Why courts should study the economic impact of decisions

Live Mint, December 30, 2022

By Pradeep S. Mehta

The judiciary is empowered to go by broad interests and can thus take into consideration the economic effects of its decisions on the vulnerable among those left unrepresented in a case.

As another year comes to an end, I am filled with hope that the new year will bring greater empathy for—and progress to—the helpless and vulnerable. The reason? The actions and assertions of D.Y. Chandrachud, the 50th Chief Justice of India. For quite some time, Justice Chandrachud has spearheaded an initiative to modernize the Indian judiciary by ensuring transparency, accessibility and accountability through digital and inclusive means. He has conveyed his belief that the judiciary should work for all, uphold constitutional morality, and that its decisions should be equitable, comprehensible and implementable. He also understands the importance of having well capacitated district and higher courts.

While well begun is half done, it is now time to shift gears. With a bumpy initial period and winter vacations behind him, Justice Chandrachud will have a little less than two years to put his vision into action. Amid growing scrutiny of the judiciary’s decisions, he will need to leave no stone unturned to retain (and in some cases even regain) the trust and confidence of Indian citizens.

A practical way to do this is to institute a mechanism for the judiciary to consider the economic implications of its decisions, particularly for India’s vulnerable, before pronouncing them. This is not wishful thinking, nor does it pit the interests of the economy against those of the environment or society.

It just calls for an assessment of the impact of different options available to the courts on diverse stakeholders, whether or not they are legally represented, and taking decisions that avoid adverse repercussions for those who have no connection with the wrongdoing in question. Some may argue that this approach goes beyond the judiciary’s remit, but the Constitution empowers courts to take such a holistic view, thereby imposing a moral obligation to do so wherever necessary.

Allow me to explain. Recently, the Prime Minister inaugurated Manohar Parrikar International Airport at Mopa, Goa. This airport is likely to boost tourism, create significant direct and indirect employment opportunities, ensure customer comfort and give a fillip to the Goan economy. While there has been a felt need for a new airport in Goa for several years, its construction has been intermittent. A reason for the interruptions was the suspension of its environmental clearance by the Supreme Court (SC), potentially causing immediate jobs losses estimated at around 1,500 workers and indirectly hurting about 6,900 persons for no fault of theirs.

The suspension lasted a full eight months, contributing to a cost escalation of around ₹715 crore. We are not talking about the economic impact of the delay. Much of this could have been avoided had the judiciary been more considerate in listing and hearing the matter. This isn’t to say that the government, bureaucracy and expert committee were not at fault, but two wrongs don’t make one right.

Similarly, several affected citizens have recently demanded reopening of a Sterlite Copper plant in Thoothukudi, Tamil Nadu, so that the area’s economy can revive. Its permanent closure was ordered by the Tamil Nadu Pollution Control Board and the state government, which was endorsed by the SC and Madras High Court. This closure directly impacted around 30,000 jobs in and around the plant, in addition to affecting around 400 downstream businesses, employing approximately 100,000 people. The livelihoods of thousands of service providers and workers was severely impacted by the closure for no fault of theirs. On the other hand, from a net exporter of copper, India became a net importer, adding to our trade deficit.

These are just a few examples. There are instances galore of judicial decisions that severely hit thousands of jobs, like the judgements that cancelled telecom licences and mining leases en masse.

Our constitutional courts are morally obliged to prevent such consequences. After all, how can a judiciary be future-ready if it is unable or unwilling to appreciate the economic consequences of its decisions on unrepresented groups. It must no longer play deaf to cries of the voiceless.

While the SC in the much-celebrated judgement of Shivashakti Sugars Limited in 2017 highlighted that courts must avoid a particular outcome which has a potentially adverse effect on employment, the economy or state revenue, and should take the economic impact of a decision into consideration, this approach is yet to gain a firm footing.

In early 2022, the SC had directed high courts to be extremely circumspect in staying the execution of projects of national importance. In September, the apex court observed that developing countries cannot be told to stop ongoing projects only because they are likely to worsen climate change. In November, the SC declined to grant a plea seeking a ban on stubble burning an urgent hearing. The court observed that it couldn’t enforce such a prohibition against every farmer in Punjab, Haryana and Uttar Pradesh.

While economic interests being taken into consideration is heartening, such instances are few and far between. Justice Chandrachud has a chance to institutionalize economic impact assessments in complex matters by creating a standing roster of experts from diverse fields. Such panels can probe impacts on the vulnerable and offer advice before rulings are made. Here’s hoping for some concrete action on this front in 2023.

Amol Kulkarni of CUTS contributed to this article.

Pradeep S. Mehta is secretary general, CUTS International

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