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Recent judgments and actions by the Supreme Court of India and the country’s premier investigating agency – Central Bureau of Investigation (CBI) have the potential of scaring the daylights out of any bureaucrat. Not only can it bring back policy paralysis but also open a Pandora’s box of all that has gone wrong in the country over the years.
The Supreme Court has declared 218 coal mining leases awarded between 1993 and 2010 as illegal. That’s a good 17 years of illegal allocations, and 21 years before the apex court realised this! But the more important question here is how is any bureaucrat expected to take policy decisions efficiently knowing that it can subject to scrutiny even decades later? This has already happened in telecom and is now threatening coal-based sectors.
While the Supreme Court has not gone beyond 1993 – when the new allocation guidelines were issued – there is little guarantee that future allegations will not be time-limited. What if someone feels that natural resources allocated before 1993 were also not done in a fair manner? Will the courts pass judgement on those, too? If the ‘licence raj’ era is questioned, will companies and business houses who have grown over the years because of, or despite of, the restrictive policy be asked to shut down, compensate and restart again?
The problem gets trickier when even a Supreme Court judgment is not good enough to stop further allegations. The bottomline is that there is no end to such mud-slinging – any one with an axe to grind can show up at the court’s door and at least get a temporary stay.
Last year CBI decided to launch a ‘new’ investigation against the divestment of Hindustan Zinc, twelve year after the divestment and one year after the Supreme Court had rejected all challenges against the privatisation. The trigger for this investigation was an anonymous oral complaint. Is it that easy to make the CBI start an investigation on senior bureaucrats?
Not only is the CBI acting like a trigger-happy cowboy, it is behaving like a dumb one. Recently, the investigation agency also initiated a probe into the sale of Laxmi Vilas Hotel in Udaipur, 12 years after the heritage property was sold. This time, too, it did so on the basis of an oral complaint. In this case, though, the investigating agency has cut a sorry figure as is seen in this article by the then divestment minister Arun Shourie. The CBI has put a price tag of Rs 151 crore for a hotel that was sold for Rs 7.5 crore in 2002. The basis for the figure of Rs 151 crore was a Rs 15 crore demand for stamp duty by the Rajasthan government. But Shourie points out that the tax demand has been stayed by the courts.
Moreover, Shourie says that the hotel when it was sold was earning a revenue of Rs 2 crore but had expenses of Rs 3 crore with an occupancy rate of only 26%. Based on established norms of valuation, if CBI is to be believed the hotel should have been valued at around Rs 3 crore per room for a 55 room hotel in 2002. Compare this with an actual deal that took place in 2002 when Lands’ End Hotel in Bandra, Mumbai was purchased by the Taj group (Indian Hotels) at a valuation of Rs 80 lakh a room. Laxmi Vilas was nowhere close to the Land’s End Hotel. In fact the Bharat group that bought the hotel had to invest another Rs 25 crore – Rs 30 crore to make it operational. Even by today’s standards, the CBI’s valuation is way above market levels. Royal Orchid’s Hyderabad property, for example, was sold in 2014 at a valuation of Rs 1.2 crore per room.
There is clearly a basic lack of understanding of how valuation is done not only by the CBI but even by the state’s tax department which issues such tax demands.
The biggest problem with such unreasonable demands and allegations is that it affects a bureaucrat’s ability to take decisions. Further, needlessly corporates are dragged into the ensuing controversy. As T N Ninan asked in this Business Standard article, ‘If no collusion or criminality can be laid at the company's door, why should it pay any penalty for someone else not doing his paperwork properly? A corporate would think twice before participating in any kind of government sale, be it divestment or sale of a natural resource.
Ninan rightly points out that time limit on undoing past injustices or for pursuing past crimes are not a novel idea. Just like we cannot give Bharat Ratna’s to all the great Indians who have blessed this soil we need to put a time limit to opening old injustices. We can at least ensure that they are not repeated.
