April 27, 2017: TAXING AGRICULTURAL INCOME IN OUR COUNTRY: old story retold By Shiva Kant Jha, Advocate

NOTE: I  have read in the Times of India this morning that someone in the Niti Aayoga  is pleading for the levy of income tax on agricultural income.  The idea has kept on popping up from time to time for certain obvious reasons. Some  Sir Launcelot keep emerging  to plead for it. Some time back the Central Board of Direct Taxes had solicited public comments on the issue. I had written a short article that I had sent to the CBDT for whatever worth it had. It seems that the CBDT saw some sense in it. As this idea has again cropped up in public domain, I deem it appropriate to put my said article in public for all to reflect and decide.  But I think it apt to enter a caveat at the threshold. Agriculturists should not be harassed, but we must devise vigilant methods to detect the cases where gains are cornered by the corporate zamindars, and the tycoons of the market.


DANIEL Bell, in his ‘The Coming of the Post-Industrial Society : A Venture in Social Forecasting’ aptly said that politics has become the ‘cockpit’ of the post-industrial society. Politics has become the visible instrument of the invisible hand controlled and guided by the corporate imperium ruling now the world under the U.S leadership. This trend manifests itself in many segments of socio-economic management of country. One such segment is agriculture involving the plight of the agriculturists, tillers, and farm labourers. Whilst the lobbyists for the de luxe India, and the protagonists of the India incorporated plead for reducing taxation to a vanishing point, they are most vociferous for subjecting the income from agriculture to tax by eliminating exemption granted to it under Section 10 of the Income-tax Act, 1961.  The present article is in response to the Board’s request. The issue of the taxation of agriculture by the Central Government is extremely complex.

Let us first examine the issue under constitutional perspective. Entry 82 of the Union List enables Parliament to impose taxes on income ‘other than agricultural income’. As it is a specific exclusion, no legislative power can be drawn from the residuary entry 97 to impose tax on agricultural income. Entry 46 of the State List empowers the States to impose taxes on agricultural income. The approaches of the States in taxing or not taxing agricultural income are shaped by the variables of socio-economic conditions of which they are the best judges. Our Parliament cannot tax it even under Art 249, which empowers it to legislate with respect to the matter in the State List in national interest. It cannot be done so for two obvious reasons: first, such legislation cannot be considered in ‘national interest’ unless the interest of the deluxe India and the India Incorporated is considered equivalent to ‘national interest’. Art 265 provides that “No tax shall be levied or collected except by authority of law.”   It is well established that ‘authority of law’ means ‘authority of constitutionally valid law”.

Hence, the Centre cannot tax agricultural income without a constitutional amendment. Assuming that things can be engineered to effect a constitutional amendment, that amendment may itself be held unconstitutional, as it would violate one of the   basic features of Constitution. In Kesavanand our Supreme Court held that our polity created by the Constitution is federal in character. In Bommai’s Case the Court observed that democracy and federalism are the essential features of our Constitution.

It is the time to think why the constitutional mandate to reduce the concentration of wealth, and the various statutory commands under the land ceilings and reforms Acts have virtually been given up, or diluted to the point of being completely ineffective. In this present day market economy we are moving in the reverse gear. We have allowed our State to become a Sponsored State. Granting huge plots of land to the Special Economic Zones, and corporations, including MNCs, are creating a breed of neo-zamindars. Their interests are being promoted by the executive government through international agreements done under the oblique system, which has been constructed through the studied art of deception and craft of corruption. It is true that for a section of our society this neo-capitalism has brought some affluence but it has done so at a very heavy cost. Peter Watson has perceptively observed: ‘Affluence plays a part, says Galbraith, because further a man is from the breadline – the more affluent he is – the more his desires can be manipulated, and the bigger the role of advertising, and here it was fortunate that the rise of radio and then television coincided with the maturation of corporation and rise of affluence.’ We are witnessing a strange syndrome of fast technology but stagnant morality producing a sinister ‘intersection of power, money, and writing’.

The strategy the waxing neo-colonialists is to destroy our way of life by turning the agriculturists and tillers to a band of serfs and slaves for the corporate masters which are a crazy herd of greedy reapers of super profits. Corporatization of agriculture is clearly a new zamindari settlement. It would be of the worst type as we would by ruled by heartless corporations having an evident symbiotic relationship with the government, which would exist as their protectors and facilitators. This assertion is borne out by examining the attitudes of our government to the taxation of agricultural income, and of capital gains.

In 1970 the definition of ‘agricultural income’ was altered retrospectively to cast a net wider. In 1973 the statute was amended to provide for the inclusion of agricultural income in one’s total income for the purposes of determining the rates applicable to one’s total income. Now the sinister idea to tax agricultural income is on the anvil. These facts are meaningful when we see how untaxing and mitigation of tax have been liberally provided in recent years in the segment of capital gains. With effect from 1.4.88 in the case of a share held in a company the holding period for being treated as a short-term gain became 12 months instead of 36 months in other cases. After 1991 our government played surrogate mother for the FIIs, MNCs, and others of similar feathers. In the recent years capital market liberalization allowed investment capital to flow in and out. The predatory international financiers made best of this crazy international capital churn. Now the position is that   those who reap rich harvests do not pay any tax, except that insignificant domestic segment which now bears only a much-attenuated burden.

