India Politics | 3 March 2015
India Politics
Budget session heavy on legislative agenda
Six pressing ordinances and a few transformative economic bills
Please refer to our report on
Union Budget 2015
n
n
n
n
Key bills for budget session
The Finance Bill, 2015
Insurance Laws (Amendment)
Bill, 2014 (RO)
Coal Mines (Special Provisions)
Bill, 2014 (RO)
The Mines and Minerals
(Development and Regulation)
Amendment Bill, 2015 (RO)
The Motor Vehicles
(Amendment) Bill, 2015 (RO)
The Right to Fair Compensation
and Transparency in Land
Acquisition, Rehabilitation and
Resettlement (Amendment) Bill,
2015 (RO)
The Citizenship (Amendment) Bill,
2015 (RO)
Constitution (One Hundred and
Twenty-Second Amendment)
(GST) Bill, 2014
Cos (Amendment) Bill, 2014
Lokpal and Lokayuktas and other
related Law (Amendment) Bill,
2014
RO:
Replaces Ordinance
n
The budget session of Parliament (ongoing till May 8, 2015) began with the Rail
Budget and Union Budget for FY16. The focus now shifts to the government’s heavy
legislative agenda, including six ordinances that need to be ratified to become acts.
There are also other significant economic legislations that would be taken up.
The government has indicated that it will not allow Parliament to be an impediment
for the reforms process. Its taking up the contentious Land Bill at the very beginning of
the session points to its resolve to push ahead with the legislative agenda. We take a
closer look at the various provisions relating to ordinances to understand the task
ahead for the government.
The legislative push through ordinances is not new to India – 644 ordinances have
been issued over 1952-2014 (average of 10 ordinances per year). Further, judicial
pronouncements have proved that actions under any ordinance stay valid.
The government can convene a joint session of Parliament as the last resort under
certain circumstances. However, it is noteworthy that Money Bills and Constitutional
Amendment Bills (GST Bill pending in Lok Sabha) cannot be placed through the
medium of joint session.
Historically, the joint session route has been opted only thrice – in 1961, 1978 and
2002. If a joint session were to be held, the NDA would be able to have any bill passed,
given the higher number of members in Lok Sabha.
Government needs to push ordinances into acts in budget session
n
n
n
n
The budget session of Parliament is being conducted between February 23 and
May 8. There would be a recess from March 21 to April 19, when the standing
committees would examine demands for grants from various Ministries.
During the winter session, several bills were not discussed/are pending in Rajya
Sabha due to disturbances. These include the Insurance (Amendment) Bill,
Companies (Amendment) Bill, and Coal Mines (Special Provisions) Bill. Further,
the Electricity (Amendment) Bill, Constitutional (Amendment) Bill on GST, and
Lokpal and Lokayuktas Bill remain pending at the Lok Sabha.
The government promulgated ordinances in certain areas to push through its
legislative agenda. Six of these need to be ratified by the Parliament to become
acts. Besides, there are other key bills (GST Bill, Companies Amendment Bill, and
Lokpal Bill) that need to be passed apart from the budget itself.
That the government took up the contentious Land Acquisition Bill at the very
beginning of the session points to its resolve of taking forward legislative
reforms. We take a closer look at the technical aspects of various
rules/procedures governing issuances of ordinances, their validity and
possibilities of carrying forward legislative reform by way of joint session of
Parliament. We also append the views of a well-known expert on these issues.
Ashish Gupta
(Ashish.Gupta@MotilalOswal.com); +91 22 3982 5544
Dipankar Mitra
(Dipankar.Mitra@MotilalOswal.com); +91 22 39825405
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

