Acres of contention

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Acres of contention

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• Expanding economy = More commercial cases: As our economy grows bigger and more complex, the legal cases involving property, contracts, labour, tax and corporate laws is growing rapidly. Their proper adjudication not only affects the parties involved, but also future trends of investment and production.
• Adjudication as a public good: By clarifying law, it helps reduce uncertainty. That reduces legal costs and disputes. Investments become clearer, and growth is higher.
• Some case studies: (A) Allahabad H.C., May 2018 – Independent Power Producers Association v/s Union of India and ors. – decision was that bankruptcy proceedings need wilful default on part of the company. But what about project unviability? (B) Supreme Court, 2018 – Rameshwar v/s State of Haryana : First, a notification for land acquisition (688 acres) came up in 2007. Worried farmers sold to those developers who quickly approached them (as compensation is meagre). Later that plan was dropped by the govt., and land with developers was regularised! The S.C. declared the deal a fraud, but instead of the original farmer owners, gave the land ownership to the government!  {The Court transferred land from those who actually work on it and need it, to those who do not!}
• Impact of such judgements: Governments have the incentive to repeat such acts. They are cumulatively sitting on huge land banks of which they do nothing!
• Failure to protect rights: The judiciary through such judgements fails to protect legitimate rights. Also, economic justice in Article 38 is not provided.
• Infrastructure projects: Courts must realise that jurisprudence in infra. projects cannot be only on the basis of prices involved, but also the quality of the asset needed, and capability of contractors involved. The judicial processes holding up execution (due to bidding issues) can escalate costs beyond any possible monetary benefit.
• Be cautious, Your Honour! (1) Treating economic growth & state revenues as public purpose is a slippery slope, (2) Even in public purposes, economic efficiency cannot trample individual rights, (3) If rights are to be infringed, then the proportionality principle (social benefit prop. to infringement) should apply.
• Summary : The judiciary has to tread with caution in matters of business and economy, as wrong judgements can have a lasting impact on investments and business confidence.

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