Liberalization of the financial and capital markets let loose a flood of short-term capital which Stiglitz explains as   “… the kind of capital that looks for the highest return in the next day, week, or month, as opposed to long-term investment in things like factories.” The view of the IMF and its protégées is that their transactions in capital and capital gains be not taxed; if at all taxed, they be taxed less. They are not troubled by qualms of conscience. Writing about the US tax policy Stiglitz has observed in his Roaring Nineties: “Another example was what we did with tax policy. As the bubble was going up and getting worse, what did we do? We cut capital gains taxes, saying to the market: if you make more money out of this speculative bubble, you can keep more of it. If you look at what happened to tax policy during the nineties, it is quite astounding. What we did in 1993 was raise taxes on upper-middle-income Americans who worked for living, and then in 1997 we lowered taxes for upper income Americans who speculated for a living. You ask the question: what sorts of values did this change represent?” Things are worse in our country.

If at all some statutory tinkering is a must, then think of dispensing with the distinction between a long-term capital gain and a short-term capital gain so that the entire net gain is charged at the normal rate of taxation. The persuaders world over paint some remote El dorado, and plead that when judging capital gains tax reductions, the weight put on the benefits to economic growth and on international competitiveness should exceed the weight put on fairness and equity considerations ¾ because of the resulting job creation and stimulus to the economy, even those who do not benefit directly from a cut in the tax rate will receive indirect benefits. We cannot afford to evade  reality.

Those who talk about taxing agricultural income should do their home work better. Our Supreme Court in CIT v. Benoykumar Sahas Roy had held that agricultural income contemplates the basic operation, prior to germination, involving expenditure of human skill and labour on land itself . By this criterion, the income of the adhatias and intermediaries cannot be agricultural income. Why not tax them effectively? Why not increase the tax rates on their exploitative and extractive income?

Land reforms are still not complete, but the policy underlying them is clear to all. Why not complete them? Why lands meant for tillers shouldn’t be allotted to them alone? Why should our government be so servile to the international manoeuvrings of the corporate lobby through the WTO? Already much prejudice has been caused to the common people of our country.

It would be a disaster if the agriculturists and the farm labourers were marginalized by the corporate power, which believes for obvious reasons in commercialism, corporatism, consumerism, hedonism, and acute crazy greediness. India’s culture would be destroyed if our agriculture were ruined.   With the ruin of agriculture the verve that sustains our independence and culture would also go. Before the USA dropped an atom bomb on Japan, it had appointed a commission to study the Japanese psyche in order to understand people’s possible response. Let there be, in our country, a study by those who have not yet sold themselves to the capitalist lobby to find out the view of all the stakeholders.

If you tax agricultural income you would let loose the minor minions of bureaucracy to suck the blood of the already anaemic village folk. The abysmal decline in the morality of public life has been noted of by our Supreme Court in a number of cases. In those days when Estate Duty was being levied, we had seen and heard, in the corridors of the government offices, how poor widows of the villages rent the air with their cries because of the exploitations by petty wretches of the government, and the lawyers believing neither in law nor in ethics. Besides, is not what Edward Gibbon said in the 18th century wholly true for us: ‘All taxes must, at last, fall upon agriculture?’

Then why this cries to tax agricultural income? It seems that the sole reason for this is the conspiracy designed to reduce taxation on the non-agriculturists and to force our government to be caught in a cleft stick in the matter of collecting resources.

My suggestions to our government are, in brief, (i) that no agricultural land be distributed for any reasons to the new zamindars proliferating these years, and land must be with tillers for whom our government should act as facilitators; (ii) our water resources must remain people’s property which none should use for commercial purpose as this would lead the sad situation when our rivers would be without water and their beds would go under corporate franchise; (iii) our environment, both of our mind and of nature, be not allowed to be plundered and polluted by those who believe in gross acquisitiveness, and brutal power, often exercised by creatures with human face but with the monster’s heart; (iv) those who have non-agricultural income above certain sums should not be allowed to possess any holding of agricultural land; and the benami transactions be made a cognizable offence; (v) the intermediaries and the adhatias be heavily and effectively taxed; (vi) our government should not sell itself to the abounding capitalist lobby, and it must consider the views of all stake holders, who obviously are the agriculturists, farm-labourers, and tillers, before it goes ahead in the matter.

It is prudent to look before you leap. Has any comprehensive and realistic study been made to find out how much widening of tax base is possible if agricultural income is taxed? In my assessment our government would lose more, and gain less in this pursuit. The Department’s   General Index Register already is already cluttered with   ineffective cases (the bhusha cases) where the expenditure in terms of men and material is more than gains: why should we add a few bags more?”

