A business executive who has spent his entire professional life knocking on doors through corridors of power in New Delhi and state capitals, described pithily the change in the policy environment since the pre-liberalisation era of the “Licence-Permit-Control Raj”. “In the old days,” he says, “we used to chase joint secretaries in Udyog Bhavan. Then we had to chase secretaries. Then came the era when we were liberated from babudom, but we had to still supplicate before ministers. Today, it is a waste of time chasing bureaucrats or ministers to get hurdles out of the way of business. We now genuflect before judges.” The Licence Raj has been replaced by an Arbitrary Raj, he says.
The judiciary, once viewed as protection for business from the arbitrariness of the Licence-Permit-Control Raj, has today become yet another pillar holding up the Arbitrary Raj of governance. Indeed, many had hoped that an Arbitration Raj would liberate them from governmental and judicial arbitrariness, but that has not yet happened. Even when mutually agreed upon arbitration proceedings come to a conclusion, governmental and judicial arbitrariness intervenes.
Pradeep Mehta’s recent book, Supreme Court and the Indian Economy: A Story of Economic Impact of Six Landmark Cases of the Supreme Court (Academic Foundation, Delhi, 2024), sums it up well when it draws attention to the “uncertainty” created by judgments that “reopen earlier decisions and override economic growth and hurt the creation of jobs. The outcome uncertainty of a ruling hurts business, compliance, and society overall. One way to move towards a sounder middle ground would be by applying an economic impact/cost benefit analysis as being fundamental to responsible and sustainable judgments”.
Also Read Artificial Intelligence: Transforming Banking with Smart Innovations Understanding surrender values – Balancing policyholder needs with insurer viability Powering India’s developed nation goal Rooftop solar: Chasing the sun
Mehta and other authors in the book recommend “the institutionalisation of assessment of disputes, where a dispute or concern that a stakeholder may have in terms of economic or environmental concerns must be adequately addressed. To this end, an independent committee of experts of diverse subject backgrounds is required, to assist the court in balancing its assessment and undertaking quantifiable analysis.”
Consider the example they cite of Shivashakti Sugars Limited vs Shree Renuka Sugar Limited, where the court observed that the economic impact and effect of a decision ought to be kept in mind, and critically, the court needed to “avoid that particular outcome which has a potential to create an adverse effect on employment, growth of infrastructure or economy or the revenue of the State”.
It would appear none of these considerations crossed the minds of the Supreme Court judges who pushed the envelope of Arbitrary Raj in the case involving Anil Ambani’s Delhi Airport Metro Express Pvt Ltd (DAMEPL) and the Delhi Metro Rail Corporation (DMRC). First, an arbitration tribunal gave its opinion in favour of DAMEPL. Then, a high court judge ruled in favour of that decision. Next, a two judge high court bench reversed that ruling. Following which, two Supreme Court judges overruled the two high court judges. On top of it all, another SC bench overturned the verdict of their brother judges.
My former colleague Swaminathan S Anklesaria Aiyar has dubbed this as judges playing ping-pong. Commenting on this bizarre legal game in which the left hand of the nation’s highest judiciary questions the actions of the right hand, Aiyar says that such reversals of the courts’ own decisions not only open a Pandora’s box of wasteful litigation but call into question the wisdom of the judiciary. Indeed, they raise doubts about judicial intent and motive.
During my brief tenure as the secretary-general of the Federation of Indian Chambers of Commerce and Industry (FICCI), we invited a senior Supreme Court judge to speak about the economic cost of judicial arbitrariness, even ignorance, and sought guidance on how to remedy this. Quite honestly, there is no better remedy than the exercise of restraint by the so-called “Learned Judges” in matters where (a) the judiciary ought to have a limited role; (b) the judiciary should be guided by subject matter expertise and not legalese alone; and (c) where the judiciary should respect the system set up for arbitration.
The last, however, requires that even the government should respect the decisions arrived at through arbitration. Having institutionalised arbitration, especially in matters pertaining to business and commerce, successive governments have been encouraged by bureaucrats to disregard the outcome of arbitration and pursue judicial action. In the case of DAMEPL vs DMRC, at the very first instance, the arbitration proceedings went in favour of DAMEPL. Why then question and challenge it?
When arbitrariness replaces arbitration, the economic impact not just on businesses and governmental revenues concerned but on the economy as a whole is huge. It raises the cost of business and political risk. The fact is that despite policy reform and governmental good intentions, investment risk in India remains high because of the uncertainty created by different arms of the State — ranging from investigative, enforcement, and compliance agencies of the government to the lowest and highest levels of the judiciary.
Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council and someone who has extensively researched the burden of outdated laws on economic freedom and business competitiveness, quoted the Roman Publius Tacitus to say, “The more numerous the laws, the more corrupt a State.” Some rephrase that quote to say, “The more corrupt a State, the more numerous the laws.” Either way, Debroy concluded, “The correlation is not in doubt.” So the question arises whether avoidable judicial intervention, in the name of interpreting and defending law, is in the interests of the public at large, or even in that of the justice seeker or whether it only serves the interests of the powerful, contributing to governmental arbitrariness, imposing a cost on the economy as a whole.