India Politics
Promulgation/re-promulgation of ordinances common in India
#1: What an ordinance is
n
Under the Constitution, the power to make laws rests with the legislature.
n
However, the Constitution also provides for ordinances for taking immediate
action under exceptional circumstances when Parliament is not in session.
n
The President issues ordinances based on the advice of the Union Cabinet.
“There
are enough
safeguards, and
constitutional system can
deal with and effectively
defeat this policy of political
obstructions”
–
Mr Arun
Jaitley, Finance Minister
#2: Period for which an ordinance remains in force
n
The Constitution has also introduced checks and balances by mandating that
every ordinance be approved by Parliament in its next sitting.
n
Further, an ordinance ceases to operate at the expiration of six weeks from the
reassembly of Parliament.
#3: Validity of actions under an ordinance
n
The Supreme Court has held that all actions under an ordinance while it is in
effect remain valid forever.
#4: The number game
n
In India, 644 ordinances have been promulgated over 1952-2014, implying an
average of 10 ordinances per year.
n
The NDA-2 government under Mr Narendra Modi has already issued 10
ordinances including re-promulgation of the ordinance on coal e-auctions. Three
of these have been passed and become acts, while six are pending presentment
in Parliament (one ordinance on coal has been re-promulgated).
n
The minority government led by Mr Narasimha Rao had promulgated 77
ordinances between 1991 and 1996. The next three short-term governments –
Mr Vajpayee (13 days) followed by Mr Deve Gowda (11 months) and Mr IK
Gujral (also 11 months) collectively promulgated 77 ordinances between 1996
and 1998. The NDA government under Mr Vajpayee promulgated 25 ordinances
during its 13-month term (1998-99) and 33 during its full term (1999-2004).
#5: Motive behind ordinances
n
Often ordinances are used by governments to pass legislation that is currently
pending in Parliament. Examples: the UPA’s Food Security Ordinance, and the
current ones on Coal Mine Auctions and Insurance Bill.
n
According to Mr Shubhankar Dam’s book, “Presidential Legislation in India: The
Law and Practice of Ordinances (Comparative Constitutional Law and Policy)”, of
the ordinances passed between 1952 and 2006, ~35% were promulgated just 15
days before Parliament was supposed to be in session, while 42% were
promulgated within 15 days of Parliament finishing its session.
#6: Re-promulgation of ordinances
n
The Constitution also allows for re-promulgation of an ordinance. Until 1991, no
ordinances at the national level had been re-promulgated.
n
Between 1991 and 1999, 53 ordinances were re-promulgated and some were
re-promulgated at least five times.
2
Key statistics on ordinances
Number of ordinances
issued from 1952-2014
No of ordinances per year
No of ordinances in NDA-2
644
10
10
Ordinances promulgated
between 1952 and 2006
Percentage of ordinance
promulgated (%)
42.4
34.8
15 days before Within 15 days
Parliament was of Parliament
supposed to be finishing its
in session
session
3 March 2015

