The judiciary must aim for harmony on complex issues

Livemint, October 3, 2022

By Pradeep S. Mehta

Matters that involve the economy as much as points of law may need broader frames of analysis many changes, mostly suboptimal. Yet, we need to feed ourselves and thus continue to denude forests to create cultivable land. There are other dimensions too, but I am not going into details here. The core issue is environment versus development. The other issue is propriety versus impropriety. Should we not draw a balance between both issues so that economic governance does not suffer and consequent harm is minimized?

The hardships of prioritizing the environment over development are largely experienced by those who have a minimal role in ecological degradation. Interests of vulnerable stakeholders are ignored in governance decisions, and they do not possess sufficient resources to absorb the economic shocks of such decisions. This is antithetical to sustainable and equitable development.

Such decisions are increasingly becoming visible in judiciary as well. It is therefore important that adequate thought goes into decisions that impact economic activities. Alternate scenarios should be considered and adequate safety nets need to be built for those who are disproportionately and unfairly impacted by such decisions.

To highlight adverse unintended consequences of select judicial decisions and support economically responsible justice, CUTS International has been implementing a programme whose first project was an assessment of the impact of the Supreme Court (SC) decision prohibiting the sale of liquor along highways. We found that decision was unable to meet its objective of reducing drunken driving incidents. Instead, the economy lost around ₹500 crore for every 1,000 km of highway stretch. In our second project, we analysed the impact of three SC and two National Green Tribunal decisions on the economy. These included decisions to ban iron ore mining in Goa, shut down Sterlite’s copper plant in Thoothukudi, Tamil Nadu, and stall the construction of Mopa airport in Goa, among others. The total estimated direct economic impact was around ₹5,000 crore, with close to 18,000 jobs lost directly. The indirect impact was much higher. For instance, around 400 downstream businesses associated with the plant, employing around 100,000 people, were impacted. The livelihoods of thousands who were part of supply side ecosystem, including truckers, contractors, service providers and small stores around the plant were also affected. Was it fair and equitable for these people to have lost their source of income without any fault of theirs?

Adding insult to injury, the plant’s closure reduced the country’s production of copper by more than 40%. From being a net exporter, India has become a net importer of the metal, thus impacting the country’s balance of payments. This begets the question: Was the closure necessary or could alternative means of environmental preservation have been sought?

In the programme’s third project, I am writing a book which chronicles the economic impact of six landmark cases of the SC. These include the 2G and ‘coalgate’ cases. While reviewing the socio-economic and political developments around the judgements, I have no hesitation in concluding that some of the bureaucracy was hand-in-glove with wrongdoers in adopting corrupt practices, implementing ambiguous policies and taking decisions that benefitted a select few. Despite this, the judiciary exceeded its remit in painting the entire industry with the same brush and cancelling all licences. This unduly impacted even those going by the law and shook their faith in fair outcomes. The judiciary needs to act more responsibly while dealing with matters the straddle law and economics. Courts need to focus on erring parties and think about the practicality of their decisions.

To help achieve harmonized outcomes, courts should appoint committees of experts to carry out cost-benefit analyses where relevant, or engage experts to provide estimates of the possible economic impact of judicial decisions, invoking their explicit discretionary powers under the Specific Relief Act and Code of Civil Procedure respectively. In all matters that could hurt the economy, courts must also consider alternate remedies and the multitude of stakeholders involved both directly and indirectly.

This sentiment was echoed brilliantly in the Shivashakti sugar case, wherein the SC noted that the economic impact of judicial decisions is important in deciding cases, especially in India, which is a developing economy on a path of rapid economic growth. Such a process of development is not independent of judicial outcomes, so it becomes imperative for courts to conduct an economic impact analysis of their decisions. Article 142 of the Constitution empowers the Supreme Court to do this, so as to ensure “complete justice”.

To this end, courts at all levels could consider appointing economists and finance experts on the appellate side to aid the adjudication of cases involving law and economics. The apex court could also set up a research unit, manned with professionals from the fields of law, economics, finance and political science and tasked with developing an integrated analytical unit that can monitor and evaluate cases from a holistic perspective.

It is time for the Indian judiciary to step up while dealing with complex matters. It should try to balance the environment, equity concerns and economic interests, without unduly favouring one over the other, thus promoting sustainable development.

Amol Kulkarni contributed to this article. Pradeep S. Mehta is secretary general, CUTS International

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