and lamented that it had been twisted completely out of shape. The avalanche of amendments only resulted in more litigation, which, according to Palkhivala, reflected tremendous public dissatisfaction with the quality of the law and of fiscal administration.
Relying on Palkhivala’s comments against frequent amendments of the ITA, the authors caution against the proposed Direct Taxes Code, which is likely to replace the ITA, 1961: “The new legislation is only going to make the law more complex, leaving the assessee confused and confounded.”
This is not surprising as one of the authors, Arvind P. Datar, has recently written opinion pieces in the media hailing the Supreme Court’s January 20 judgment quashing the Income Tax Department’s notice demanding tax on capital gains from Vodafone following its acquisition of 67 per cent controlling interest in Hutchison Essar Limited through an overseas transaction involving holding companies. Datar has also been very critical of the government’s move to retrospectively amend the ITA to remove the ambiguity that led to the Supreme Court’s judgment so that a fresh tax demand notice can be issued to Vodafone. The book reveals that Datar owes his intellectual debt to Palkhivala, and had Palkhivala been alive today, both Datar and he would have been on the same page on the Vodafone controversy.
But my interest in Palkhivala’s views on the issue goes beyond the Vodafone matter. I wanted to know how he might have interpreted the Supreme Court’s five-judge judgment in the McDowell case (1985), which critics said favoured the Income Tax Department’s efforts to nail ingenious tax avoidance mechanisms. However, the book disappoints, with even the Table of Cases making no mention of the McDowell case.
The book says that Palkhivala’s involvement in tax cases spanned five decades from 1945 to 1995. He gave his first annual post-Budget public speech in 1957, and continued to be a bitter critic of the avalanche of amendments and chronic tinkering with tax laws. The book has chapters titled “Income Tax Matters” and “Indirect Taxes”. With a little more research, the authors could include Palkhivala’s views on the McDowell case, if at all he had made his views public, in the book’s next edition. Or, perhaps, one could find some discussion of this case in the forthcoming 10th edition of Kanga and Palkhivala’s Law and Practice of Income Tax, being edited by Datar.
Nani Palkhivala. He could make dry legal arguments very interesting and often left judges spellbound. A 1978 photograph.
The book’s merit lies in bringing out many hitherto unknown snippets of information from the legal career of Palkhivala. Some of these will be of considerable interest to any reader.
The Kesavananda Bharati case of 1973 is credited with the Supreme Court’s laying down the principle that Parliament cannot amend the basic structure of the Constitution. The credit, in fact, is due to Palkhivala for ably articulating this view before the first 13-judge Bench. Again, when another Bench, headed by Chief Justice A.N. Ray, began to review the Kesavananda Bharati judgment, it was Palkhivala who made Justice Ray understand the futility of his exercise and dissolve the Bench within three days of its constitution.
Missed opportunity
The book shows that Palkhivala missed a rare opportunity to articulate the basic structure doctrine before the Supreme Court in 1965 in the Sajjan Singh case when two of the five judges of the Constitution Bench – Justices M. Hidayatullah and J.R. Mudholkar – came close to laying down the basic structure doctrine by holding that Parliament could not amend the fundamental rights.
Palkhivala missed his opportunity to argue before the Bench and tilt the balance in favour of the basic structure doctrine because he hated to wait for his turn. When he decided to come to New Delhi to argue the matter, the hearing was over. The result was that the country had to wait for eight more years to get the basic structure doctrine. The authors’ belief that Palkhivala had the ability to tilt by his arguments the balance of the Constitution Bench in 1965 may indeed be correct. Their reverence for Palkhivala stops them from suggesting that his impatience with the court’s norms and procedure could have been a negative trait in itself during the early part of his career.
When the Golak Nath case was heard by the Supreme Court’s 11-judge Bench in 1967, Palkhivala was held up in Geneva where he was arguing for the Union of India in an international dispute. The Golak Nath case was a precursor to the Kesavananda Bharati case insofar as the court laid down that Parliament could not amend the fundamental rights. Because of his prior engagement in Geneva, Palkhivala got only half a day to argue before the Golak Nath Bench, although the case was heard for several days. As a result, although Palkhivala explained the implied limitations on the amending power of Parliament, none of the judges of the Golak Nath Bench took note of his arguments in their judgments.
In the Kesavananda case, the Supreme Court, by a narrow majority of 7:6, held that the power of Parliament was not unlimited and that the amending power could not be used to alter the basic structure or the essential features of the Constitution. The role of Justice H.R. Khanna, who appears to have tilted the scales in favour of the majority in this case, has been the subject of interpretation by scholars. Some scholars hold the view that Justice Khanna did not support the purported majority view in this case.
The authors of the book mention that the majority in this case was not really 7:6. If Justice Khanna’s decision is vivisected carefully, one would find that the verdict is really 6.6:6.4! As the majority had by and large accepted Palkhivala’s arguments in this case, the authors could well have discussed in detail how Palkhivala interpreted the ratio of this judgment.
The book regrets Palkhivala’s critical failure to argue in the Habeas Corpus case during the Emergency. In this case, the Supreme Court, by a majority verdict of 4:1, held that no person who had been arrested and detained had the right to move a writ of habeas corpus before a High Court during the Emergency. Palkhivala was overconfident that the Supreme Court would not overrule seven High Courts which had delivered well-reasoned judgments in favour of the citizen’s rights during the Emergency. To him, it was an open-and-shut case, and nothing would be gained by his appearing before the Supreme Court. The result, however, stunned him. The authors believe that he ought to have appeared in the case, given that several persons had been detained without trial. The authors add, though, that it would be presumptuous to imagine that his presence would have made a decisive difference to the case as the judgment was clearly influenced by much that happened outside the courtroom.
One does not find a critical discussion in the book of Palkhivala’s views on the Supreme Court’s judgments in the Mandal case and the Election Commission’s case. In the Mandal case, he argued against reservation on the basis of caste. In the Election Commission case, he contended against the government’s proposal to make it a multi-member commission. History vindicates the Supreme Court’s rulings in both the cases, and it is clear that Palkhivala’s apprehensions were without basis.
The book includes in its appendices Palkhivala’s affidavit in the U.S. District Court, Southern District of New York, in the Bhopal gas tragedy case. In this affidavit, Palkhivala defended Union Carbide Corporation’s motion for dismissal on forum non conveniens grounds and opposed the activists’ plea that the Indian legal system was deficient and inadequate. The U.S. District Court accepted Palkhivala’s affidavit and deprived the survivors of the disaster an opportunity to litigate the case in the U.S. court to claim better compensation than what they could achieve from the Indian Supreme Court. The authors seem to have added this affidavit in the appendices as an afterthought as they did not consider it important enough to be discussed in the book. But it speaks for itself, and readers may well judge for themselves whether Palkhivala had sufficient understanding of tort law.
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