Drawn up by

Shiva Kant Jha, Advocate

Mob. 9811194697




















THE UNWHOLESOME AADHAAR: The conundrum of Sec. 139AA of the I. T. Act ( by Shiva Kant Jha, Advocate) 5 POINTS WHICH SHOULD NOT BE MISSED

1.The Income-tax Act had been legislated as a Money Bill, and enacted as law in terms of Art. 265 of the Constitutution.  [The Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016 (18 of 2016) has its specified purpose, and is neither a Money Bill, nor an enactment under the discipline of Art. 265 of our Const.\

2.The tax under a statute framed under Art 265 must conform to the tax law discipline, and it must not transgress Constitutional restraints as judicially interpreted and evolved. Section 139AA of the Income-tax Act yokes arbitrarily two distinct legal provisions made for different purposes together. PAN and Aadhaar number were conceived for distinct purposes. Not to see what is obvious may not be fair. We all hear that to woo the foreign investors our tax-law deserves to be stable. But when it is ordinary Indian citizens Section 139AA contemplates almost an anarchy!

  1. The extraction of all sorts of biological, social, and personal data from the free citizens under the requirements of the Aadhaar cards, even when a citizen is under no bondage to earn anything which can ever be considered a chargeable event under the Income-tax Act, would be grossly unreasonable and arbitrary. Validity of such provisions require examination first in the context of the Income-tax Act, then in the context of the constitutional restraints, but all viewed under the footlight of the values of a democratic society for building which “We the People “ have established our democracy under the discipline of our laws and values which give content to our Constitution.
  2. The requirements under Section 139AA of the Income-tax Act, 1961, are irrelevant. Once there is taxable event, the right to get tax thereon in accordance with law gets vested in the Government (can be called the person of inherence). Corresponding duty to pay tax at the prescribed rate is cast on the tax payers (can be considered the persons of incidence. In a situation of this sort, the core provisions Act, 2016 (18 of 2016), esp. the Objectives as enacted, are wholly irrelevant and extraneous[1].

5  It is submitted that we stand at a cross-road requiring an insightful decision that may have effect subversive to our democracy and cultural values which, when all is said, remain to save us from turning into a society of slaves. All the criss-cross,  even in the  blood drops wherein all genetic information remain housed, or finger print, Iris scan, or such other biological attributes can be  mapped to be stored somewhere exposing the citizens to the risk of morbid  manipulation  for purposes which right now no human being can foresee. Our judiciary would  consider the reach of “biometric information”, “core biometric information”, “demographic information” not only to see their relevance to the filing of the Income-tax Returns, but also to measure the risk that our society is exposed to. We should mark that  the definition of “demographic information” is inclusive that provides deliberately battered  frontiers on extension of its import. Besides, before taking such decision, our Government should have got the issues  examined by experts, with no axe to grind, the appropriateness of such study when a drop of blood can present baffling problems. In order to teach humility even to our experts this layman would quote two short extracts from Cambridge Minds, edited by Richard Mason:

“All the information which specifies us, the information which specifies a human being, is laid down in 46 chromosomes, which together contain a length of DNA of about I metre. This one meter contains about 3 billion bases, the equivalent of a library of about 5,000 volumes, all packed together into a single cell. Because the DNA is of atomic dimensions, that information is packed so tightly that it can fit into a single sperm or a single egg.”( page 200)

“I have not yet told you why I worked on haemoglobin, and what it does. It is the protein of the red blood cell. It carries oxygen from the lungs to the tissues and helps the return transport of carbon dioxide to the lungs. It is a protein that evolved at the same time as large animals, because without this oxygen-transport molecule, the life of the higher animals would not be possible. So it’s a crucial protein. If you are anaemic you are short of haemoglobin, you don’t get enough oxygen and feel weak. There are 250,000,000 red cells in one small drop of blood, and inside every red cell there’s the same number – about 250,000,000 – of haemoglobin molecules. Haemoglobin contains four atoms of iron embedded in a dye – a pigment – called haem; this is what makes blood red. The four haems in the haemoglobin molecule are arranged in separate pockets on its surface.” (page 202)

We know that “biometric information”, “core biometric information”, “demographic information” are mapped in many countries but not with right results. To cast this duty on the ordinary Indians is alarming. They are to be saved from all possible traps. They should not be left to be exploited by the so-called experts. The experts have many concealed agenda. Art of concealment delights  the experts most, it also  delights government quite often. Harold Pinter, the winner of the Nobel Prize for Literature, 2005, very perceptively said:

“Political language, as used by politicians, does not venture into any of this territory since the majority of politicians, on the evidence available to us, are interested not in truth but in power and in the maintenance of that power. To maintain that power it is essential that people remain in ignorance, that they live in ignorance of the truth, even the truth of their own lives. What surrounds us therefore is a vast tapestry of

lies, upon which we feed.”


In fine:

We are optimists, we are even incorrigible optimists.  We believe Justice would surely be done some day.