India Politics
n
The last re-promulgation (thrice) was of the SEBI Amendment Bill in September
2013 to give additional powers to SEBI (urgent need to deal with Saradha scam).
“The government is
extremely determined to go
ahead with reforms and will
not allow a parliamentary
disturbance to obstruct or
delay a reform of this kind”
–
Mr Arun Jaitley, Finance
Minister
#7: Comparison with foreign countries
n
Most democracies including UK, USA, Australia and Canada do not have
provisions similar to those of ordinances in the Indian Constitution.
n
The reason is because legislatures in these countries meet year long.
Exhibit 1: On an average, 10 ordinances are promulgated every year
Bill Passed
487
333 327
272
336 355
216
38
99
135
28
58
35 63
16
284
77
77 64 60
25
302
261
185
33
36
25 30
10
Ordinances Promulgated
39
20
31
Source: PRS, MOSL
Exhibit 2: Ten ordinances promulgated/re-promulgated in NDA-2 regime
Sr No Names of ordinances
1
2
3
4
5
6
The Telecom Regulatory Authority of
India (Amendment) Ordinance 2014
Andhra Pradesh Reorganisation
(Amendment) Ordinance 2014
The Coal Mines (Special Provisions)
Ordinance, 2014
The Textile Undertakings
(Nationalisation) Laws (Amendment and
Validation) Ordinance, 2014
The Coal Mines (Special Provisions)
Second Ordinance, 2014
The Insurance Laws (Amendment)
Ordinance, 2014
The Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement
(Amendment) Ordinance, 2014
The Citizenship (Amendment) Ordinance,
2015
The Motor Vehicles (Amendment)
Ordinance, 2015
Date of
ordinance
28-May-14
29-May-14
21-Oct-14
24-Oct-14
26-Dec-14
26-Dec-14
Status
Passed in
Parliament
Passed in
Parliament
Re-
promulgated
Passed in
Parliament
Pending
Pending
Brief about ordinances
Makes Chairperson and whole-time members of TRAI eligible for
any employment under Central or State Government or any
company in business of telecom service
Alters the boundaries of the states of Telangana and Andhra
Pradesh
Procedure for auction of coal blocks that were cancelled by the
Supreme Court
Allows the National Textile Corporation to continue with the
lease-hold rights vested with it, even after the completion of the
lease-hold tenure
Procedure for auction of coal blocks that were cancelled by the
Supreme Court
Raises FDI limit to 49% and allows entry of foreign re-insurers
Key amendments include waiver from requirement of Social
Impact Assessment study (SIA) for five categories viz.
infrastructure projects, industrial corridors, national security,
affordable housing, and rural infrastructure. Consent
requirements have been waived for PPP projects.
Seeks to merge Person of Indian Origin (PIO) and Overseas
Citizenship of India (OCI) schemes, by which PIOs will also get
life-long Indian visa
Brings e-carts and e-rickshaws under the Act, provides for
issuing of driving license and registration to them
Paves the way for auctioning of major minerals including iron
ore, bauxite, limestone and manganese ore, along with certain
other conditions
Source: PRS, MOSL
3 March 2015
3
7
31-Dec-14
Pending
8
6-Jan-15
Pending
9
7-Jan-15
Pending
The Mines and Minerals (Development
10 and Regulation) Amendment Ordinance,
2015
12-Jan-15
Pending

India Politics
Joint session of Parliament – the last resort
#1: When a joint session can be held
The Constitution allows the President of India to call for a joint session of the LS and
the RS if:
n
A non-financial bill (ordinary bill) passed by one house is rejected by the other
house, or
n
If the amendments proposed to a non-financial bill by one house are not
acceptable to the other house, or
n
Other house does not take any action on a non-financial bill remitted to it for six
months.
#2: Bills which cannot be undertaken in a joint session
n
There is no provision of joint sittings on a money bill or a constitution amending
bill.
n
Thus, the constitution amendment bill on GST cannot be passed in a joint
session of Parliament. A constitution amendment bill requires approval of two-
thirds majority of each house (LS and RS) and by at least 50% of the state
assemblies (15).
#3: Voting for joint session
n
The deadlock over a bill in a joint sitting is resolved by a simple majority of the
total members present and voting.
n
Since the Lok Sabha includes more than twice as many members as the Rajya
Sabha, in such a session, the members of the Lok Sabha would generally prevail.
#4: Speaker for joint session
n
The joint session is presided by the Lok Sabha speaker.
n
The Lok Sabha speaker does not vote in the house except on those rare
occasions when there is a tie at the end of a decision. Till date, the speaker of
the Lok Sabha has not been called upon to exercise this unique casting vote.
Three joint sessions held till date
Year
1961
1978
2002
Bills presented
Dowry Prohibition Bill
Banking Service
Commission (Repeal) Bill
Prevention of Terrorism
Bill
Bills which cannot be presented in
joint session of Parliament
1) Money bills
2) Constitution Amendment Bill
(GST Bill introduced in Lok Sabha
requires 2/3 majority in each
house of Parliament and approval
of at least 50% of state assemblies)
rd
#5: Past instances of joint sessions
n
Such sittings are rare in India’s history.
n
Only three have ever been called – in 1961, 1978 and, most recently, in 2002 to
pass an anti-terrorism legislation that was later repealed.
#6: Strength of NDA in case of a joint session
n
At current strength, a joint sitting will have 784 members (541 LS + 243 RS), of
which the NDA has 393 (334 LS + 59 RS). This gives the NDA simple majority
(50.1%).
n
Assuming maximum number of members at the joint sitting (including two
vacant seats in LS, two in RS and two nominated members in LS), the maximum
members could increase to 790 (545 LS + 245 RS).
n
In such an instance, with 397 members (393 current + 2 RS vacancy-
Maharashtra and Jharkhand + 1 LS vacancy-BJP + 1 nominated), the NDA will be
in majority, with 50.3%.
4
3 March 2015

