Monday, 4 July, 2022
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Supreme Court squarely to blame for economic slowdown, says senior advocate Harish Salve

Harish Salve says with judgments like 2G, coal block allocation and Goa iron ore mining, the Supreme Court has caused harm to the Indian economy.

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New Delhi: Senior advocate Harish Salve has blamed the Supreme Court for India’s current economic slowdown, saying the decline began with the apex court judgment in the 2012 2G spectrum case, when in one stroke, it cancelled 122 spectrum licences issued to telecom operators, redrawing India’s telecom industry. 

“… I squarely blame the Supreme Court,” he told fellow senior advocate Indira Jaising in an interview for her legal news website, The Leaflet.

“I can understand holding people responsible for the wrong distribution of licenses in 2G… Blanket cancellation of licences where foreigners are investing… See, when a foreigner invested it was your rule which said he must have an Indian partner. The foreigner did not know how the Indian partner got a licence,” he said.

“Foreigners invested billions of dollars, and with one stroke of the pen, the Supreme Court knocked all of them out. That’s when the decline of the economy began.”

Back in 2010, the Comptroller and Auditor General (CAG) revealed that the 2G scam had caused a loss of Rs 1.76 lakh crore to the exchequer. The Supreme Court had then cancelled 122 licences in February 2012, rejecting the arguments presented by Salve, who appeared for 11 telecom companies in the case.

Five years later, in December 2017, a CBI trial court acquitted former Union ministers and key accused A. Raja and Kanimozhi, along with 15 others. In doing so, the trial court opined that the scam was “conjectured” by some people who created a “scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels”.

Also read: Modi’s principal secy was CBI’s star witness in 2G case. But court ignored his testimony

SC ‘inconsistent’ in dealing with commercial cases

In the interview, Salve also said that the Supreme Court has been “inconsistent” in dealing with commercial cases, causing “grave concern in the minds of investors”.

He referred to the Supreme Court judgment on coal mines. “You cancelled coal mines by one stroke of the pen, without examining the merits of every case. Much genuine foreign investment in the coal industry went flat. Then what happened? Indonesian coal and other world coal prices softened up. It became cheaper to import…,” he said.

“A few million people are without jobs in India. Indian coal mines are lying closed, and we are importing coal. That is putting pressure on the economy.”

The Supreme Court had, in August 2014, declared all 218 coal block allocations from 1993 to 2011 illegal and arbitrary. Subsequently, in September the same year, it cancelled all but four of these allocations. 

Salve also called the apex court judgment cancelling iron ore mining leases in Goa “a howler”. Soon after the judgment, officials had claimed that the state was facing Rs 1,500 crore revenue loss every month from the sector, besides jobs taking a hit. 

He claimed that the Centre had sent seven senior secretaries to consult him on dealing with the Supreme Court judgment.  “…And one of them said that this judgment will cost India 1 per cent plus of GDP, and that has happened,” he added.

Also read: Modi govt promised to end coal imports by 2016, but they’ve been on the rise since then


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  1. Salve is right, and I applaud him for writing this – finally, someone has drawn attention to this hugely important reality.

    Sure, there is sufficient reason to believe that scams of great proportions took place – but it was wrong of the SC to arbitrarily strike down all the telecom and coal licenses. It caused huge damage to legitimate investors, demolished the reputation of India as a safe destination for investments, caused massive unemployment and set the economy back immensely. And to top it all, the judicial system – presided over by the SC – eventually completely failed to punish the corrupt politicians, bureaucrats and their local industrialist cronies – they walked off scot free, their ill-gotten zillions to enjoy.

    The role of the SC and all courts is not just to decide cases. They must also ensure that justice is done to all parties affected by their decisions. They must exercise their powers intelligently with regard to the big picture, doing what is logical, prudent, fair and in the overall interest, whilst strongly punishing wrongdoing. In this case the SC ought not to have cancelled the licenses – it should have punished those corrupt politicians, bureaucrats and local industrialists who were guilty; seized the equity shares of the guilty Indian partners; and devised a mechanism to allocate these shares to new Indian partners selected via a transparent process overseen by the court.

    In India things have descended into petty one-upmanship between the legislature, the executive and the judiciary. The SC loses no opportunity to show it is superior to the other two arms of the government – taking arbitrary decisions that have far reaching consequences, showing an abject ignorance of economic and social aspects of cases, displaying a glaring lack of care and wisdom in deciding complex matters, and humiliating the investigative agencies in court rather than properly utilizing them to ensure that facts are brought to light. It seems to be all about showing who is top dog; never mind if India ends up looking like – and becoming – a banana republic.

