No role of courts in economic policy

The Supreme Court order on oil public sector undertakings' sale has generated a lot of debate about the nature of judicial intervention. The issue of the relative equation between executive, legislature and judiciary has also been raised.

But nobody has questioned the judiciary's jurisdiction in restraining the executive in disinvestment, which is a part of economic policy.

Though in a different context, there is a clear and well-established legal position that the judiciary will not intervene in the shaping of economic policy.

In this case, it was the interpretation of the executive in relation to application of a particular law, though it involves policy.

If it involved no application of any law but just a matter of policy, the judiciary could not have intervened.

The difference is very thin. But it makes all the difference. The principle that the courts should not interfere in the economic policy has long been upheld by the Supreme Court and various high courts.

The Gujarat High Court in the Navjivan Mills vs Union of India case, 1982(10) ELT 155 Gujarat; the Calcutta High Court in the Black Diamond Beverages vs Union of India case, 1988(36) ELT 225 (Calcutta); and the Madras High Court in the Sulochana Enterprises vs Union of India case, 1991(56) ELT 22 (Madr-as), held taxation policy could not be pronounced upon by courts unless there was a violation of the Constitution.

In the Indian Express Newspapers vs Union of India case, AIR 1986SC 515, the Supreme Court interfered to strike down excessive tax on newsprint because it concluded that the imposition or exemption violated the Fundamental Right of the Freedom of Speech under Article 19(1)g. On a mere ground of unreasonableness, an imposition of tax could not be challenged, the apex court said.

In the recent Balco Employees Union vs Union of India case relating to the privatisation of the public sector undertaking, the apexcourt reiterated that courts should not enter into the merits of economic policies, it should best be left to Parliament.

"In the sphere of economic policy or reforms the court is not the appropriate forum. Courts are not intended to and nor should they conduct the administration of the country. Courts should interfere only if there is a clear violation of Constitution or statutory provisions," the apex court said.

The Supreme Court made some very pertinent remarks about how economic policy should be treated if somebody approaches the courts.

"In a democracy, it is the prerogative of each individual government to follow its own policy. It is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not courts," the Supreme Court said.

Thus if it is a mere economic policy, the courts cannot interfere. But if it involves a constitutional or statutory issue the courts can interfere.

The author is a former member (Budget) of CBEC.