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Friday, 4 November 2011

It should allow some people to become less poor

On Thursday the Constitutional Court heard a case involving this balance. Slightly surprisingly, several of the judges appeared to be standing up for the rights of the landlord. Yes really. STEPHEN GROOTES was in the public gallery.

We at the Daily Maverick have a proud interest in the creation of capital. We like to discuss, think about and examine how wealth can be created. We believe, strongly, that part of the foundation to this process is property rights. This is why we have such a strong interest in the balance between the rights of landlords, and the rights of tenants. I, personally, believe that this balance is currently heavily tilted towards tenants, in a way that is destructive to the rental market. As a result, there is not enough low-cost housing.

It's a case that seems to directly pit the right of a landlord to seek profit against the right of a tenant to adequate housing. The landlord is Aengus Lifestyle Properties. It owns, among other things, some buildings in the Joburg CBD. The applicants are a group of around 17 (I say "around" because there's a bit of confusion around how many people are actually involved in this case) people who have been renting their flats for between four and 17 years. The landlord decided it needed to make more money from its properties. Thus it terminated the renters' leases, using the termination clause in the contract it had with them. The renters went to court, lost, went to Bloemfontein, lost, and then had their day on Constitution Hill.

On the face of it, it would seem incredibly heartless to turf people out simply to make more money. Of course, it's far more complicated than that. For a start, there are agreements in place. Then there's the fact that it would be impossible to ever improve the inner city if no one is ever allowed to be evicted. And then there's the immortal South African question (for us filthy capitalists, at any rate), do the rich have rights too?

The judges were strongly engaged in his. The advocate for the renters, Daniel Berger, had a torrid morning. At one point it seemed almost like the legal equivalent of WWF tag-teaming, as judges would line up to punch through questions. Zac Yacoob wanted to know whether a clause to terminate the contract was specified in the contract or not. Then he demanded whether the ground on which the landlord relies (i.e.to cancel the contract simply to put up the rent) was specified. Berger replied that “there can't simply be a termination clause, and thus I'm using the right to terminate the contract because there's a termination clause", when the real motivation is to put up the rent by 100%.

The ground for termination must be because I want to increase the rent by 100%, he argued. Oh really, said Yacoob, "why is the motive relevant, where does the legislature say that the motive is relevant?” And while Berger was still chewing on that, he followed up with the sucker punch, what if the "termination occurred purely without the landlord disclosing the ground"? Berger responded with "we say the landlord can be called upon to disclose his reasons.”

It was clear Berger's clients had a lot to do to convince the judges here. But the main issue was still to come. It was Judge Edwin Cameron, along with Deputy Chief Justice Dikgang Moseneke who kept returning to it. They are very worried about what they call the "social cost" of these problems, and who should pay for it. In other words, why, they asked repeatedly, should the landlord pay to keep these people in this accommodation? It is the landlord who would suffer if these people were allowed to remain in these properties, and paying these (lower than they otherwise would be) rents.

This is a sticky point, because at the moment, there is another case, relating to exactly this issue, which is still being adjudicated by the court. It has already heard argument in the case of Blue Moonlight Properties vs. the City of Joburg, which relates to who should pay to accommodate people in these situations. If you haven't already guessed, Blue Moonlight Properties thinks it should be the City of Joburg; the City of Joburg would like to demur on that particular responsibility. As a result, these two cases are really interlinked.

But the judges weren't finished yet. There's some explanation required here, but stay with us, because it relates directly to South Africa as a developing country.

The Inner City Resources Centre is acting as an Amicus Curie in the case, and made an argument pretty much relating to why the tenants should be allowed to stay on in the properties. Their lawyer, Heidi Barnes, mentioned the situation in Germany and Canada, where, she said, there is no way these people would be evicted, simply because of the disproportionate effect this would have. They would be homeless so a company could make more money. But, said Cameron, we are different to those countries. Is there not, he asked, a case to answer about the exercise of judicial function? In Germany and Canada, there is 101% housing stock, they are affluent countries; in a state with 100% housing stock, an eviction would be impermissible. But in a developing country, with a developmental economic model, might it not be important for social enterprises to generate low cost housing through capital accumulation through the rental market?

It seems to me, that at least one interpretation of what he is saying is that we want our people to be rich. To do that, we need to allow them to accumulate capital, and to do that, we need to allow them to have rental properties that they safely let out. And for all of that to work, we need to allow them to evict people, or in this case, terminate a lease agreement.

It seems that Cameron is pointing to the difference in approach between India and China. In India, because it's very difficult to evict people, the inner city slums of the 1950's are the inner city slums of today. In China, where rights don't matter quite so much, the inner city slums of the 1950's are now the gleaming shrines to their own type of capitalism.

