Supreme Court verdicts that shook industries like telecom, coal, and mining

A view of the Supreme Court | Photo: PTI
The decade that is coming to a close saw the growing clout of the Supreme Court of India in economic affairs. Its intervention has shaken industries like telecom, coal, and mining. It has also turned its eye on corporate venality, convicted tycoons, and even sent some of them to prison.

This year’s record itself is formidable. The telecom sector is still smarting from the impact of the court order to pay Rs 92,000 crore as adjusted gross revenue (AGR) to the government. The industry was suffering financial stress since the court cancelled 122 2G spectrum licences at one stroke of a pen in 2012. Eminent lawyers have flagged it as the beginning of the economic slowdown.

Two years after the 2G shocker, the court struck down all but four of the 218 coal block allocations from 1993 to 2011. This was supposed to be another scam. However, the judgment is being assailed by experts on various counts. They point out that many coal mines are now lying idle and the country is forced to import the commodity.

The court followed the stink that came from the unholy alliance between politicians and miners. The Karnataka mining scandals were as much about illegal excavations as politics. Many iron mines were halted and stocks e-auctioned. The story repeated itself in the neighbouring Goa where many firms were found operating without valid licences or expired ones. Exports were frozen and many workers were rendered jobless.

The illegal mining orders were spread over nearly a decade until the National Green Tribunal was set up at the instance of the Supreme Court, which could not handle thousands of applications from miners and forest industries. It was in this series of orders that the court asked the government to set up regulators in this sector. Environment clearance from competent authorities at the Centre and the state was made mandatory. Setting up of industries must be preceded by an environment impact assessment. This applies also to real estate in metro cities like Mumbai. Non-forest industries like sawmills were thrown out of forest areas. Violators of environment laws, especially miners in all states, were directed to contribute penal sums to a compensatory afforestation fund.

It was at the instance of the Supreme Court that the Coastal Regulation Zone rules were implemented with full force. Builders, civic authorities, and politicians were exposed in the Kochi case where several multi-story residential skyscrapers were ordered to be demolished irrespective of the agony of the flat buyers. Hydro-power projects also came in the crosshairs of the court as in the case of an NTPC project in Himachal Pradesh. The protective arms law has reached even the forests of Andaman and Nicobar.

The environment litigation vastly widened its scope to clear water and air. The court forced automobile manufacturers to use cleaner fuel, set deadline to go in for the latest Bharat Stage VI version and to dump older vehicles. The Environment Pollution (Prevention and Control) Authority (EPCA), headed by environmentalist Bhure Lal, was set up which provided periodic reports on Delhi’s notoriously polluted air and the court passed orders following its recommendations. The court imposed restrictions on the use of poison-emitting firecrackers during festivals and indiscriminate use of loudspeakers in crowded areas even during nights. Though much of these orders have gone up in smoke, it has incrementally benefitted the people.

In the corporate field, the court delivered a landmark judgment last month when it struck down Section 87 of the Arbitration and Conciliation Act, which provided for an automatic stay on an arbitral award as soon as it was challenged in a court. The court ruled that the provision was “manifestly arbitrary”. A frequent question in arbitration is suspicion of bias by arbitrators. Public sector undertakings habitually insert a clause which makes their executives arbitrators. A 2015 amendment has barred it but the habit continues and the judiciary has checked the tendency in individual cases. Another practice of the government entities is to make the contractor sign on the dotted line admitting that he has received all his dues. The court ruled that the dissatisfied contractor can still seek full dues.

It is another habit of these arms of government, sitting on huge litigation funds, to fight against each other with taxpayers’ money. The court had asked the government to set up a committee of secretaries to check this tendency. But that has not stopped the practice; it only delayed adjudication. This is one area where the courts have manifestly failed, for no fault of theirs.

The establishment of the National Company Law Tribunal was delayed for years because the bureaucracy wrote into the draft law a prominent role for retired babus. The judges struck back and insisted that a judicial person should head the tribunal. After the tribunal was launched, it has tackled issues in the Insolvency and Bankruptcy Code with some success. The ArcelorMittal-Essar Steel case decided a few months ago is a telling example. Several appeals have come against NCLT orders and the Supreme Court has ironed out several provisions. It has struck down, for instance, a Reserve Bank of India (RBI) circular that gave defaulting companies 180 days to agree on a resolution plan with lenders or be taken to the bankruptcy court to recover a debt of Rs 2,000 crore and above. The court has upheld the right of flat buyers to move the tribunal as consumers.

Another chronic litigation is about bounced cheques. This is flooding the magistrate’s courts. After the Supreme Court laid down a series of guidelines for the courts below, the appeals have almost dried up.

Information technology is unrolling too fast for common person’s understanding and its impact on personal liberty is a theme for the next decade all over the democratic world. In the first challenge to the IT Act, the court struck down Section 66-A which, the court said, had a “chilling effect” on freedom of expression.

The downside of the decade was the sending of ministers, political heavyweights and business magnates to jail for alleged misdemeanours. Among them were A Raja, Kanimozhi, Lalu Prasad, Subrata Roy of Sahara India, and Amrapali promoter Anil Sharma. Among those who were convicted but did not suffer such ignominy was Anil Ambani in the RCom case and the Singh brothers in the Fortis case.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel