Explained: How a Complete Bandh in Sikkim Led the Supreme Court to Amend an Order

The Supreme Court, hearing a case about income tax exemption, observed that the state's majority community – Sikkimese Nepalis – were "persons of foreign origin". After statewide outrage, it has now agreed to amend the section.

New Delhi: A state-wide shutdown was observed on Wednesday, February 8, in Sikkim. At the centre of the bandh is a Supreme Court judgment delivered on January 13, which the apex court has now agreed to amend. In it, it had called a section of Sikkim residents as people having “foreign origin.”

The relatively peaceful northeastern state – which makes the news for being a success story in tourism and organic agriculture more than for violent clashes or conflict – observed the day-long total bandh call.

The bandh was called by a citizens’ group, as an expression of collective anger of the state’s majority community – the Sikkimese Nepalis. It resonates within the state so much that even the ruling party, the Sikkim Krantikari Morcha (SKM), has thrown its support behind the band call, along with the opposition parties.

On January 13, hearing a petition filed by the Association of Old Settlers of Sikkim, the apex court decided on a rather pesky issue: whether those Indians who had settled in Sikkim prior to the kingdom joining the Indian Union in 1975 should be exempted from paying income tax, like the rest of the population in the Himalayan state is. It also dealt with another issue, whether Sikkimese women who have married non-Sikkimese persons after 2008 onwards should also be exempted from paying income tax.

Before getting into the specifics of the case and the ensuing backlash leading to the shutdown and causing a political maelstrom, some amount of context woven around the long-pending issue will be useful.

Like all the Northeastern states, Sikkim too was granted special provisions by the Indian constitution, under Article 371F. Through this, Sikkim became a democracy from a monarchy by joining the Indian Union in 1975. By and by, a set of Indian laws began to cross over to Sikkim.

The gates of the
Tsuklakhang Palace, the seat of the Chogyal dynasty. Photo: BOMBMAN/Flickr CC BY 2.0

In July 1989 though, there was strong resistance from the state government about one such move. That year, the Union government extended the Income Tax Act, 1961, to Sikkim by repealing a monarchy-era Act – rather a manual – brought in by the Chogyal dynasty in 1961 to levy income tax on Sikkimese residents. The state government went to court, calling it a violation of Article 371F, ultimately leading the Union government to back out.

Thereafter, several years of deliberations between the Union and state governments on the matter ensued, finally leading to an amendment (Clause 26AAA) stitched to the Income Tax Act, in 2008. With that amendment, the Union government agreed to the exemption. In a way, that amendment defined who could be called ‘Sikkimese’, and therefore, the IT exemption to be extended to them.

While the exemption list included all tribal and non-tribal Sikkimese, it kept out a minuscule section of people of north Indian origin who had moved to the kingdom during the British era for trade and employment. That section did not give up their Indian citizenship to become Sikkimese subjects during the Chogyal reign. Consequently, this lot was kept out of the citizens’ register (Sikkim Subject Register) and, therefore, from the IT exemption brought into effect from 2008 onwards. Slowly, that section of settlers organised themselves to fight that ‘discrimination’ and for their inclusion in the exemption clause. A petition was filed before the SC.

The controversial order

On January 13, hearing the Association’s petition, a division bench of Justices M.R. Shah and B.V. Nagarathna passed an order in favour of the old settlers, so also stating that Sikkimese women married to non-Sikkimese persons are also to be exempted from paying income taxes like the rest of the permanent residents of the state. In the latter decision, the issue was simple: the court said the discrimination was gender-based and struck it down.

But in deciding the former, the top court touched on the delicate issue of the “insider-outsider” narrative that runs deep across the Northeast. The order to include the north Indian settlers in the IT exemption list – like the rest of the residents – is being looked at by a large section within the state as an attempt to weaken Article 371F. These fears have been brewing ever since the Narendra Modi government diluted Article 370, which granted special provisions to Jammu and Kashmir – even though it was the principle clause based on which Maharaja Hari Singh acceded to India.

This aside, the court kicked up a hornet’s nest for yet another observation: that a section of Sikkimese Nepalis – a community that forms the majority population in the state – were late entrants to the kingdom. In a way, it said that the non-Nepali ‘old settlers’ of north Indian origin were residents of Sikkim much before the Nepalis had entered the state, and, therefore, they should be included in the exemption list too.