In this context two comments are worth consideration, one by Thomas Balogh said in The Irrelevance of Conventional Economics: ”The modern history of economic theory is a tale of evasions of reality.”; and the other byProf. John Kenneth Galbraith in his A Short History of Economics:The Past as the Present (at p. 236):

                          “Here another great constant in economic life: as between grave ultimate disaster and conserving reforms that might avoid it, the former is frequently preferred.”

Drawn up by

Shiva Kant Jha, Advocate

Mob. 9811194697



[1] “An Act to provide for, as a good governance, efficient, transparent, and targeted delivery of subsidies, benefits and services, the expenditure for which is incurred from the Consolidated Fund of India, to individuals residing in India through assigning of unique identity numbers to such individuals and for matters connected therewith or incidental thereto.”

The Peter Pan syndrome: The problem of flood and the plight of Mithila

“The present-day Mithila is changing fast. Now we see a rampant craze to imitate the West. The impact of the present phase of the Economic Globalization is evident everywhere. Never in the past had our society faced a challenge of the sort that bedevils its cultural existence in our days. The young boys and girls are getting enticed to the neoliberal market culture of consumerism. The social segments, which are now emerging on economic affluence bred by marketization, are fast becoming monochromatic: all after money; and their gaudy life-style pampers and promotes limitless needs and boundless desires, and is flat to the point of obnoxious tedium. The society, which the present circumstances are evolving, is narcissistic. What is happening in Mithila is no different from what is seen elsewhere in our country. To this aspect of the matter I would come again in the Book III of this Memoir.The plate on which the Mithila region exists is hyperactive and is constantly drifting north causing frequent earthquakes. A whimsical friend once told me

with reference to Mithila : while the subjacent earth of the region is hyperactive the superjacent biomass (he meant human beings) is almost inert! He made a veiled reference to seismic activity under the Earth crust, and the indolence which had overtaken the people of Mithila. But the most devastating calamity that visits this land annually is Flood. We are told that the over-flooding is a punishment for playing imprudently with the ways of nature through rapacious deforestation, and our ‘foolish’ meddling with the courses of the rivers descending from the Himalayas in Nepal. Massive destruction of forest in Nepal has led to massive over-flooding in Bihar causing criminal soil degeneration, inundation, erosion and heavy siltation of the rivers raising every year the levels of the river-beds. It is high time to enter into an understanding with the Government of Nepal that the growing deforestation of the Himalayas and their foothills must end. The problem of annual devastating floods cannot be tackled unless there is a close cooperation between the two Governments as most of the rivers flow from the   Nepal Himalayas. It is hoped that Nepal would behave as a good neighbour obedient to the ‘Standard of Economic Good Neighbourlines’, now considered a norm of public policy under international law.”


        [Quoted from Shiva Kant Jha’s  autobiographical memoir, ON THE LOOM OF TIME, Portrait of My Life and Times pp. 29-30  at http://www.shivakantjha.org/pdfdocs/on_the_loom_of_time_2nd_edition/15_loom_01.pdf ]

Right Perspective on the role performance of the IRS and the IAS (by Shiva Kant Jha)

This is an old controversy that has acquired timely relevance because of the recent controversy caused by the sharp difference in the perception of the roles of the IRS and IAS. It is worrisome that after 18 years of my retirement from the IRS, I  am witnessing same combative wrath that had shocked us in 1965. I had written about it in my autobiographical memoir, On the Loom of Time,  [ published by the Taxmann, Delhi, in 2011].  An extrctat from its Chapter 17 (pp. 228-229) is quoted hereunder for general information. The second edition of the text of the said book can be read on my website: shivakantjha.org [http://www.shivakantjha.org/pdfdocs/on_the_loom_of_time_2nd_edition/31_loom_17.pdf].  The unwholesome controversy proves what Burke had said long back:  To tax and to please, no more than to love and be wise, is not given to men.” I  had quoted this in the said Chapter.

“(i) I joined the statutory Civil Service

At the IRS (Staff) Training College, Nagpur, Shri V. V. Badami, who later became the Chairman of the CBDT, told us, whilst delivering his first lecture that the Indian Revenue Service was not a general civil service: it was a statutory civil service for which the governing norms were prescribed in the Income-tax Act itself. He told us to keep in view certain constitutional principles of fundamental importance. The Executive Government exercises powers over taxation in accordance with the provisions of our Constitution. In our country, the Executive is a creature of our Constitution with prescribed duties and conferred powers. The executive power is exercised in terms of Articles 53 and 73 of the Constitution. The Article 265 states, with wonderful precision, the norm of Parliamentary control on ‘taxation’. An exclusive power over taxation had been acquired by Parliament in England after the Glorious Revolution 1668. The Executive had, thus, lost all powers on ‘taxation’; and it could exercise these only in conformity with the law. Our Constitution’s provisions are the same as under the British constitution.

We learnt that CBDT was established by the Central Board of Revenue Act, 1963. The Act established separate Central Boards: one for Direct Taxes, and the other for Excise and Customs. The section 3 of the said Act prescribes: “each such Board shall, subject to the control of the Central Government, exercise such powers and perform such duties, as may be entrusted to that Board by the Central Government or by or under any law.” Section 4 authorizes the Central Government to “make rules for the purpose of regulating the transaction of business by each Board”. The following two important propositions emerge:

  • (i) the CBDT “shall, subject to the control of the Central Government, exercise such powers and perform such duties, as may be entrusted to that Board by the Central Government”; and/or

(ii)        the CBDT shall exercise such powers and perform such duties, as may be entrusted to that Board by the Central Government by or under any law.

It follows that in exercise of the functions entrusted to the CBDT by the statutes, the CBDT is not “subject to the control of the Central Government”. It discharges the Parliamentary commission, and for the propriety of its acts, it is accountable only to the Courts on the points of legality. The tax authorities can be mandated to discharge their public duty, and their orders can be quashed on standard grounds for which remedy for Judicial Review is granted by our superior courts (on the counts of illegality, irrationality, procedural impropriety and also breach of proportionality). The Central Government is, thus, interdicted by law from trespassing on the Board’s spheres of statutory functions which are controlled and guided only by the terms of the statutes. But functions, which are analytically administrative, are under the control of the Central Government to be exercised through the CBDT. These provisions reflect certain constitutional principles of fundamental importance. Without going into details, I would state them thus diagrammatically:

 Explanatory comments:

(A) Governed by the Business Rules.

(B) Governed by the Rules of Business.

(C) Powers to be exercised in accordance with the statute ONLY.

The Revenue Department of the Government would be a clear trespasser if it interferes in (C). The Executive Government’s power is derived simply from Art. 53 of the Constitution: and it would be acting ultra vires if it interferes in the exercise of the legal duties prescribed by the law framed under the discipline of Art. 265 of our Constitution. The Income-tax Act is framed in exercise of power under Article 265 of our Constitution”.

The Real problems that tax evasion and resource loot present in our world: A short Reflection on the leak from the Panamanian law firm, Mossack Fonseca. (by Shiva Kant Jha, Advocate )


The  prime reasons for the  loot of resources, and corrupt practices were insightfully  noticed by the  two Presidents of the USA: one in 1861, by President Abraham Lincoln on noticing the imperious ascent in corporate power, and the other in 2016, by President Obama in his perceptive localisation of the problem posed by the Panama Papers Leak.  These two comments deserve a close reflection to comprehend the realities of our day to forge appropriate remedies for the weal of people,  and  for genuine democracy.

Shortly before his death, President Abraham Lincoln (1809-1865), the 16th President of the United States, expressed, on 21st November 1864, his apprehension about the future of his Republic:

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavour to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

And on April 5, 2016, responding to the premonitions of scandals emerging  through the Panama Papers Leak, President Obama made a comment with utmost candour.  He said:

”In the news over the last couple of days, we’ve had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem.  It’s not unique to other countries because, frankly, there are folks here in America who are taking advantage of the same stuff.  A lot of it is legal, but that’s exactly the problem.  It’s not that they’re breaking the laws, it’s that the laws are so poorly designed that they allow people, if they’ve got enough lawyers and enough accountants, to wiggle out of responsibilities that ordinary citizens are having to abide by”.


After having argued the Indo-Mauritius Tax Treaty Abuse Case in the early years of the first decade of this century [ Shiva Kant Jha v. Union of India, and the Union of India v. Azadi Bachao Andolan], I  had a sense of catharsis in writing my  book entitled   Judicial Role in Globalised Economy, esp Chapter 2.   While drawing up the portrait of our time in Chapter 29 of  the second edition of my memoir On the Loom of Time,   I  had noticed President Abraham Lincoln’s said comment, and developed it with reference to the ideas of  Noam Chomsky.  As both the  books are  out-of-print,  I  have put their texts   on my website, http://www.shivakantjha.org.  I advise my readers to read these two chapters to  appreciate the profundity of the above-quoted comments by the two U.S. Presidents.

                   The climate that has been created/crafted by the dominant key-international players over the years of neoliberal economy in the post-World War II phase, has helped substantially in the creation/ modification/ interpretation of law for the benefit of the high net-worth individuals and the MNCs. A complex web has been created spanning through the dense contrived darkness over secret jurisdictions and tax havens to conceal the exact nature of economic and fiscal transactions through the extension of corporate structures with several rungs erected on the quick-sound over various parts of our terra firma, now even in the cyberspace. They have creatively utilised the concepts of sovereignty, incorporation, and residency through the newly evolved states-system about which I have already written about this  in Chapter 26 of my On the Loom of Time.  Though the Delhi High Court’s decision  in Shiva Kant Jha & Anr.  v. Union of India & Anr.  [ (2002) 256 ITR 563 (Del) was reversed by our Supreme Court in Union of India vs. Azadi Bachao Andolan & Anr.,  its peremptory dictum has survived over all the years thereafter as none can quarrel with  its sagacity and democratic propriety: The High Court had said: “ No law encourages opaque system to prevail.”. On legal sophistry the Union of India helped the tax haven operators, but its moral shock has been felt over all the years thereafter.  Even our Government has been often  Janus-faced: telling us that remedial measures would be taken to stop the evil that flourishes through secret jurisdictions and tax havens. But neither that circular,  that had patronised the tax haven secrecy by bidding our authorities to go under blinkers,  has been withdrawn, nor the Indo-Mauritius DTAA has been reviewed to ensure that shell companies are not floated to facilitate transmission of black money under the shroud that the tax havens and secrecy jurisdictions provide, nor effective deterrence has been created against transmission through the dark corridors of the international financial architecture.


.   But the worst happened when the most sinister sort of corporate structuring was approved by our Supreme Court in Vodafone Case.  It illustrates how the Rogue Finance and their corporate vehicles resort to the creation of the labyrinthine corporate structures to operate through fog and mist hopping from jurisdiction to jurisdiction on this planet.   I was amazed  why none felt aghast when the authority of  Pope Innocent III and IV  was cited in the  support of such corporate re-structuring. .  Those ideas had been advanced by them with the obvious purpose to promote the imperium of the Roman Catholic Church   before the rise of nation states, and emergence of democracy.  The MNCs, and their experts, consider ‘corporations’ virtually mystical and magical structures, which can be erected on the waves, in the thin air, in the ethereal space choosing their span of life, and the points of their birth, and also of their death.  The corporate lawyers of our time  plead  for ‘corporations’ and ‘corporate imperium’ drawing  their light from the ideas in Mystci Corporis, (translated into English as ‘The Mystical Body’) on which Pope Innocent had founded his view. The Church was the mystical body of Christ in the City of God; and the ‘corporation’ became a foil to the R.C. Church in the City of  Man, this world of ours!


Whenever I read Charles Mackey’s   Extraordinary Popular Delusions and Madness (1841),  the sagacious comments of Galbraith in his The Age of Uncertainty (1997) comes to mind:

“The man who is admired for the ingenuity of his larceny is almost always rediscovering some earlier form of fraud. The basic forms are all known, have all been practiced.  The  manners  of capitalism improve. The morals may not.”

President Obama’s comment reminds me of what I had written, more than a decade back, in  my Judicial Role in Globalised Economy. I had expressed my concern on the measure of collusion shown by the experts of high technology, law, and accounts and a band of PEPs  (“PEPs are individuals who are or have in the past entrusted prominent public functions in a particular country.”).

It is worth noting that President Lincoln (1809 – 1865), the 16th President of the United States America, was himself an eminent lawyer in Illinois, and Barak Obama, the present  President  of the United States is the 44th President of the  United States  had   served as  the president of the Harvard Law Review, had lectured on constitutional law at the  University of Chicago Law School, and had a wide experience of being a distinguished attorney.  Even at the cost of being censured by readers for my descent from the sublime to the ridiculous, this humble self feels like submitting that he too is an advocate, an active member of the Indian Bar. When I  had written in my Judicial Role, or when I was reflecting on the quotes of Lincoln and Obama, I  had worrisome moments: Are we not forfeiting our claim to be considered the members of learned profession?  ‘’Learned Profession’’ is a term of art that refers to  one of the three professions believed to be learned and committed to salutary high principles: these are medicine, law and divinity. The real cause of the degradation in any profession is the loss of its moorings in ethical values. We live to see all around us an  “exponential growth of technology going with stagnant morality”.


The rottenness of the state of our affairs is illustrated by the Panama leak papers which bring to light the rotten state of the global economy with lurid details in which the professionals  have facilitated the hyper creativity in pursuit of greed.  Scanning the global scenario of the corporate structuring through the labyrinth of the  dark nodes (manifest in the increasing number of the tiny-tot states), I agreed with  Prof Sol Picciotto  that after the World War II numerous tiny states were created under the protective umbrella of the USA and UK to help neoliberal economy beget capitalism by providing safe place to grow, and ward off security hazards by providing not only much-needed darkness but also by helping evolve legal system creatively which facilitates and protects such endeavours. Prof. Picciotto has aptly said

“The emergence of ‘offshore’ statehood acted as a catalyst for the undermining of the classic liberal international system, which was reinstated within a framework of multilateral institutions after 1945. ‘Offshore’ statehood was created by international investors (especially TNCs) and their advisers, responding to and exploiting the elastic scope of state sovereignty based on regulatory jurisdiction and legal fictions of residence and incorporation.”