India Politics
Exhibit 3: NDA has majority at current strength of JS
392
NDA – 393
Others – 391
Exhibit 4: NDA will be in majority at full strength of JS also
395
NDA – 397
Others – 393
Total members
784
Source: Rajya Sabha, Lok Sabha, MOSL
Total members
790
Note: Source: Rajya Sabha, Lok Sabha, MOSL
3 March 2015
5

India Politics
Appendix: Labyrinth of ordinances and joint sessions unraveled
Actions under an ordinance valid, joint session criteria not easy to fulfill
We hosted a conference call with Constitutional Expert, Mr Shubhankar Dam, Assistant
Professor at Singapore Management University to understand the nuances of ordinances and
joint sessions. Our key takeaways:
n
An ordinance needs to be converted into an act within six weeks after the Parliament
session begins, post which it “ceases to operate”. When an ordinance ceases to operate, it
is only with prospective effect. There are Supreme Court verdicts stating that all actions
taken during the time an ordinance is in force remain valid forever.
n
The President is the final authority to approve an ordinance. There have been several
instances where the President has rejected ordinances. The earliest was in 1979, when Mr
Neelam Sanjiva Reddy rejected two ordinances. The general understanding is that the
President can reject an ordinance only once and if it is returned in the same form by the
Cabinet, he has to approve it. During the current NDA-2 government, no ordinances have
been rejected by the President.
n
Being a constitutional amendment bill, the GST Bill cannot be passed through an
ordinance or joint session of Parliament. It has to be passed in each of the Houses with
two-thirds majority and by 50% of the state legislatures.
n
One of the conditions for convening a joint session of Parliament is that the bill in
question should be approved by one House and six months should have elapsed in the
other House. The six months here do not mean six calendar months but that the other
House is in session for more than six months (or 180 days), which based on empirical
evidence, is normally more than 18 months.
Mr Shubhankar Dam
Assistant Professor of Law,
Singapore Management
University
Mr Shubhankar Dam has
completed his Masters in Law
from the Harvard Law School
in 2007 and is currently the
Assistant Professor of Law in
Singapore Management
University. He has bagged
various awards and and
honours throughout his
career. He has written
various books and articles on
Indian Constitution including
a book on Ordinances titled
“Presidential legislation in
India: The Law and Practice
of Ordinances”
Please refer to our report,
A walk
down the ‘ordinance’ lane,
dated
January 13, 2015
Actions under an ordinance valid; no limit on number of re-promulgations
What conditions are to be fulfilled to promulgate an ordinance?
Under the
Constitution, the power to make laws rests with the legislature. However, in
cases when the Parliament is not in session, and ‘immediate action’ is needed,
the President can issue an ordinance. As per Article 123 of the Constitution of
India, an ordinance can be promulgated by the President subject to two
conditions:
1
One of the Houses is not in session:
The President can only promulgate an
ordinance when either of the two Houses of Parliament is not in session.
2
Immediate action is required:
The President is satisfied that there are
circumstances that require taking ‘immediate action’.
Both these conditions appear to be easily satisfied considering that nearly 10
ordinances have been issued every year since 1950 (refer to our report,
A walk
down the ‘ordinance’ lane,
dated January 13, 2015).
n
When does an ordinance “cease to operate”?
An ordinance must be approved
by both Houses of Parliament within six weeks of reassembling, post which it
ceases to operate. The ordinance also ceases to operate if resolutions
disapproving the ordinance are passed by both Houses.
n
Are actions under an ordinance valid?
An ordinance has the same force and
effect as an Act of Parliament. There are Supreme Court verdicts stating that all
actions performed under an ordinance are valid and cannot be nullified even if
the ordinance were to lapse/be rejected later. Thus, all the actions validly taken
n
6
3 March 2015

