The Supreme Court has upheld a central government notification of 1998, under which the sugar industry was delicensed. The Allahabad High Court had quashed the notification four years ago.
The Supreme Court allowed the appeal of Bajaj Hindusthan Ltd against the high court judgment. The high court had held that delicensing could be done only by the legislature and not by the executive. The Supreme Court held this was a wrong view. The power of the executive and legislature were co-extensive. Therefore, it was not necessary to amend the Industries (Development and Regulation) Act to delicense the sugar industry, the apex court said.
Bajaj Hindusthan had argued that the high court judgment had virtually thrown the industry into the era of licence raj, nullifying the efforts of the government to open the economy to prospective investors. It even made illegal the industries set up after 1998.
Accepting the argument, the bench of Justices Markandey Katju and Gyan Sudha Mishra quashed the high court order and observed that a situation in which red-tapism and corruption were encouraged should be prevented.
The bench observed “the state should not be hampered by courts in such measures, unless they are clearly illegal or unconstitutional. All administrative decisions in the economic and social spheres are essentially ad hoc and experimental.”
The judgment stressed that “economic matters are extremely complicated and the state must be left with wide latitude in devising ways and means to impose fiscal regulatory measures, and courts should not encroach into this field.”