It reminds me also of a previous judgment, relating to property rights that was rendered in the South Gauteng High Court by Judge Nigel Willis. Containing the immortal phrase that "if the Constitutional Court thinks all property is theft it should tell us so", it was a very angry critique of how important it is for a country's development that landlords have the right to evict.

This ruling is part of a series of cases relating to property rights, and the rights of landlords and tenants that are going through our courts. It's no accident that so many of them seem to come from the Joburg CBD – the nexus of urban immigration, poverty and inner city decay. So it's not just the ruling in this case that will matter. But the court could deliver a boost for the rights of landlords here. In doing so, it will mean hardship for the tenants. But it should also mean development in inner Joburg. And capital accumulation. In other words, it should allow some people to become less poor than they are now. It will generate wealth, rather than simply redistributing it. DM

Disclaimer: Grootes was once a landlord. It ended catastrophically. He is currently a renter. For now at any rate.

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Monday, 24 October 2011

Sale of mortgaged property must be transparent : Bombay H.C.

The Bombay high court has set aside the order of the Mumbai Debt Recovery Appellate Tribunal in the sale of the Mysore unit of Jay Electric Wire Corporation, now closed, and asked the recovery officer to issue public advertisements inviting fresh bids. The earlier sale was challenged by the employees’ union, Central Bank of India and Standard Chartered Bank, who were secured creditors. According to them, the sale did not fetch fair market value and was vitiated by irregularities. Allowing their writ petitions, the court observed that “it is necessary that the sale process must be conducted with transparency and in accordance with law. In the present case, we find that the element of transparency was completely lacking. The grounds which weighed with the appellate tribunal are misconceived. Its conclusion that there was no material irregularity is specious.”

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Saturday, 22 October 2011

Plan reforms with consensus: Manmohan

Recently Prime Minister Manmohan Singh indicated the government's plan to introduce labour reforms with “consensus.” This statement assumes significance as the labour unrest in Maruti Suzuki India Limited plants near Delhi had forced the management to declare two days shutdown. Dr. Singh, affirmed the government's commitment to do “everything possible to ensure good industry-labour relations.” He said:“Recently we have witnessed some incidents of industrial unrest. This is a matter of serious concern to me and I believe we need to address this issue with alacrity and sincerity. “Workers and management had a symbiotic relationship and both sides should work in a spirit of collaboration and cooperation, without losing sight of the overall national objective of progress.

“There is a view that the labour laws are sometimes felt to be too rigid and are a constraint on our growth impulses… There was also a contrary view that the labour legislation needed to protect the interests of workers, particularly in the unorganised and the contract labour sectors. Clearly, there were areas where there was a need to strike a balance between the needs of a growing economy and the interests of working people.”

The Prime Minister said the Center was aware that there were many areas of labour legislation that might require reform to encourage business and enterprise. “We will move ahead only in those areas where a broad consensus for reform is built and will ensure that the interests of our workers are fully protected in doing so.” He also highlighted the government's plans to increase skill development programmes and expand the workers' health insurance scheme such as the Rashtriya Swasthya Bima Yojana, which was already benefiting about 25 million labourers.

Labour and Employment Minister Mallikarjun Kharge said the objectives of maximum utilisation of resources, quantum increase in productivity and efficiency could not be achieved unless the managements, workers and trade unions came together and helped evolve an ethos and work culture. His Ministry had constituted a National Social Security Board for recommending formulation of Social Security Schemes.

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Govt. Intends to extend all benefits to contract workers as permanent workers

The Labour Ministry is making efforts to extend all benefits available to permanent workers to contract workers, keeping in mind the interests of all stakeholders. This was stated by the Union Labour and Employment Minister, Mr Mallikarjun Kharge, at the Standing Labour Committee meeting here on Monday.

Mr Kharge was responding to the demand of trade unions to amend the Contract Labour Act, 1970 to provide for automatic absorption of contract labour in the event of prohibition of employment of contract labour and opposition by employers' organisations.

On the issue of trade union ‘recognition', especially in the backdrop of the Maruti unrest, Mr Kharge said “the present system of verification (of trade unions) like secret ballot, check off, etc., needs to be closely examined further for evolving an improved system which is more transparent and brings out the proper representation.”

The Minister also hinted at the need to have a National Labour Code, as suggested by the Arjun Sengupta Committee, to lay down “a floor of substantive labour rights or standards such as minimum wages, maximum hours of work, minimum standards of safety and health at workplace and so on.”

The tripartite meeting was attended by representatives from Central ministries, State Labour Ministers, industry bodies, employers' organisations and trade unions.

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Wednesday, 19 October 2011

Judges should not shy

Judges should not shy away from constructive criticism of their actions and decisions as such review leads to the development of law, Chief Justice of India S.H. Kapadia has said.

Chief Justice Kapadia said this here Tuesday while releasing a book, "The Kesavananda Bharati case: The untold story of struggle for supremacy by the Supreme Court and Parliament", written by eminent jurist T.R. Andhyarujina.

