Editorials/Opinions Analysis For UPSC 07 April 2023 

Contents:

1. Supreme Court Stand on the Sealed Cover Jurisprudence
2. A pragmatic move by RBI

Supreme Court Stand on the Sealed Cover Jurisprudence

Context:

The Supreme Court of India recently set aside the denial of broadcasting permission to Malayalam channel MediaOne.

Relevance:

GS II- Executive & Judiciary

Dimensions of the Article:

1. Denial of security clearance to MediaOne
2. Verdict of Supreme Court
3. Aims of Limiting procedural guarantees
4. What is sealed cover jurisprudence?
5. When has it been done in the past?
6. Judicial Stand on the Sealed Cover Jurisprudence
7. Why is Sealed Cover Jurisprudence a concern?
8. Conclusion

Denial of security clearance to MediaOne:

• The Supreme Court has set aside the Centre’s decision to refuse the broadcasting license renewal of Malayalam news channel MediaOne citing reasons of National Security.
• Reasons:
  • The media channel was denied security clearance based on its alleged anti-establishment
  • It was also accused that its shareholders have links with the JamaateIslami
• The Judgement protects the media against arbitrary action and bars the use of undisclosed national security considerations as a pretext to shut down an outlet.
• The Court has struck a blow for media freedom by ruling that the government could not term critical coverage or airing of critical opinions as “antiestablishment”, and so initiate action.
• It said: “The use of such a terminology… represents an expectation that the press must support the establishment.” The denial of security clearance to a media channel on the basis of views it was entitled to hold “produces a chilling effect on free speech and particularly on press freedom”.

Verdict of Supreme Court:

• The Court has rightly found fault with the approach of the Kerala High Court, which had accepted material in a sealed cover on why the Home Ministry denied security clearance to the channel.
• The top court noted the failure of the Higt Court to explain how it felt the denial of security clearance was justified even after noting that the gravity of the issue was not discernible from the files.
• Significance of the Judgement:
  • It seeks to end the casual resort to ‘sealed cover procedure’ by courts by suggesting an alternative approach to state claims of immunity from publication in public interest.
  • As per the principle of Natural Justice, relevant material must be disclosed to the affected party, ensuring that the right to appeal can be effectively exercised.

Aims of Limiting procedural guarantees:

• The court pointed out that confidentiality and national security could be legitimate aims for the purpose of limiting procedural guarantees.
  • A blanket immunity from disclosure of all reports could not be granted.
  • The validity of the involvement of such considerations must be assessed by the use of relevant tests.
  • It held that if nondisclosure is in the interest of national security, a reasonable person would come to the same inference from it.
  • In a bid to balance the public interest in nondisclosure with the one in ensuring a fair hearing, the Court has mooted alternatives such as redacting sensitive portions and providing a gist of the material given to the affected party.
  • The Court could also appoint an impartial adviser who could be given access to the material whenever the state claims immunity from disclosure.

What is sealed cover jurisprudence? 

• It is a practice used by the Supreme Court and sometimes lower courts, of asking for or accepting information from government agencies in sealed envelopes that can only be accessed by judges.
• While a specific law does not define the doctrine of sealed cover, the Supreme Court derives its power to use it from Rule 7 of order XIII of the Supreme Court Rules and Section 123 of the Indian Evidence Act of 1872.
• It is stated under the said rule that if the Chief Justice or court directs certain information to be kept under sealed cover or considers it of confidential nature, no party would be allowed access to the contents of such information, except if the Chief Justice himself orders that the opposite party be allowed to access it.
• It also mentions that information can be kept confidential if its publication is not considered to be in the interest of the public.
• As for the Evidence Act, official unpublished documents relating to state affairs are protected and a public officer cannot be compelled to disclose such documents.
• Other instances where information may be sought in secrecy or confidence is when its publication impedes an ongoing investigation, such as details which are part of the police’s case diary; or breaches the privacy of an individual.

When has it been done in the past? 

 Rafale fighter jet deal,

• A Bench headed by Chief Justice Ranjan Gogoi in 2018, had asked the Centre to submit details related to deal’s decision making and pricing in a sealed cover. T
• This was done as the Centre had contended that such details were subject to the Official Secrets Act and Secrecy clauses in the deal.

National Register of Citizens (NRC) in Assam,

• The supreme court mandated coordinator of the NRC, Prateek Hajela, was asked by the apex court to submit period reports in sealed cover, which could neither be accessed by the government nor the petitioners.

In the 2014 BCCI reforms case

• The probe committee of the cricket body had submitted its report to the Supreme Court in a sealed envelope, asking it not to make public the names of nine cricketers who were suspected of a match and spot fixing scam.

Bhima Koregaon case,

• Activists were arrested under the Unlawful Activities Prevention Act, the Supreme Court had relied on information submitted by the Maharashtra police in a sealed cover.

Judicial Stand on the Sealed Cover Jurisprudence

• Sealed Cover Jurisprudence has come under heavy criticism from the courts themselves.
• Supreme Court has declared that Judicial Review is the Basic Feature of the Constitution and that if executive is restricting a fundamental right then it must pass the test of reasonable restrictions. This principle is the bedrock of Judicial Review.
• This has been iterated in the Minerva Mills Case and L. Chandra Kumar vs. Union of India Case.
• Legality of an action which infringes upon a fundamental right needs to be examined from the lens of proportionality. This has been adopted in the Modern Dental College Case and was reiterated in the Puttaswamy Judgment.
• However, High Courts have sidelined these principles and have relied on Digi Cable Network Case where the court declared that Principle of Natural Justice may be overlooked in the matters concerning national security.
• Supreme Court with its recent judgment in the Pegasus Case has stated that State can’t be given a free run every time the matter of National Security is raised.
• It also said that ‘National Security can’t be the bugbear that judiciary shies away from, by virtue of its mere mentioning.’
• Several cases such as the INX Media Case have prompted Supreme Court to take corrective action as High Courts have preferred the path of Sealed Cover Jurisprudence.