The order, while delineating the evolution of Sikkim from monarchy to a modern state in terms of who should have been the beneficiaries of the IT exemption rules, also observed:

“There was no difference made out between the original inhabitants of Sikkim, namely the Bhutia-Lepchas, and the persons of foreign origin settled in Sikkim like the Nepalis or persons of Indian origin who had settled down in Sikkim generations back.” [Emphasis supplied]

The court also referred to a petition moved by the then sole Lok Sabha MP from the state in 1988, which had stated that since the time of the merger of Sikkim with India, only those residents whose names were in the Sikkim Subject Register in 1961 were made Indian citizens. That move, therefore, kept out several thousand residents of Sikkim who had entered the state between 1946 and 1975, thus turning them stateless. “The government of India conceded to this demand and an exercise was carried out to grant Indian citizenship to those so-called stateless people who were deemed to have been genuinely omitted,” the court order said.

It continued, “In the year 1989, the Sikkim Citizenship (Amendment) Order 1989 was notified wherein a proviso was created to deem such cases of genuine omission as citizens of India. It appears that the principal beneficiaries of the said Amendment were those who had migrated to Sikkim post 1946 and therefore not even eligible for being on the Sikkim Subject Register.”

A process was started by the government thereafter, leading to, as per the order, “a total of 73,431 granted Indian citizenship” on the basis that they should have been eligible for the Sikkim Subject Register. “However, these guidelines (put together by the government) did not apply to persons of Indian origin as they were already Indian citizens, but only to those ‘non-Sikkimese Subjects’ who were to be made Indian citizens.” It says the then state government then pushed for the IT exemption to that section of citizens, alongside the Bhutias, Lepchas and Sherpas, leaving out about 5% of the state’s population of which, as per the order, only 1% comprises of the old settlers of Indian origin who would benefit from the January 13 order.

Supreme Court building. Photo: The Wire

Opposition, citizens groups kick up storm

In an election-bound state, the court’s reference to the majority community of the state – the Nepalis – as being of “foreign origin” kicked up a storm, baring the ethnic and political faultlines. Opposition parties jumped on the bandwagon, issuing press statements, holding protests and joining the bandh call given by the citizens’ joint action committee (JAC). They also demanded the resignation of chief minister Prem Singh Tamang Golay for not being able to handle the matter in the SC adequately. The controversy gained further steam when Golay’s own health minister, Mani Kumar Sharma, put in his papers, accusing his government of failing to respond to the SC’s order satisfactorily.

The principal opposition, the Sikkim Democratic Front (SDF), in a press statement on February 6, accused the Golay government of committing “serious mistakes” and demanded its resignation. “In the first place, the SC judgement is a product of the submissions, pleadings and documents placed before the Supreme Court by the officers of the respondents taking authorisation from the competent authority. Therefore, making the writ filed and relied upon by the Attorney General of Sikkim and his team in this case is of utmost importance. It must be made public,” the statement said. While opposing the ‘foreigner’ tag on Sikkimese Nepalis, the press note added, “The other (point) is the complete redefinition of who is ‘Sikkimese’ and further dilution of Article 371F.”

A day before, on February 5, addressing the press in Gangtok, ace footballer and president of the Hamro Sikkim Party, Baichung Bhutia sought the support of the JAC to fight the ‘injustice’ caused to the community and also met SDF leader and former state president Pawan Chamling.

Meanwhile, having found himself on the back foot, the chief minister reached out to New Delhi. His party, SKM, is an ally of the BJP.

Help arrived, with Union law minister Kiren Rijiju and the Union home ministry issuing a series of tweets on February 6 “assuring all the people of Sikkim” that the Union government would file a review petition immediately to urge the top court to drop the ‘foreign origin’ reference to the Nepalis in the judgment.

By then chief minister Golay had rushed to New Delhi and met Amit Shah and Rijiju.

Hearing the review petition of the Union government on February 8, the division bench duly agreed to expunge the controversial part from the judgment.

Though the news from the SC gives Golay a much-needed reprieve back home, it is unlikely that the controversy is going to die down completely. With assembly polls due in 2024, the opposition parties have already upped their game to surround the Golay government not just on this issue but for alleged bad governance in general, amplifying it to the local press continuously for some time now. The SKM has not been able to counter it with equal steam.

This article, first published at 7.30 pm on February 8, 2023, was republished at 8.45 am on February 9, 2023, with additional details on the Supreme Court’s decision to amend the judgment.