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Will court rulings on PF affect you?

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Income Tax rates by Country based on OECD 2005...

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SONU IYER IN LIVE MINT

Are you a member of the Indian Provident Fund (PF)? Do you contribute 12% of your basic salary every month into the PF? Is your CTC (cost to company) divided into basic salary and various allowances such as conveyance allowance, asset allowance, education allowance and special allowance? Are you an HR manager in a company where you handle the above set of employees? If your answer is yes for any of these questions, then you may find this article useful.

After the specific inclusion of international workers in the Provident Fund Scheme in October 2008 and then further amendments in September 2010, the recent Madhya Pradesh and Madras high court rulings are the latest to add to the woes of employees and HR directors/chief financial officers of many companies.

Very briefly, the high courts have held that various allowances such as conveyance allowance and special allowance form part of basic wages for calculation of PF contribution.

Reinforcing existing law

What needs to be considered here is whether the high court rulings have laid down some new principles or are these more a way of reinforcement the existing law. To understand this, let us discuss the concept of PF contribution and basic wages in greater detail.

Under the Provident Fund Act, an employer is required to contribute 12% of the basic wages, dearness allowance and retaining allowance (if any) paid to the employees to the Provident Fund and Pension Scheme. The employee is required to match the contribution made by the employer.

Basic wages are defined to mean all emoluments in accordance with the terms of the contract of employment and which are paid or payable in cash, but does not include cash value of any food concession, dearness allowance, house rent allowance, overtime allowance, bonus, commission or any other similar allowance and presents made by the employer.Thus, the definition of basic wages in the Provident Fund Act seems to suggest the intention of including all cash emoluments unless the same is specifically excluded.

On this topic, the Supreme Court of India has ruled that any payment, which is universally, necessarily and ordinarily paid to all across the board is included in basic wages.

The Supreme Court has also mentioned that a payment that is specifically made to those who avail of an opportunity such as an overtime allowance is not to be included in basic wages. Also, any payment by way of special incentive or work or which is based upon contingencies is excluded.

Therefore, it is fair to say that the high court rulings only serve to reinforce the above principles laid down by the Supreme Court earlier. Subsequent to the high court rulings, the PF head office has issued internal directions to regional offices (available in the public domain) that the rulings of high courts may be utilized by the regional offices as per the merits of the case as and when similar situations arise in the field offices.

The concerns

This has caused apprehension among the employer community. Whether this would lead to increased PF audit activity? Whether employers would be asked to pay contribution on such allowances retrospectively? Whether this would lead to increased cost of PF in case of international workers and have an impact on their business plan?

The major concern here is of the employees who are worried since this would reduce their take-home salary drastically. In the current CTC structure which is generally followed in most companies, if both the employer’s and the employee’s share of additional contribution is deducted from the CTC, there will be a major impact on the employee’s take-home salary. While there will be some tax saving on the employer’s portion of contribution as the same is non-taxable, the deduction of the employee’s contribution under section 80C of the Income-tax Act will be limited to Rs1 lakh annually.

The way out: But the situation does not seem to be so bleak. Particularly, in case of local employees, the Provident Fund Scheme does provide a cap. There is merit in saying that employer’s and employee’s contribution to the Provident Fund Scheme can be limited to the base of Rs6,500 per month. However, if the employee so chooses, he may opt to make an additional contribution. Therefore, in respect of local employees, the employer can still take a position of limiting monthly contribution to the base of Rs6,500.

Still to be examined

Also, the generally accepted principle of not contributing on special allowance and certain other allowance on the basis of certain old PF circulars may also be examined. The argument that the earlier PF audits did not impose any requirement to contribute on such allowance may also be brought up.

For international workers, this needs to be examined differently as the limit of Rs6,500 per month does not apply to them. For international workers, what needs to be analysed is whether the test of universality needs to be applied for the company as a whole (including local employees) or for the international worker population only. Also, what needs an analysis is whether it can be argued that allowances paid to expatriate employees during the period of assignment can be considered as contingent as these are paid only while they are away from their home country and thus excluded from the scope of basic wages.

The writer is tax partner, Ernst & Young.

