The Supreme Court’s reluctance to overturn economic legislation is a recognized fact. Its decision in the Bharat Aluminium Co. disinvestment case in 2001 was a test case. This trend has been fortified with an appeal from the Andhra Pradesh high court.
In a judgement delivered on Monday, justices H.K. Sema and Markandey Katju reversed a judgement from the Andhra high court. The high court had declared unconstitutional the amended section 47A of the Indian Stamp Act. The section was meant to check the evasion of stamp duty while registering property. The amendment was made by the Andhra legislature in 1998.
The court argued for judicial restraint while deciding cases involving economic and regulatory legislation as it does not have expertise in these matters.
This is a sound argument. Economic ideas, as woven into legislation, have evolved over time. Assessing the effect of such legislation on the economy is a difficult task for a body whose core competence is the law. This assessment is a must while deciding such cases as any decision is bound to affect a large number of citizens.
This, however, ought not to turn into an excuse for blanket retreat from such cases. In arriving at a decision, the court relied on the ideas of American jurists from Oliver Wendell Holmes to James Bradley Thayer. Yet, it ignored the decisive role of the US Supreme Court in shaping antitrust law. This affected a wide swathe of economic and commercial activity, from mergers to price setting to modern economic regulation.
Here, as in other domains of the law, finding the balance between individual rights and societal needs is the key. India is in the throes of an economic transition: There has been strong growth since the inception of economic reforms but a huge number of citizens continue to be poor. The legislative and executive wings have been found wanting in almost all spheres. It is incumbent on the judiciary to keep a watch; if this means acquiring economic expertise, then it must be done.
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