If the last year was marked by the Supreme Court raising grim questions on corruption, food security and future of environmental litigation, the court is expected to provide some answers to those momentous concerns this year. Therefore, the coming months could be exciting for observers of the courts.
A number of hot-button issues are standing in long and impatient rows before the court. Next month, the first report of the Central Bureau of Investigation (CBI) on the 2G scam investigation will be delivered to the Supreme Court. The Niira Radia tapes are already in its possession. Another pivotal issue is the controversial appointment of Chief Vigilance Commissioner P J Thomas. Then there are social issues like distribution of surplus food at cheap rates and the National Rural Employment Guarantee Scheme. The Supreme Court is a petitioner in a case involving the right to information regarding the appointment of judges. Ratan Tata has raised the alarm over the violation of right to privacy in another petition. The Ayodhya judgment of the Allahabad High Court has to be unscrambled from the ruins of history and religion.
What is of considerable interest to the corporate field in this age of international mergers and acquisitions is the Vodafone’s appeal in its income tax case. The hearing in this $ 2.5 billion tax dispute is scheduled to start next month. While the conflict involves clusters of companies, the main contention of Vodafone, which is slapped with the whopping demand for capital gains tax under Indian law, is that the transactions took place outside the country between two non-resident entities and, therefore, the Indian taxmen have no jurisdiction in the matter.
The tax authorities and the Bombay High Court maintain that the very purpose of entering into the agreement between the foreign firms was to acquire the controlling interest that one foreign company held in the Indian company by the other foreign company. “This being the dominant purpose of the transaction, the transaction would certainly be subject to municipal law of India, including the Indian Income Tax Act,” says the high court judgment, against which the company has moved the Supreme Court.
Another issue with international ramifications is the “curative petition” filed by the central government in the 1984 Bhopal gas leak case. The central government had already agreed to the $470 million settlement and the Supreme Court had approved the compromise in 1989. The companies involved have since taken new avatars. Union Carbide, whose plant leaked the toxic gas killing thousands of people, divested itself of its Indian subsidiary’s stock in the 1990s, which was acquired by Dow Chemical in 2001. However, the government now says that the earlier settlement was a gross miscarriage of justice and wants the court’s order to get $1.1 billion more as compensation. It contends that the earlier settlement figure was arrived at on the basis of assumptions unrelated to the realities. Both the government and the court have to justify their U-turn and if they get a decree, the problem of executing it on an unwilling foreign corporation would be keenly watched. The disaster occurred 26 years ago and a Supreme Court judge has remarked that it would take equal time to decide the new issues.
Mining companies and those who have eco-sensitive projects in several parts of the country are anxiously watching the course of the hearings in the “forest matters”. The chief justice has shown his dissatisfaction over environmental litigation stalling mammoth ventures. The Lafarge case is a litmus test. The nail-biting wait should be over within a few months. The court’s review of the environment judgments will set the tone for policy-makers and entrepreneurs drawing up schemes in the forest, coastal and other sensitive regions.
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The Supreme Court has some 50 cases that have been referred to larger benches since the smaller ones could not agree on the interpretation of law. Some years ago, one bench wanted a larger bench to clarify the definition of industry in the Industrial Disputes Act. But the question is still hanging in balance and the sectors concerned have learned to live with the confusion. There is another nitpicking over the meaning of “shop” in the Employees State Insurance Act.
Perhaps the oldest question referred to a Constitution bench relates to the right to property after the 25the amendment to the Constitution. Several benches have differed on the state of law and, therefore, the issue was referred to a nine-judge bench. That was 14 years ago. Judicial memory has failed and the issue is in limbo. The petitions challenging land acquisitions and setting up of special economic zones also seem to have fallen off the judicial radar. For the judiciary, time acts as a great healer. But for millions who are affected by the inaction of the courts in these vital matters, these are simmering wounds.