ORIGIN: http://www.livemint.com/2011/09/12215809/Will-court-rulings-on-PF-affec.html?h=B

Reprieve from death

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T.S. SUBRAMANIAN IN THE FRONTLINE

DEATH CONVICTS IN THE RAJIV GANDHI ASSASSINATION CASE

The delay of over 11 years by the President to decide the mercy pleas of Rajiv Gandhi’s killers dominates the debate on the issue.

WHY was there a delay of more than 11 years before the President of India decided on August 11 to reject the clemency petitions of Murugan, Santhan and Perarivalan, who had been sentenced to death in the Rajiv Gandhi assassination case? The question came to the fore after it became known that the President had rejected their petitions. Officials of the Central Prison, Vellore, subsequently decided to hang them on September 9, but on August 30 the Madras High Court stayed their execution.

The Supreme Court reconfirmed the death sentences awarded to Nalini, Murugan, Santhan and Perarivalan in October 1999. On April 24, 2000, M. Fathima Beevi, Governor of Tamil Nadu then, commuted the death sentence awarded to Nalini, wife of Murugan, on the grounds that she was a woman and had a daughter; but she rejected the clemency petitions of the other three. The three sent separate clemency petitions to the President on April 26, pleading that they had undergone solitary imprisonment for eight years, which alone could be a mitigating factor for commuting their death sentences. The President’s decision came after 11 years and four months.

Following this, Vaiko, leader of the Marumalarchi Dravida Munnetra Kazhagam (MDMK) and N. Chandrasekaran, advocate, filed petitions on behalf of the trio in the Madras High Court. Senior Advocates Ram Jethmalani, R. Vaigai and Colin Gonsalves, who appeared for Murugan, Santhan and Perarivalan respectively on August 30 before a Division Bench comprising Justices C. Nagappan and M. Sathyanarayanan, argued that the 11-year delay made the death penalty illegal and unconstitutional. The sentence of death after the three had spent 20 years in jail was “unjust and inhuman”, they said.

“Unless the delay is properly explained or justified,” Jethmalani argued, “it makes the death penalty immoral, illegal and, according to me, unconstitutional.” He told the judges: “You must start with the assumption that more than two years’ delay is, prima facie, wrong.” Jethmalani quoted from various Supreme Court and High Court judgments, including the apex court’s ruling in the Chinnappa Reddy case, to argue that the 11-year delay could be the sole ground for commuting the death sentence.

Vaigai and Gonslaves argued that the delay was “unconscionable”. By no yardstick could a government sit on a mercy petition for so many years. The delay made the execution of death sentence unconstitutional, Gonslaves argued. He said Article 21 of the Constitution made it mandatory that no person should be deprived of his life or personal liberty except according to the procedure established by law. Taking 11 years to dispose of the mercy petitions was not a procedure established by law, he said.

The arguments were heard in a courtroom packed with a couple of hundred advocates. The judges said in their brief order that the main contention raised in all the writ petitions was the delay in the disposal of the mercy petitions. “Since the matter involves consideration of question of law, the petitions are admitted and there shall be an order of interim injunction. Counter by eight weeks.” Additional Solicitor-General M. Ravindran and Advocate-General A. Navaneethakrishnan took notice for the Union government and the State government.

Assembly resolution

As news of the stay spread, the several hundred advocates gathered on the High Court premises rejoiced. Arputhammal, mother of Perarivalan, thanked Jethmalani with clasped hands as a beaming Vaiko stood by. There was more rejoicing when news came in on the same day that the Tamil Nadu Assembly had passed unanimously a resolution urging President Pratibha Patil to reconsider the clemency petitions.

The President should take into account the sentiments of the people of Tamil Nadu and the opinions of the political parties, the resolution said. The Congress members did not oppose the resolution. The Dravida Munnetra Kazhagam (DMK) members were not present in the House.

The resolution, piloted by Chief Minister J. Jayalalithaa, marked a significant change in the ruling All-India Anna Dravida Munnetra Kazhagam‘s (AIADMK) stand. Only the previous day had she told the Assembly that as Chief Minister she had no powers to stop the executions after the President had rejected the mercy petitions. This had been made clear in a Union Home Ministry Communication dated March 5, 1991, which said: “In case of death sentences where a petition for grant of pardon, etc., has earlier been rejected by the President of India in exercise of his powers under Article 72 of the Constitution of India, it would not be open for the Government of a State to seek to exercise similar powers under Article 161 in respect of the same case. However, if there is a change of circumstances or if any new material is available, the condemned person himself or anyone on his behalf may make a fresh application to the President for reconsideration of the earlier order. Once the President has rejected a mercy petition, all future applications in this behalf should be addressed to and would be dealt with by the President of India.”