"We judges are not afraid of constructive criticism of our actions and decisions by the bar," Chief Justice Kapadia said.

He regretted that senior counsel are too engaged in their professional pursuits to pay attention to the development of statutory and constitutional law.

He declined to be part of the discussion on the plea that judges should not get involved in debatable issues.

The book recounts the "tensions and conflicts in the Kesavananda Bharati case - not only between the rival sides but also among the judges, some of whom had preconceived views because of being judges in earlier cases and others by reason of their selection by the government."

The book reveals "the stratagems of the (then) Chief Justice S.M. Sikri on the date of the judgment on 24 April, 1973 by which he formulated a paper hurriedly prepared by him 'The Views of Majority'".



"This paper was signed in Court by 9 judges, 4 other refusing to ascribe their signatures to it." This has come to be known as a majority decision in the Kesavananda Bharati case.

Andhyarujina said the book deals with the actual account of how the case developed and dealt with and the decision arrived in a "dubious manner".

His account of the case is based on his "recollections and notes maintained by him as a counsel in the case and on later interviews by him with some of the judges in the case".

The book was described by various speakers as a maiden attempt in Indian judicial history to see beyond the pronouncement of a judgment and how it was arrived at.

In the case, the Supreme Court held that parliament cannot tinker with the basic structure of the constitution.

It laid down 35 parameters to define the basic structure of the constitution that include rule of law, secularism and separation of powers between the three organs of the state -- legislature, executive and judiciary.

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Tuesday, 18 October 2011

Farmula One: SC notice to UP Govt, Jaypee Group on tax exemption

India's Formula One ambition has hit its first hurdle just two weeks ahead of the first Indian Grand Prix. The Supreme Court sought explanation from the Uttar Pradesh government for granting tax exemption to Jaypee group, the company organising Formula 1 event in Greater Noida.

A bench headed by Justice D K Jain also issued notice to Jaypee Group, organiser of the sporting event, and asked them to file their response by Friday on why the event was given exemption from entertainment tax.

The notices were issued by the apex court on the basis of a public interest litigation (PIL) which challenged the exemption of entertainment and luxury tax for organising the F1 event.

The court passed the order on a PIL challenging the state government decision to grant tax exemption to the event.

India's first Formula 1 event is scheduled to be held in Greater Noida, adjacent to the national capital, on October 30.

The Uttar Pradesh government and the Jaypee group have been asked to file their replies by Friday.

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Monday, 17 October 2011

Book on Kesavananda Bharati case will be released on Tuesday

A 13-judge Bench of the Supreme Court, the largest so far, decided the Kesavananda Bharati case after hearing arguments by eminent lawyers spread over 66 days. The judgment, delivered by a majority of 7:6 on April 24, 1973, held that Parliament could not alter the basic structure of the Constitution by an amendment.
Chief Justice of India S.H. Kapadia will release a book dealing with this case at a function here on October 18. The senior advocate and former Solicitor- General, T.R. Andhyarujina, has written the book, explaining the culmination of a struggle for supremacy over the power to amend the Constitution between Parliament and the government on the one hand, and the Supreme Court on the other.
Mr. Andhyarujina says: “This book is a gripping story of the conflict and tensions in the Kesavananda Bharati case and its aftermath, which has not been disclosed so far. It is based on the author's recollection and [the] detailed notes maintained by him as counsel in the case, and on later interviews by him with some of the judges in the case.”
The book reveals that prior to the hearing, the government attempted to influence the court by appointing judges who it expected would decide in its favour. It shows the preconceived views of some of the judges on Parliament's power to amend the Constitution, the internal conflicts and factions among the judges, and the charged atmosphere in the court till the delivery of their judgments.
In the words of Mr. Andhyarujina, the battle began when the Supreme Court, in the Golak Nath case in 1967, held that fundamental rights could not be amended by Parliament. Parliament and the government were not reconciled to the ‘view by majority' in the Kesavananda case and were determined to get it overruled. On the day of the judgment (April 24, 1973), the government superseded three senior-most judges, who had decided against the government and appointed Justice A.N. Ray as the next Chief Justice on the retirement of Chief Justice S.M. Sikri. In 1975, with the help of Mr. Ray, the government tried in vain to reverse the majority view in the Kesavananda case by another Bench of 13 judges.
However, during the emergency, the government nullified the Kesavananda case judgment by the 42nd amendment, but this was overruled in the Minerva Mills case in 1980, when Y.V. Chandrachud was the Chief Justice.
Mr. Andhyarujina says the purpose of the book, coming as it does after 38 years of the event, was “an interaction of constitutional law with the politics of the day; the story of the Kesavananda case requires to be widely known.” Though such an exercise is being done in the United States, it has not been done in respect of any leading case in India, hence his attempt.

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