The Supreme Court, which declared all coal block allocations made after 1993 as illegal due to the non-transparent and arbitrary processes followed, will today ( 1 September) tell us how it is going to deal with the consequences of its own verdict.
It should refrain from doing so, for the job of dealing with the consequences of a verdict is that of the executive, not the court. The Supreme Court should clearly ask the elected government to come up with remedies and ratify them if they are sensible. It should not take upon itself the task of deciding each allocation case through a process controlled by itself or its nominees. The court’s job is to protect the constitution, not run policy. It has no competence in this regard.
In fact, the verdict of 25 August is unnecessarily disruptive for the simple reason that the court went far deeply into history – right up to 1993 – to decide legalities. But is it the court’s job to take its task so far back, when the immediate question was the illegalities involved in the allocation of coal blocks over the last few years? Even in the 2G case, even though spectrum was allocated as far back as the early 1990s, the Supreme Court did not go that far. It focused on A Raja’s allocations and his wayward processes.
As TN Ninan pointed out today (30 August) in Business Standard, if courts can go into economic history to decide that something wrong or inadmissible was done, businesses can’t function. He asks: why not question the allotment of ore mines to Tata Steel in British India, an allotment that gave the company an unfair advantage in terms of cheap ore? A businessman today can, after all, go to court claiming he can’t compete with the Tatas without getting an equally good deal on ore mines.
The point is cancellation of coal allocations from 1993 – even if declared illegal – has its costs, and it is not the court’s job to give verdicts that can ruin the business climate or damage someone’s long-established business. At best, it should suggest a penalty – or let the government suggest one.
In fact, past Supreme Court verdicts, and even its 2012 answer to the UPA’s presidential references on the auction of natural resources, suggest that some decisions are best left to government, even if errors and misjudgments were made.
Apart from holding that auctions need not always be the best way to allot natural or scarce resources, the bench, headed by then Chief Justice SH Kapadia, quoted several judgments from India and the US to show that courts should not get into judging the efficacy or even desirability of policy legislated by parliament in its wisdom.
For example, the bench noted that in economic matters, the court should show “judicial deference to legislative judgment” unlike areas involving fundamental human rights. It quotes from an admonition pronounced by the US Supreme Court to emphasise the same point: “‘In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events - self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability’...”. (Italics mine)
Note the significant sentence, “the courts have only the power to destroy, not to reconstruct.”
If the Kapadia Supreme Court quotes this point approvingly, there is no reason why the RM Lodha Supreme Court should believe that its coal verdict should not stop with declaring illegality, but it should be following through on what needs to be done.
When it does not have to power to reconstruct what its verdict may destroy – business confidence, fiscal policy, bank portfolios, supply chains, etc – it should not take upon itself the right to decide what to do on a case-by-case basis in these cases. That is the job of the government, not the courts.
In yet another case quoted by Kapadia & Co in the presidential reference case, the Supreme Court went even further and suggested that courts should not sit in judgment on mistakes and even iniquities inflicted by legislation for the simple reason that legislatures (and, by implication, the executive) have a learning curve.
Quoting from the judgment of a five-judge bench headed Justice PN Bhagwati in the RK Garg Vs Union of India case, Kapadia noted that “every legislation, particularly in economic matters, is essentially empiric and it is based on experimentation or what one may call trial and error method and, therefore, it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture Vs Central Reig Refining Company, be converted into tribunals for relief from such crudities and inequities.” (Italics mine).
This quote, if interpreted in the extreme, can even be used to suggest that the flawed and opaque system of a screening committee used by recent governments to allot coal blocks was also a trial and error case, and hence courts must not make too much of it.
I don’t think it can be taken that far. What the Kapadia court said was essentially that while a bad law can be struck down, its implementation cannot be unfair. The Lodha court has done just that by declaring the process of allocating coal blocks as illegal.
It does not follow that it must now take on the job of fixing what it thinks was wrong. That is the job of government.
The Supreme Court has used its power to destroy by declaring the allocations illegal; it must not extend its mandate by trying to pretend it must now decide things case-by-case. It should let the government fix what it has broken.
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