Abraham Lincoln had insightfully noticed the triple alliance of  MNCs, capitalism, and corruption. The story of the West, after the World War II is, in effect, to facilitate the triple alliance to rule the world, a phenomenon that threatens the world with corporate hegemony, decline of democratic values, and the dominance of the greedy-property-owners, and subjugation of the nation states. There are many ways to bring about such a change, but the most conspicuous effort is by ensuring that law itself turns facilitators in such pursuits. After having established secret jurisdictions across the world, they  created  the dense veneer of secrecy to conceal their art and craft by the creative use of  such widely known  concepts as  sovereignty, incorporation, and residency. Various changes have been made  through ingenuous creativity to facilitate the neoliberal agenda of our times, esp.  after 2003 when the Liberalised Remittance Scheme (LRS) was introduced facilitating  sending funds abroad for a variety of reasons without breaking law.  It was my reflection on this syndrome that had led me to suggest to the Supreme Court-appointed SIT to  undertake a review of the laws to ensure that the laws do not become the ignoble helper of the crooks whose theatre of operations is not only this tiny earth but the entire cyberspace. One of my suggestions to the SIT was thus stated at page 557 of On the Loom of Time:

“ All the statutory provisions in various Acts introduced in the recent years should be reviewed. Most of the provisions, through studied omissions and commissions, have been devised to make things easier for the looters and crooks. From 1990s various legal provisions have been altered to adapt to the demands of the neoliberal agenda. We all know how many laws were altered because of the WTO commitments. The Foreign Exchange Regulation Act was replaced by the Foreign Exchange Management Act after subjecting it to changes to make it compliant with the neoliberal policy of the WTO-IMF-World Bank. It was the same strategy that was afoot crafting the provisions of the Prevention of Money Laundering Act 2002. All the laws deserve to be considered to see if by omissions and commissions, through their tilts and tenor, they favour, or facilitate, the evil of black money, and its concealed movements within and outside India. I understand that the SIT is already on this track.”


More important was my suggestion to the SIT on the protocol of its work. I wrote, to quote from page 477 of On the Loom of Time:

“ It is great that our Hon’ble Supreme Court has given very sound and comprehensive mandate to the SIT it has appointed. …. In effect, the instructions to the SIT require this body to explore all the investigative possibilities to the ultimate confines drawing on the latest developments in  the information technology. I think this would require the study of the “computer program”  which is used by the crooks to transform money into abstractions, and used by the professional service providers  to transmit money from realms to realms both on the earth and in the virtual space. It is time when it is essential to constitute a core segment  of investigators   in investigative  structure who can develop software to keep track  of money leapfrogging from jurisdictions to jurisdictions, from the earth to cyberspace…..Our investigators would endeavour to acquire skill to use the innovative computer  information technology  that  even helps  the crooks to backdate  transactions  to any point of time , past or future. An investigator, like a lawyer or a poet, must possess that imaginative faculty to see the gone past and the looming future by observing the present as it unfolds itself before his mind’s eye.”


Abraham Lincoln had insightfully noticed the triple alliance of  MNCs, capitalism, and corruption. The story of the West, after the World War II is, in effect, to facilitate the triple alliance to rule the world, a phenomenon that threatens the world with corporate hegemony, decline of democratic values, and the dominance of the greedy-property-owners, and subjugation of the nation states. There are many ways to bring about such a change, but the most conspicuous effort is by ensuring that law itself turns facilitators in such pursuits. After having established secret jurisdictions across the world, they  created  the dense veneer of secrecy to conceal their art and craft by the creative use of  such widely known  concepts as  sovereignty, incorporation, and residency. Various changes have been made  through ingenuous creativity to facilitate the neoliberal agenda of our times. It was my reflection on this syndrome that had led me to suggest to the Supreme Court-appointed SIT to  undertake a review of the laws to ensure that the laws do not become the ignoble helper of the crooks whose theatre of operations is not only this tiny earth but the entire cyberspace.


It is the time for all of us to realise that we all  are before the bar of history.  We should, both at our national level and at global level, try to build systems under which  laws cannot be abused. We know laws help us to  judge what is proper, but moments do come when we must judge our law,  and also our  system of law administration. The Panama Paper Leak is a timely warning before more sinister leaks occur. If we in India are well equipped to hold things under vigilance, we shall be more effective to look after our interest if, perish the thought, similar leak takes place from  the Ugland House in the Cayman Islands, or from the Cathedral Square in Mauritius. As things seem to suggest,  in our market-ruled globalised economy with  fast changing technology  but stagnant morality,  prudence demands us to remain vigilant overseeing all our institutions.  It is high time to realise the wisdom of President Abraham Lincoln.  Who knows? We  may  have in store many more leaks,  no less sinister than that from the Panamanian law firm  Mossack Fonseca.


Email ID – shivakantjha@gmail.com

The Looters and their Sone Ki Lanka

This morning I read in the Times of India a report that can delight you. or sadden you, depending on your observation-post, and what you are. But this has called up in my mind what I had written about Sone Ki Lanka in the Chapter 26 of my memoir, On the Loom of Time (2nd ed.) that you can read at my http://www.shivakantjha.org by visiting at http://www.shivakantjha.org/pdfdocs/on_the_loom_of_time_2nd_edition/39_loom_25.pdf. I wish my readers read this, and reflect on it with utmost good faith. We all stand before the bar of history at which all of us,  and all our institutions are on trial. It would be sad for the destiny of mankind if the cloud-minders dominate us through their  strategies and stratagems by subverting our democratic institutions.