Jayalalithaa also accused the DMK of adopting “double standards” and enacting “a deceitful drama”. Several political parties, Arputhammal and DMK president M. Karunanidhi had appealed to her to stop the executions. Jayalalithaa recalled that it was under Karunanidhi’s chief ministership in 2000 that the State Cabinet recommended rejection of the mercy petitions of Murugan, Santhan and Perarivalan. (The Cabinet took the decision on April 19, 2000, and the Governor, accepting its advice, passed the order on April 24.) If, after recommending the rejection of the mercy petitions of the three to the Governor, “Mr. Karunanidhi issues a statement that their lives should be saved, people of Tamil Nadu should ponder whether it is not tantamount to adopting double standards and performing a drama?” Jayalalithaa said.

Karunanidhi, however, turned the tables on Jayalalithaa. He said that on April 27, 2000, an AIADMK member opposed in the Assembly even the commutation of the death sentence awarded to Nalini. Jayalalithaa, too, had objected to the commutation. In a statement published in the AIADMK party organ Namadhu MGR (Our MGR) on October 23, 2008, she had attacked the delay in executing the death sentences awarded to the trio.

Karunanidhi said: “The three persons have spent more than 20 years in jail, which is virtually tantamount to death sentences. So the DMK wants the [death] sentence to be reconsidered. Since Murugan, Santhan and Perarivalan have spent more than 20 years in prison, it should be treated as if they had fully undergone the punishment awarded to them and they should be freed. The DMK appeals to the Centre to take steps in this direction.”

The assassination case

On May 21, 1991, former Prime Minister Rajiv Gandhi was assassinated at Sriperumbudur near Chennai by Dhanu, a belt-bomb assassin belonging to the Liberation Tigers of Tamil Eelam (LTTE). After a meticulous investigation, the Special Investigation Team (SIT) of the Central Bureau of Investigation (CBI) headed by D.R. Karthikeyan charge-sheeted 41 people in the case. The SIT said the LTTE was behind the assassination. Of the 41 accused, three were absconding and could not be tried. They were the LTTE chief V. Prabakaran, its intelligence wing chief Pottu Amman, and deputy chief of the LTTE women’s intelligence wing, Akila. Twelve among the 41 died, and so charges against them abated. The remaining 26 stood trial in the designated court at Poonamallee near Chennai. In his judgemnt delivered on January 28, 1998, the designated judge, V. Navaneetham, pronounced all 26 guilty under Section 102-B (murder) read with Section 302 (murder) of the Indian Penal Code and provisions of the Terrorist and Disruptive Activities (Prevention) Act, or TADA.

The charge against Prabakaran was that he ordered the assassination. Pottu Amman conspired with Prabakaran to carry it out. The charge against Akila was that she, in tandem with them, planned the assassination and arranged for its execution. Dhanu, an LTTE cadre, was to carry out the assassination along with Subha. Sivarajan, LTTE intelligence wing member, led the nine-member assissination squad, which reached Kodiakkarai in Tamil Nadu from the Jaffna peninsula on May 1. Sivarajan and Subha committed suicide at Konankunte, near Bangalore, on August 19, 1991, when cornered by the SIT.

The charge sheet said Nalini, an Indian national and wife of Murugan, accompanied Sivarajan, Dhanu, Subha and Haribabu to the assassination site. Murugan, a Sri Lankan Tamil and LTTE intelligence wing cadre, acted as a conduit between Sivarajan and Nalini’s family. According to the charge sheet, Murugan knew that Rajiv Gandhi was the target; Santhan, also a member of the LTTE intelligence arm, was a member of the squad; and Perarivalan, an Indian citizen, helped Sivarajan and Murugan in planning and executing the conspiracy. He bought two battery cells on Sivarajan’s instructions and gave them to him. They were used by Dhanu in her belt-bomb. Perarivalan also bought a battery to operate an illegal wireless set, which was installed in Vijayan’s (another accused in the case) house to send messages to Pottu Amman. Perarivalan bought the Kodak film used by Haribabu, photographer, to film the assassination. Haribabu died in the blast.