India Politics
during the time an ordinance was in force remain permanently legal. Thus, an
ordinance never ceases to operate retrospectively; it only ceases to operate
prospectively.
Exhibit 5: Ten ordinances promulgated/re-promulgated in NDA-2 regime
Sr No Names of ordinances
The Telecom Regulatory Authority of India
(Amendment) Ordinance 2014
Andhra Pradesh Reorganisation
(Amendment) Ordinance 2014
The Coal Mines (Special Provisions)
Ordinance, 2014
The Textile Undertakings (Nationalisation)
Laws (Amendment and Validation)
Ordinance, 2014
The Coal Mines (Special Provisions) Second
Ordinance, 2014
The Insurance Laws (Amendment)
Ordinance, 2014
The Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement
(Amendment) Ordinance, 2014
The Citizenship (Amendment) Ordinance,
2015
The Motor Vehicles (Amendment)
Ordinance, 2015
Date of
ordinance
28-May-14
Status
Passed in
Parliament
Passed in
Parliament
Re-
promulgated
Passed in
Parliament
Pending
Pending
Brief about ordinances
Makes Chairperson and whole-time members of TRAI
eligible for any employment under Central Government or
State Government or any company in business of telecom
service
Alters the boundaries of the states of Telangana and Andhra
Pradesh
Procedure for auction of coal blocks that were cancelled by
the Supreme Court
Allows the National Textile Corporation to continue with
the lease-hold rights vested with it, even after the
completion of the lease-hold tenure
Procedure for auction of coal blocks that were cancelled by
the Supreme Court
Raises FDI limit to 49% and allows entry of foreign re-
insurers
Key amendments include waiver from requirement of Social
Impact Assessment study (SIA) for five categories viz.
infrastructure projects, industrial corridors, national
security, affordable housing, and rural infrastructure.
Consent requirements have been waived for PPP projects.
Seeks to merge Person of Indian Origin (PIO) and Overseas
Citizenship of India (OCI) schemes, by which PIOs will also
get life-long Indian visa
Brings e-carts and e-rickshaws under the Act, provides for
issuing of driving license and registration of e-carts and
e-rickshaws
Paves the way for auctioning of major minerals including
iron ore, bauxite, limestone and manganese ore, along with
certain other conditions
Source: PRS, MOSL
1
2
3
4
5
6
29-May-14
21-Oct-14
24-Oct-14
26-Dec-14
26-Dec-14
7
31-Dec-14
Pending
8
6-Jan-15
Pending
9
7-Jan-15
Pending
The Mines and Minerals (Development and
10 Regulation) Amendment Ordinance, 2015
12-Jan-15
Pending
Ordinances promulgated
between 1952 and 2006 (%)
n
42.4
34.8
n
15 days before Within 15 days
Parliament was of Parliament
supposed to be finishing its
in session
session
n
Are there any past instances of the President rejecting an ordinance?
The
President is the final authority empowered to approve/reject an ordinance.
There have been several instances where ordinances have been rejected by the
President. The earliest was in 1979, when Mr Neelam Sanjiva Reddy rejected
two ordinances. Later, during the period of Mr Narasimha Rao’s government, Dr
Shankar Dayal Sharma had rejected three ordinances.
How many times can a President reject an ordinance?
The general
understanding is that the President can reject an ordinance only once. If it
comes back in the same form from the Cabinet, he has to approve the
ordinance. However, there is nothing provided in the Constitution to this effect.
Mr Dam is of the view that the President can reject an ordinance as many times
as he wishes (though this view is sparsely accepted).
Is there a time limit within which the President has to promulgate an
ordinance?
As per the Constitution of India, there is no time limit specified
within which the President has to promulgate an ordinance. For instance, Mr
7
3 March 2015

