Question:medium

The Supreme Court observed that the Ordinance making power has been used to such an extent that its use has become ‘fraud on the Constitution’. Critically examine this statement in the light of constitutional provisions, practices/conventions and judicial decisions.

Updated On: Jul 13, 2026
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Solution and Explanation

What the Constitution requires:
Article 123 (Union) and Article 213 (State) allow the President or Governor to issue ordinances only when the legislature is not in session and immediate action is genuinely needed. This is meant as a stand-in for the legislature, not a substitute for it. Every ordinance has a built-in expiry: six weeks from the legislature's reassembly, unless it is withdrawn, disapproved, or converted into an Act before that.

How the practice drifted from the text:
The problem the courts kept confronting was governments re-issuing the same ordinance again and again, right before or right after the six-week clock ran out, so that the content of the ordinance kept operating for years without ever facing a legislative vote. Bihar was the clearest example of this in the 1980s, with the same ordinances renewed dozens of times.

Why the courts called it a fraud on the Constitution:
Re-promulgation defeats the temporary character the Constitution builds into the power. It lets the executive make law that never gets debated or voted on, which is the opposite of how Articles 123 and 213 were designed to work. The Supreme Court used this exact phrase, fraud on the Constitution, to describe the practice, first for the state-level pattern and later, in a seven-judge ruling, for the underlying principle itself, adding that a lapsed ordinance does not get to leave permanent legal effects behind just because it operated for a while.

What still needs watching:
A single fresh ordinance followed by prompt legislative approval is constitutionally fine. The doctrine only bites re-promulgation and indefinite postponement of legislative scrutiny, so the real safeguard going forward is legislatures actually debating and voting on ordinances quickly, rather than courts having to strike down abuse after the fact.
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An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”) in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had personally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group in which CPM held a controlling interest (about 2% of the issued share capital of Tata Sons). Seven out of the nine directors of Tata Sons voted for CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to vote as he was an interested director. Mistry challenged his removal, accusing the board of mismanagement and of oppressing minority shareholders. however, the National Company Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in National Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court. CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order reinstating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships in the holding company as well as three group companies, with a preliminary observation that the first impression of the order was “not good” and that the tribunal ‘could’ not have given consequential relief that had not been sought in the first place. Ultimately, the Supreme Court decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that “whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’ under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed that “unless the removal of a person as a chairman of a company is oppressive or mismanaged or done in a prejudicial manner damaging the interests of the company, its members or the public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a Company in a petition under Section 241 of the Companies Act, 2013.” This case highlighted the point that “an executive chairman does not have sovereign authority over the company. In corporate democracy, decision making always remains with the Board as long as they enjoy the pleasure of the shareholders. Likewise, an executive chairman will continue as long as he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she would have a free hand in running the affairs of the company is incongruous to corporate governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’ is antithesis to collective responsibility and collective decision making”.
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[Extract from Sahara India Real Estate Corporation Limited v. Securities and Exchange Board of India (SEBI), Para 89-91, Civil Appeal No. 9833/2011 (SC)]
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[Extract from the judgment of the Supreme Court in A.K. Kraipak v. Union of India, (1969) 2 SCC 262, decided on April 29, 1969, hereafter ‘A.K. Kraipak’].
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[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].
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