After the designated court awarded death sentences to all the 26 accused, they appealed in the Supreme Court. On May 11, 1999, Justices K.T. Thomas, D.P. Wadhwa and Syed Shah Mohammed Quadri confirmed the death sentences awarded to Nalini, Murugan, Santhan and Perarivalan but “altered” the death sentences awarded to Robert Payas, Jayakumar and Ravichandran to life imprisonment.

Justice Thomas disagreed with Justices Wadhwa and Quadri on confirming the death sentence awarded to Nalini. In his dissenting judgment, Justice Thomas said, “She became an obedient participant without doing dominant role. She was persistently brainwashed by A-3 [Murugan] who became her husband and then the father of her child…. She realised only at Sriperumbudur that Dhanu was going to kill Rajiv Gandhi. But she would not have dared to retreat from the scene because she was tucked into the tentacles of the conspiracy…. She knew how Sivarajan and Santhan had liquidated those who did not stand by them…” ( Frontline, November 5, 1999). Justice Thomas added that it could not be overlooked that she was the mother of a little girl who was born in captivity. Since the death sentence had been confirmed on the father Murugan and the child had to be saved from “imposed orphanhood”, the judge said, “the sentence passed on her is altered to one of imprisonment for life”.

Of the 19 other accused, the judges absolved 18 of taking part in the conspiracy. Although the judges confirmed the sentences awarded to them by the lower court under the Arms Act, the Explosive Substances Act, the Passport Act, and so on, they were freed because they had already served out their terms. S. Shanmugavadivelu, who was charged only under TADA, was acquitted.

Nalini, Murugan, Santhan and Perarivalan filed petitions in the Supreme Court, seeking a review of the death sentences awarded to them. On October 8, 1999, Justices Thomas, Wadhwa and Quadri reconfirmed the death sentences. Justice Thomas, who gave the dissenting judgment with regard to Nalini, said her review petition “should be allowed and her sentence should be altered to imprisonment for life”.

After the Supreme Court ruling in October 1999, Fathima Beevi accepted the recommendation of the Karunanidhi Cabinet in April 2000 to commute the death sentence awarded to Nalini to imprisonment for life. Congress president Sonia Gandhi met President K.R. Narayanan and conveyed her family’s view that Nalini’s life should be spared. “It is my personal feeling, keeping in mind a child’s need for a mother,” Sonia Gandhi said ( Frontline, May 26, 2000). Fathima Beevi rejected the petitions of Murugan, Santhan and Perarivalan. They sent clemency petitions to the President on April 26, 2000. President Pratibha Patil’s rejection of the petitions led to protests across Tamil Nadu.

SOURCE: http://www.frontline.in/stories/20110923281912700.htm

Is the death penalty about to die?

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The Madras High Court‘s order last week staying the execution of former prime minister Rajiv Gandhi‘s three killers has triggered a fresh debate on the desirability of the death penalty in India. The court also asked the government to explain why it took 11 years for the president to reject the trio’s mercy pleas.

President Pratibha Patil rejected them in early August. The Tamil Nadu assembly then passed a unanimous resolution requesting the president to reconsider her decision. Politicians in Punjab are making a similar demand for Devender Pal Singh Bhullar, convicted of a 1993 terror attack in Delhi that claimed several lives. Jammu and Kashmir chief minister Omar Abdullah reflected the sentiment in his state when he tweeted that had his state assembly passed a similar resolution about Parliament attack convict Afzal Guru reactions would not have been so muted.

The BJP favours the death penalty for such criminals, but Congress leaders have been airing their personal views for or against it. The Indian intelligentsia – the media, academics and the judiciary is also divided about the issue.

A look at the debate:

Punishment is a natural response to crime
This principle is almost universally accepted and that letting off criminals can result in vigilante justice. Also, the punishment has to be proportionate to the degree of wrongdoing and mitigating circumstances have to be considered while deciding the quantum of punishment. It goes without saying that the accused will be given a fair chance to defend himself/herself.

