SC ruling on Appropriation Bill

The Supreme Court in its determination on the Appropriation Bill said any deviation from the “development activities” programme in terms of Clause 6 of the Bill, to any other programmes under any other title by order of the Treasury Secretary should be specifically included in the reports submitted in terms of the Fiscal Management (Responsibility) Act giving reasons for such deviation.

A Supreme Court Bench comprising Chief Justice Sarath N Silva and Justices N.E. Dissanayake and A.M. Somawansa gave this ruling on the seven petitions filed in Court challenging Clauses 5 and 6 of the Bill on the basis they were inconsistent with Article 148 and related to Articles of the Constitution that provide for full control of public finance by Parliament. The petitioners submitted that the impugned provisions detract from parliamentary control amounting to an abdication of the power vested in Parliament.

Clause 6 provides that any money allocated as Recurrent or Capital expenditure under the “development activities programme” appearing under the title “Department of National Budget” may be transferred to any other programme under any other title by order of the Treasury Secretary or any other officer authorised by him.

It further provides that the money so transferred shall be deemed to have been covered by a supplementary estimate submitted by the appropriate Minister. A similar clause had been contained in all preceding years beginning from the Appropriation Act No 44 of 2003.

The crux of the submissions by the petitioners was that by this provision the Treasury Secretary is vested with an unfettered discretion to transfer funds voted for “development activities” to meet expenditure under other programmes and titles. In particular in clause 6 the final sentence which reads as, “The money so transferred shall be deemed to have been covered by a supplementary estimate submitted by the appropriate minister,” is an abdication of parliamentary control.

The Additional Solicitor General submitted that there was no abdication of parliamentary control over public finance since money could be transferred by the Treasury Secretary in terms of Clause 6, only dependent on the amount voted by Parliament for “development activities” and that the powers vested in Parliament and the Treasury Secretary would come into force only after due and proper consideration and would not amount to an abdication of Parliamentary control over public finance as contended by the petitioners.

The ASG submitted that the immediate responsibility of meeting unexpected expenditure under other Heads and Programmes would finally rest with the Department of National Budget and in this context it appears that from 2003 a budgetary method had been adopted in which a relatively large sum was allocated under this Head with an attendant reduction under other Heads. He submitted that such action was necessary in view of the volatile nature of the country’s financial position resulting from a variety of factors, including escalating defence expenditure, rising oil prices, inflation and unfavourable balance of payments situation resulting in the downward trend of the rupee in relation to other currencies.

Court said it accepted the ASG’s submissions with regard to the context on which Parliament has passed into law clauses to the same effect consistently from 2003 onwards. Court said it was also inclined to agree with the ASG’s submissions that the establishment of a Contingencies Fund to meet urgent and unforeseen expenditure as envisaged by Article 151 was far-fetched in the current fiscal context plainly due to a lack of resources.

“The sentence referred to in Clause 6, which drew criticism by the petitioners provides that the money transferred shall be deemed to have been covered by a supplementary estimate submitted by the appropriate Minister. This provision is necessary in our view to ensure accountability by the officer who is actually responsible for expenditure,” the Court said. It said that although discretion was vested by Clause 6 in the Treasury Secretary to transfer monies, any such transfer would come within the purview of Parliament pursuant to the reporting mechanism as contained in the Fiscal Management (Responsibility) Act No.3 of 2003.

Thus the vesting of discretion in the Treasury Secretary from the year 2003 has been equally matched by the reporting mechanism introduced to ensure fiscal management responsibility. Thus the Court ruled that Clause 6 was not inconsistent with the Constitution. But the Court observed that considering the severe criticism made, for the purpose of ensuring transparency and prudent financial management, the transfers made in terms of Clause 6 that are deemed to be supplementary estimates should be specifically included in the relevant reports submitted in terms of the Fiscal Management (Responsibility) Bill, with reason for the particular deviation.

The challenge in respect of Clause 5 (1) also related to the authority vested in the Treasury Secretary or by any officer authorised by him. The submission of Counsel was that although such a transfer may be necessary, the vesting of authority only in the Treasury Secretary in this regard would be unconstitutional and there should be specific provision for the Secretary’s power to be exercised in consultation with or on the recommendation of the appropriate Ministry Secretary.

The Court observed that this submission is made without taking into account the ordinary administrative procedure. The court observed that the Treasury Secretary would finally be responsible for the order and he would delegate his powers to an officer of suitable standing. The Counsel did not pin point a particular provision of the Constitution in relation with which Clause 5 (1) was inconsistent.

“We are unable to agree with the submissions that there is now a need to ignore the well accepted norms as to administrative procedure and to introduce additional guidelines and limitations. Accordingly we see no merit in the submissions made in respect of Clause 5 (1) of the Bill”, the Court said.

The petitioners were Nihal Sri Amarasekera (in person); Sunil Handunnetti with Counsels Manohara de Silva and Sunil Watagala; Centre for Policy Alternatives (Guarantee) Ltd with Counsel M.A. Sumanthiran, Viran Corea, B. Fonseka and S. Fernando, L.O.K.G. Fernado with Counsel Romesh de Silva with Sugath Caldera and Eraj de Silva instructed by G.G. Arulpragsam, Susiri Adikari with Counsel Ikram Mohamed with M.S.A. Wadood, Champaka Laduwahetty and Palitha Subasinghe; Institute of Human Rights with counsel J.C.Weliamuna with Maduranga Ratnayaka, Uma Wijesinghe and Rashani Meegama and Themiya L.B. Hurulle with counsel Sanjeewa Jayawardena with Senanay Dayaratna.

Additional Solicitor General P.A. Ratnayake with Deputy Solicitor General Indika Demuni de Silva and Janak de Silva appeared for the Attorney General.