India Politics
n
n
Giani Zail Singh had not taken any action on the Postal Bill passed by both
Houses of Parliament for two and a half years after it was approved by both
Houses of Parliament. The bill remained with subsequent Presidents, and was
finally withdrawn by NDA in 2002.
Is re-promulgation of an ordinance valid?
No ordinances were re-promulgated
at the central level until 1992. However, at the state level, ordinances have been
re-promulgated since long. The Supreme Court’s ruling is that re-promulgation
of ordinances is generally unconstitutional. However, if the Parliament is too
busy or there are other reasons due to which the ordinance could not be
discussed, then the government can re-promulgate an ordinance.
How many times can an ordinance be re-promulgated?
Empirical evidence
suggests that an ordinance can be re-promulgated as many times, subject to the
above conditions being fulfilled. At the central level, we have seen ordinances
being re-promulgated 4-5 times, while at the state level, ordinances have been
re-promulgated more than 10 times.
Requirements of joint session not easy to meet
n
n
n
n
What conditions are to be satisfied for joint session?
As per the Constitution,
one of the three conditions should be satisfied for the President to call for a
joint session. These are:
1. If after the bill has been passed by one House, it is rejected by the other, or
2. If there is a disagreement between the two Houses on amendments to be
made in the bill, or
3. If after the bill has been passed by one House, more than six months have
lapsed from the date of reception of the bill by the other House without it
being passed.
What is the interpretation of six months period?
The period of six months in (3)
above does not refer to six calendar months. It means that the particular House
where the bill is pending should be in session for six months (or 180 days). These
six months (or 180 days) need not be in one calendar year. Thus, if a bill is
approved in the Lok Sabha and no action is taken by the Rajya Sabha on that bill
in any of the remaining sessions, the earliest a joint session can be called for
that bill is normally after a period of 18 months (refer Exhibit 4).
How many joint sessions have been held in India?
Only three joint sessions of
Parliament have been held in India’s history till date. The first one was in 1961,
then 1978, and lastly in 2002, to pass an anti-terrorism legislation that was later
repealed.
Can more than one bill be taken up in a joint session?
There is no limit on the
number of bills that can be taken up in a joint session of Parliament so far as the
conditions for convening a joint session are fulfilled.
Exhibit 6: Bills which cannot be presented in joint session
of Parliament
1) Money bills
2) Constitution Amendment Bill
(GST Bill introduced in Lok Sabha requires 2/3rd majority in each
Exhibit 7: Three Joint sessions held till date
Year
1961
1978
Bills presented
Dowry Prohibition Bill
Banking Service Commission (Repeal) Bill
Prevention of Terrorism Bill
8
house of Parliament and approval of at least 50% of state assemblies) 2002
3 March 2015

India Politics
Exhibit 8: Scenario analysis - Earliest time as to when a joint session can be held if a bill is passed by one House and pending
in the other House
Source: MOSL
Assumptions for the above scenario analysis
n
n
We have assumed that the Bill is passed in Lok Sabha and presented in Rajya Sabha during the 4th Session
(Budget session) and the bill is pending in Rajya Sabha till the 8th session.
We have assumed the same number of Rajya Sabha sittings during UPA-2 (2009-2014) for our scenario analysis.
Actual number of sittings during NDA-2 (2014-2019) may be different.
3 March 2015
9

India Politics
GST Bill cannot be passed through an ordinance or joint session of
Parliament
n
n
n
n
Currently, the constitutional amendment bill of GST is pending with the Lok
Sabha.
Mr Dam is of the view that the GST Bill, being a constitutional amendment bill,
cannot be passed either through an ordinance or joint session of Parliament.
Ordinances are an alternative only for ‘acts’ of Parliament. There is no provision
in the Constitution for promulgating an ordinance in lieu of ‘constitutional
amendments’.
The GST Bill has to be passed with two-thirds majority in each House of
Parliament and by 50% of the state legislatures.
3 March 2015
10

India Politics
NOTES
3 March 2015
11

India Politics
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