                         The paper reports as under:
“India saw the fourth-big gest outflow of high net worth individuals globally in 2015 with 4,000 millionaires shifting overseas.According to a report by New World Wealth, some 4,000 wealthy Indians changed their domicile in 2015, while France saw the maximum outflow of millionaires with as many as 10,000 leaving.France was followed by China, with 9,000 leaving the country while Italy stood at third with 6,000 exits.The report said France is being heavily impacted by rising religious tension, especially in urban areas. “We ex pect that millionaire migration away from France will accelerate as these tensions escalate,“ it said. A report by New World Wealth says that Europe an countries where reli gious tensions are starting to emerge such as Belgium, Germany , Sweden and the UK are likely to see millionaires leaving in the near future.Other countries that saw significant millionaire outflows include Greece (3,000), while Russian Federation, Spain and Brazil saw 2,000 such outflows each.In terms of millionaire inflows, Australia topped the chart with 8,000 shifting base there, followed by the US (7,000) and Canada (5,000) in the second and third place respectively.Millionaires, otherwise known as “high net-worth indi viduals“ or “HNWIs“ refer to individuals with net assets of $1 million or more, excluding their primary residences.”



     In ancient times, Ravana was a demonic person, and felt precisely as the demonic persons feel: “I am God myself. I am perfect and the mightiest. Every object exists only for my pleasure.”  He ruled the mighty imperium of Lanka where he had amassed wealth that he had looted from all the worlds. His capital was made of gold beautified with pearls and diamonds. Everything that could beautify it was there in plenty making it a thing of delight every moment it was seen. Its security was of the highest order, and the king was wholly invincible.

Tulsidas tells us in the Ramcharitmanasa that during His sojourn in the forest, Rama saw heaps of bones of the sages and saints. His kindness welled up, and he asked people around what had wrought their plight that way. He got a reply: “The demonic persons had eaten up the good residents of the forest (अस्थि  समूह देखि रघुराया, पूछी मुनिन्ह लागि अति दया “ ). Ravana had got Lanka made by the divine architect Vishwakarma. Hanumanji, contemplating to enter Lanka in search of Sita, felt that Ravana’s capital floated on the clouds. Ravana’s aircraft had on it white mansions, water tanks with lotuses in plenty. It was called the Puspakvimana.

But Ravana’s extractive imperialism did not last long. His city, with all its might and affluence, was destroyed by of Hanuman, a monkey who was working for Rama. Even the invincible Ravana was killed by Rama. None survived even to shed tears for the mighty demon.

David Korten, in his Where Corporations Rule the World tells us about a very suggestive episode: about the Cloud Minders in The Star Trek: The Original Series. It is an allegory with deep import.

“The Cloud Minders, episode 74 of the popular science fiction television series Star Trek, took place on the planet Ardana. First aired on Feb. 28, 1969, it depicted a planet whose rulers devoted their lives to the arts in a beautiful and peaceful city, Stratos, suspended high above the planet’s desolate surface. Down below, the inhabitants of the planet’s surface, the Troglytes, worked in misery and violence in the planet’s mines to earn the interplanetary exchange credits used to import from other planets the luxuries the rulers enjoyed on Stratos.”

The Troglytes, the suffering beasts of burden, worked extracting zenite. This mineral was valuable for the cloud-minders for augmentation of wealth, though the unprocessed zenite emitted gas which made the beasts of burden lose their mental capacity. But their capitalist exploiters had good time in their world built in the sky. How unfair it is to deprive the poor of essential entitlements, and then cast them off in the ashcan because they are deficient!

To suffer unjust sufferings, tongue-tied, is itself the worst of all sins.


Good Work done never perishes (by Shiva Kant Jha)

I would end this Part telling you what Krishna had told  Arjuna when he had asked Krishna, in the battlefield of Kurukshetra: of what worth is the entire endeavour if it turns out futile in the end. A ‘movement’, or a ‘revolution’ is a march with a mission towards the future. We are scripting our deeds only on the passing moments of the living present. What the Lord told Arjuna  is  valid in  all times as what He said is the very existential truth:

पार्थ एव इह अमुत्र विनाशः तस्य विद्यते

हि कल्याण कृत कः चित् दुर्गतिं तात गच्छति

(‘O, Partha (Arjuna), neither in this life nor hereafter is there destruction for him; for never does anyone who does good, dear friend, tread the path of woe.’ Chapter VI.40)

 It should be read recalling the oft-seen but seldom understood quote from one of the the inscriptions on our Parliament:

 “अन्त में लिफ्ट संख्या 5 के निकटवर्ती गुम्बद पर फारसी का यह भित्ति लेख है:-

बरी रूवाके जेबर्जद नविश्ता अन्द बेर्ज,
जुज निकोईअहले करम नख्वाहद् मान्द।।”

“This lofty emerald like building bears the inscription in gold, Nothing shall last except the good deeds of the bountiful.”