But various societies in different parts of the world react to crime in different ways. While some, such as a few Arab countries, choose retributive punishment of “an eye for an eye”, others have deterrent punishment. Of late, there has been a shift towards restorative and reformist approaches to punishment, including in India.

Death Penalty in India
Capital crimes are murder, gang robbery with murder, abetting the suicide of a child or insane person, waging war against the government and abetting mutiny by a member of the armed forces. In recent years, the death penalty has also been imposed under a new anti-terrorism legislation for people convicted of terrorist activities.

Is the judiciary becoming averse to the death penalty?
Section 354(3) of the Criminal Procedure Code (CrPC), which was added to the Code in 1973, requires a judge to give “special reasons” for awarding death sentences. In 1980, in the Bachan Singh case, the Supreme Court propounded the “rarest of rare” doctrine and since then, the life sentence is the rule and the death sentence the exception.

But recently, the Supreme Court refused to impose the capital punishment in the Graham Staines, Jessica Lall and Priyadarshini Mattoo murder cases on the ground that these did not fall within the category of “rarest of rare.” Is the judiciary becoming averse to capital punishment?

According to senior advocate KTS Tulsi, the vice chairman of the Law Commision of India, “India has found a perfect balance by retaining the death penalty as a deterrent, yet invoking it only in exceptional cases. While the deterrent effect is maintained, the possibility of an erroneous execution is minimised. Compared with China, Japan, Arab countries and the US, the use of capital punishment in India has been minimal.”

Moratorium on the death penalty
In December 2007, India voted against a UN resolution calling for a moratorium on the death penalty. But in effect, there has been a moratorium on the death penalty in India. Since 1995 there has been only one execution, that of Dhananjoy Chatterjee, in August 2004.

The judiciary appears to be hesitant in awarding the death penalty. The executive has disposed of several mercy petitions in the past few months, but around 20 such pleas, including that of Afzal Guru, are still pending before the president.

According to Amnesty International, in India, at least 100 people in 2007, 40 in 2006, 77 in 2005, 23 in 2002, and 33 in 2001 were sentenced, but not executed, to death.

Rajiv Gandhi Killers’ case is a test case
The Rajiv Gandhi Killers’ case is going to be a test case for death penalty in India. Whatever be the Madras HC decision, the matter is bound to go to the Supreme Court, which could lay down guidelines for timely disposal of mercy petitions. If the court rules that inordinate delay is a ground for converting a death penalty to life imprisonment, then it would have bearing on all pending mercy petitions, including that of Afzal Guru.

World moving towards abolition of death penalty
According to Amnesty International, more than two-thirds of countries in the world have now abolished the death penalty in law or practice. Ninety-six countries have abolished capital punishment for all crimes while nine have done away with it for ordinary crimes. Further, 34 countries have abolished it either in law or in practice. Only 58 countries retain this extreme form of punishment.

Should India abolish the death penalty?
“No”, says former additional solicitor general of India Vikas Singh. “Generally, a punishment should be aimed at reforming the criminal. But in some cases, such as in the Rajiv Gandhi assassination case or Parliament attack case, you have to give a deterrent punishment, for the simple reason that you can not reform these criminals. Can you reform Kasab (26/11 convict)?”

But Suhas Chakma, the director of the Asian Centre for Human Rights, disagrees. “The death penalty has failed to act as a deterrent against any crime. It’s nothing but retribution. Such medieval justice does not reflect the ethos of Mahatma Gandhi. India should abolish the death penalty and join the league of civilised countries.”

COURTESY: HINDUSTAN TIMES

Rajiv case outcome will settle fate of India’s 18 ‘dead men walking’

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Rajiv Gandhi and R.L.Lakhina

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J.VENKATESAN & VINAY KUMAR in THE HINDU

With as many as 18 clemency petitions filed by death-row convicts or their family members still pending consideration with the Government — some for years on end — the eventual fate of the petition filed by the three condemned men awaiting execution in the Rajiv Gandhi case is bound to have an impact on other prisoners awaiting the gallows across India.

In a plea admitted by the Madras High Court on Wednesday, Perarivalan, Santhan and Murugan said that the eleven years the government took to process and reject their mercy petition made the execution of their death sentence unduly harsh and excessive. Rajiv Gandhi was assassinated in 1991 and the trio, who were convicted of being part of the larger conspiracy, have already been incarcerated for 20 years, mostly in solitary confinement.