(Views are personal)
A business executive who has spent his entire professional life knocking on doors through corridors of power in New Delhi and state capitals, described pithily the change in the policy environment since the pre-liberalisation era of the “Licence-Permit-Control Raj”. “In the old days,” he says, “we used to chase joint secretaries in Udyog Bhavan. Then we had to chase secretaries. Then came the era when we were liberated from babudom, but we had to still supplicate before ministers. Today, it is a waste of time chasing bureaucrats or ministers to get hurdles out of the way of business. We now genuflect before judges.” The Licence Raj has been replaced by an Arbitrary Raj, he says.
The judiciary, once viewed as protection for business from the arbitrariness of the Licence-Permit-Control Raj, has today become yet another pillar holding up the Arbitrary Raj of governance. Indeed, many had hoped that an Arbitration Raj would liberate them from governmental and judicial arbitrariness, but that has not yet happened. Even when mutually agreed upon arbitration proceedings come to a conclusion, governmental and judicial arbitrariness intervenes.
Pradeep Mehta’s recent book, Supreme Court and the Indian Economy: A Story of Economic Impact of Six Landmark Cases of the Supreme Court (Academic Foundation, Delhi, 2024), sums it up well when it draws attention to the “uncertainty” created by judgments that “reopen earlier decisions and override economic growth and hurt the creation of jobs. The outcome uncertainty of a ruling hurts business, compliance, and society overall. One way to move towards a sounder middle ground would be by applying an economic impact/cost benefit analysis as being fundamental to responsible and sustainable judgments”.
Mehta and other authors in the book recommend “the institutionalisation of assessment of disputes, where a dispute or concern that a stakeholder may have in terms of economic or environmental concerns must be adequately addressed. To this end, an independent committee of experts of diverse subject backgrounds is required, to assist the court in balancing its assessment and undertaking quantifiable analysis.”
Consider the example they cite of Shivashakti Sugars Limited vs Shree Renuka Sugar Limited, where the court observed that the economic impact and effect of a decision ought to be kept in mind, and critically, the court needed to “avoid that particular outcome which has a potential to create an adverse effect on employment, growth of infrastructure or economy or the revenue of the State”.
It would appear none of these considerations crossed the minds of the Supreme Court judges who pushed the envelope of Arbitrary Raj in the case involving Anil Ambani’s Delhi Airport Metro Express Pvt Ltd (DAMEPL) and the Delhi Metro Rail Corporation (DMRC). First, an arbitration tribunal gave its opinion in favour of DAMEPL. Then, a high court judge ruled in favour of that decision. Next, a two judge high court bench reversed that ruling. Following which, two Supreme Court judges overruled the two high court judges. On top of it all, another SC bench overturned the verdict of their brother judges.
My former colleague Swaminathan S Anklesaria Aiyar has dubbed this as judges playing ping-pong. Commenting on this bizarre legal game in which the left hand of the nation’s highest judiciary questions the actions of the right hand, Aiyar says that such reversals of the courts’ own decisions not only open a Pandora’s box of wasteful litigation but call into question the wisdom of the judiciary. Indeed, they raise doubts about judicial intent and motive.
During my brief tenure as the secretary-general of the Federation of Indian Chambers of Commerce and Industry (FICCI), we invited a senior Supreme Court judge to speak about the economic cost of judicial arbitrariness, even ignorance, and sought guidance on how to remedy this. Quite honestly, there is no better remedy than the exercise of restraint by the so-called “Learned Judges” in matters where (a) the judiciary ought to have a limited role; (b) the judiciary should be guided by subject matter expertise and not legalese alone; and (c) where the judiciary should respect the system set up for arbitration.
The last, however, requires that even the government should respect the decisions arrived at through arbitration. Having institutionalised arbitration, especially in matters pertaining to business and commerce, successive governments have been encouraged by bureaucrats to disregard the outcome of arbitration and pursue judicial action. In the case of DAMEPL vs DMRC, at the very first instance, the arbitration proceedings went in favour of DAMEPL. Why then question and challenge it?
When arbitrariness replaces arbitration, the economic impact not just on businesses and governmental revenues concerned but on the economy as a whole is huge. It raises the cost of business and political risk. The fact is that despite policy reform and governmental good intentions, investment risk in India remains high because of the uncertainty created by different arms of the State — ranging from investigative, enforcement, and compliance agencies of the government to the lowest and highest levels of the judiciary.
Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council and someone who has extensively researched the burden of outdated laws on economic freedom and business competitiveness, quoted the Roman Publius Tacitus to say, “The more numerous the laws, the more corrupt a State.” Some rephrase that quote to say, “The more corrupt a State, the more numerous the laws.” Either way, Debroy concluded, “The correlation is not in doubt.” So the question arises whether avoidable judicial intervention, in the name of interpreting and defending law, is in the interests of the public at large, or even in that of the justice seeker or whether it only serves the interests of the powerful, contributing to governmental arbitrariness, imposing a cost on the economy as a whole.
(Views are personal)
Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.
The JD(S) candidate Prajwal Revanna’s sex scandal has escalated with the whistleblower, Karthik, disappearing after sharing videos with a BJP leader and receiving an SIT notice. This has caused a political uproar in Karnataka, with the JD(S) and Congress blaming each other. Prajwal, who fled to Germany, has been suspended by the JD(S) and is expected to return on May 15.
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Rami G Khouri
Mort Laitner
Rachel Marsden
Donald Low
Bradley Blankenship
Ali Fathollah-Nejad
Nikkei Editorial
Abbas Juma
Michael Kwet
visit website