Why is Sealed Cover Jurisprudence a concern?

• Violates Principle of Natural Justice.
• Chilling effect on Judicial Review and its principles. Eg. Test of Proportionality and Reasonable Restrictions.
• Hampers Right to Freedom of Speech and Expression and also the Rights to Association, Occupation and Business.
• Gives blanket immunity to the state in matters of National Security without scrutiny.
• Application of previous judgments in the form of a statute.
• Curbing dissent and reactionary voices in the democracy.

Conclusion:

Hence, the Supreme Court strikes a blow for both media freedom and fair procedure

A Pragmatic Move By RBI

Context:

The Reserve Bank of India holds increase in the policy rate surprises most banks and economy analysts.

Relevance:

GS III- Indian Economy

Dimensions of the Article:

1. RBI pause repo rate hike
2. Reasons for the pause in policy rate
3. Instruments of Monetary Policy
4. About Monetary Policy Committee (MPC)

RBI pause repo rate hike:

• The pause in repo rate hikes comes after the RBI increased the key interest rates six times since May last year.
• The consensus view among analysts is that this could well mark the end of the current rate tightening cycle.
• RBI governor Shaktikanta Das stressed that the pause was “this meeting only” — and that MPC could start cutting rates from April 2024.
• The pause has been triggered by turbulence in the global macroeconomic and financial climate.

Reasons for the pause in policy rate:

1. Inflation:
   • While it was over 6%, the upper limit of RBI’s tolerance band in February (at 6.44%), it is expected to come down this year.
   • MPC’s resolution expects it to be 5.2% for the entire year (2023-24), and 5.1%, 5.4%, 5.4%, and 5.2% in each of the four quarters.
   • Increasing Crude oil prices and than expected winter crop on account of recent weather events could aggravate inflation.
2. Growth:
   • MPC marginally increased its growth forecast for 2023-24 from 6.4% to 6.5%, with an estimate of 7.8%, 6.2%, 6.1%, and 5.9% across the four quarters.
   • A great barrier to this are all global — geopolitical tensions and a churn in the global financial market.
3. Financial Stability:
   • Recent developments in US and European banks have sent shock waves through the global financial system, raising prospects of a 2008-style global financial crisis.
4. Apart from these reasons, a rapid rate tightening since May has increased interest rate by 2.5 percentage points. It has affected retail borrowers, hence the pause should provide some relief.  

Instruments of Monetary Policy

There are several direct and indirect instruments that are used for implementing monetary policy.

1. Repo rate
   • The central bank has retained the repo rate – the rate at which the RBI lends funds to banks – at 4 per cent to boost growth.
   • This means banks won’t hike lending and deposit rates and EMIs on loans will remain unchanged.
   • The RBI has reduced key policy repo rate by 115 bps to 4.0 per cent and reverse repo rates by 155 bps to 3.35 per cent since February 2020.
   • Banks had since then reduced their interest rates (both deposits and lending) significantly.
   • The large size of the FY23 market borrowings, and with no progress on the inclusion of Indian debt market in the global bond indices, might have prompted the RBI to delay the liquidity normalisation in an effort to keep the cost of large borrowings programme under control, said an analyst.
   • It also retained the marginal standing facility (MSF) rate, and kept the Bank Rate unchanged at 4.25 per cent.

2. Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF.
3. Liquidity Adjustment Facility (LAF): The LAF consists of overnight as well as term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected under fine-tuning variable rate repo auctions of range of tenors. The aim of term repo is to help develop the inter-bank term money market, which in turn can set market based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy. The Reserve Bank also conducts variable interest rate reverse repo auctions, as necessitated under the market conditions.
4. Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.
5. Corridor: The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.
6. Bank Rate: It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India Act, 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes.
7. Cash Reserve Ratio (CRR): The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify from time to time in the Gazette of India.
8. Statutory Liquidity Ratio (SLR): The share of NDTL that a bank is required to maintain in safe and liquid assets, such as, unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector.
9. Open Market Operations (OMOs): These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.
10. Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank.

About Monetary Policy Committee (MPC)

• The Monetary Policy Committee (MPC) is the body of the RBI, headed by the Governor, responsible for taking the important monetary policy decisions about setting the repo rate.
• Repo rate is ‘the policy instrument’ in monetary policy that helps to realize the set inflation target by the RBI (at present 4%).

Membership of the MPC

• The Monetary Policy Committee (MPC) is formed under the RBI with six members.
• Three of the members are from the RBI while the other three members are appointed by the government.
• Members from the RBI are the Governor who is the chairman of the MPC, a Deputy Governor and one officer of the RBI.
• The government members are appointed by the Centre on the recommendations of a search-cum-selection committee which is to be headed by the Cabinet Secretary.

Objectives of the MPC

Monetary Policy was implemented with an initiative to provide reasonable price stability, high employment, and a faster economic growth rate.

The major four objectives of the Monetary Policy are mentioned below:

• To stabilize the business cycle.
• To provide reasonable price stability.
• To provide faster economic growth.
• Exchange Rate Stability.