The last execution in India was carried out in Kolkata in August 2004, when Dhananjoy Chatterjee was hanged for raping and killing a schoolgirl. Since then, there has been no execution of convicts awarded the death penalty.

According to information furnished by the Minister of State for Home, Mullappally Ramachandran, in the Lok Sabha on August 16, 18 mercy petition cases of death convicts are pending. Though “the power under Article 72 of the Constitution does not contain any limitation as to the time in which the power conferred might be exercised,” the minister asserted that, “As per the orders of the Supreme Court, the cases of mercy petitions are processed expeditiously in consultation with the governments/departments concerned for a final decision of the President of India, under Article 72 of the Constitution.”

The facts, however, speak otherwise.

Mercy petitions are usually filed soon after the Supreme Court rejects the petitions seeking review of the judgment convicting and sentencing the accused to death. Right after the mercy petition is filed, the

President’s office forwards it to the Union Home Ministry for advice by the Council of Ministers. Invariably, delay takes place in the government forwarding its advice to the President. Thereafter, the President decides on the mercy petition based on the government’s advice. Lengthy delays occur there too.

In the case of the three convicts in the Rajiv case, the mercy petitions were sent to the President soon after the review petitions were dismissed in October 1999. It took about five years for the government to convey its decision to the President to reject the mercy plea and six years for the President to accept the advice and pass appropriate orders.

Recently the Home Ministry has asked the President to reject the mercy petition of Afzal Guru, sentenced to death in the Parliament attack case of December 2001. In reply to information sought under the RTI Act by Subhash Chandra Agarwal, the President’s Secretariat said the oldest petition pending with them was from 2005, while six mercy petitions were submitted to her office in 2011 alone.

The petition of Sushil Murmu from Jharkhand, who was convicted of killing a nine-year-old child for a religious ritual, has been pending since 2005. Another case is of Jafar Ali, who is facing the death penalty for murdering his wife and daughters. He applied for the President’s mercy August 21, 2006.

Meanwhile, the RTI reply also said that the President had commuted the death sentences of 10 convicts to life imprisonment following mercy petitions. In 2009 alone, death sentences of seven convicts had been commuted to life imprisonment.

In May, President Patil rejected the mercy plea of Mahendranath Das alias Govinda Das who had severed the head of 68-year-old Harakanta Das, secretary of the Guwahati Truck Drivers Association, in 1996. He was sentenced to death by a sessions court in 1997. Another mercy plea rejected by the President was that of Devinder Pal Singh Bhullar, who has been given the death penalty in a 1993 car bombing case in New Delhi.

During his tenure, President A.P.J. Abdul Kalam decided only two mercy petitions. In 2004, he rejected the plea of Dhananjoy Chatterjee, and in 2006 he commuted convict Kheraj Ram’s death penalty to life imprisonment. President K.R. Narayanan did not clear any mercy petition.

In 2009, the Supreme Court judgment in Jagdish vs State of Madhya Pradesh asked the Centre to decide the mercy petitions expeditiously, preferably within three months. It said the condemned prisoner and his suffering relatives have a very pertinent right in insisting that a decision in the matter be taken within a reasonable time, failing which the power should be exercised in favour of the prisoner and the sentence should be commuted into one of life imprisonment.

A self-imposed rule should be followed by the executive authorities rigorously, that every such petition shall be disposed of within a period of three months from the date on which it is received. Long and interminable delays in the disposal of these petitions are a serious hurdle in the dispensation of justice and indeed, such delays tend to shake the confidence of the people in the very system of justice, the court said.

In July this year, the Supreme Court issued notice to the Centre on a plea by Devinder Pal Singh Bhullar to explain the inordinate delay of several years in deciding the mercy petitions of convicts after the Supreme Court had pronounced its final verdict. The petitioner said, “The power is not merely a privilege but a matter of performance of official duty. The power has to be exercised not only for the benefit of the convict, but also for the welfare of the people who may insist for the performance of the duty and therefore the discretion has to be exercised on public considerations alone.”. The matter is still pending as the Centre is yet to file its reply. However, days after Bhullar filed his petition, his mercy plea — which had been hanging fire for years — was speedily processed and rejected by the Home Ministry and President.