  2. In this corrupt and self serving ocean it is impossible to find an island of excellence. It often appears that a good( read expensive and high profile) lawyer can get a bail out of turn, make the courts work in the night, so why blame the Courts? At the end of the day those who argued in the court for cancellation of the 2G & Coal cases were better, while the ones who argued at the trail court were not so good.
    The lawyers are not suppose to pre-judge the case before accepting or declining, is what they claim. So the only consideration is How good the money is or how good the investment it will be.
    Good Lawyers do not come cheap they will either win the case or delay it using every trick in the book

    • “Island of excellence”…. “honourable court”….”hon’ble minister”…. as long as Indians remain stuck in this sycophantic mindset toward power, they will continue to languish in poverty, injustice and the ridicule of the world.

  3. Should blame Vinod Rai the then CAG for his idiotic biased audit report just to benefit the BJP fellows and himself. Supreme court came much later. This guy Vinod Rai should face the parliament inquiry panel, There should be a public morcha against this fellow

  4. The history of Indian jurisprudence is filled with inconsistent and ill-conceived judgments. The only thing that courts are good at is protecting and expanding their own power. India’s housing shortage and the lack of rental industry falls squarely on the shoulders of the courts. When buildings fall in Mumbai it is the legal system that is responsible for the many who die after monsoons every year. The impossibility of evictions made renters the de facto owners. However, they were never the real owners so they had very little interest in fixing crumbling structures. Rickety buildings worth crores sag and fall today, because there is no ownership and no responsibility. For decades, the judges would skillfully blame the executive for everything ranging from pollution, poverty, corruption and crime. And, yet it is the courts who bear a significant share of that responsibility by destroying governance and preventing the resolution of cases for decades.

  5. The Supreme Court of India’s decision to cancel 120-odd 2G licenses in 2012 and very many coal block allocations thereafter was ill-founded, impulse and hasty. Even before the alleged wrong doing had been established beyond a reasonable doubt in a court of law, the SC, based upon CAG-leaked reports, speculations, hearsay, false public opinion, sensational newspaper write-ups, had taken the incredibly atrocious, arbitrary action of cancelling numerous 2-G licenses and coal block allocations. The SC, clearly lacking in expertise in economics and finance as well s commercial procedures had drawn conclusions from tenuous and delusional premises. And such appalling conclusions have since then proved to be devastating for the country. The deplorable demonetization was the final nail in the coffin. Does the Apex Court silently say, “Go to hell; we have no regret or remorse whatsoever as whatever ruled is ruled.” If it were so, what do we do with you SC?

  6. Mr. Salve has missed the wood for the trees? Had the UPA not indulged in unfair practices, SC would not have cancelled these awards. The blame is on UPA leadership who allowed misuse of power and that too blatantly? Worse still, when asked to explain these depredations, some of them defending it brazenly, reducing the questioning citizens to hapless morons. Had UPA taken immediate action and stemmed the rot ( which may have brought the govt. down , so what??, it was worth it!). Some leader of UPA explained it by calling inaction ‘ Coalition Pressures’, other senior members made comments like ‘notional loss’, ‘coal is lying under mother Earth’??? Could they have gotten more ridiculous than that besides treating the common man with such arrogant comments. Let me remind one of those leaders that bequeath all your ill-gotten money to me, I promise it will remain on ‘Mother Earth’ only as I have no intention to escape to the outer space.
    SC acted only technically, the only way to act in the face of stark evidence of depredations colluded by UPA leaders and the businessmen concerned. It is unfortunate that Mr. Salve has taken such a stand, it shows how right thinking people lose their perspective in face of immorality? Makes me wonder is it an Indian thing???

  7. Mr. Salve has analysed the facts correctly. Vinod Rai, Arun Jaitley, Ravi Shanker Prasad misled the court with imaginary figures of CAG. The SC with its lack of knowledge in commercial matters cancelled 122 spectrum licences and so many coal mine allocations. This estranged the foreign investors. That has really dealt a big blow to investments and thereby to the economy. Those arbitrary orders completely dislodged the Indian economy during Manmohan Singh govt and the shock is still continuing.

  8. In addition to issues raised by mr salve, there are two very significant issues which get knocked out of the discussion by attributing political motives.. firstly the fact that both mr Vinod rai and the SC stepped well out of line by intervening in policy decisions which are the privilege solely of the executive, and which factor in a lot more than cash profit to the government( to say the least of it) .the SC can only examine the constitutional propriety of such decisions.. nothing more or less… and the second is the subsequent policy making paralysis amongst higher bureaucracy and the executive which flowed out of legitimate fear of the consequences

  9. In India, the general rule is to punish commercial entities for any scam. The bribe takers/politicians/bureaucrats, those who receive bribes or create the scenario where bribes have to be paid for doing business rarely face any punishment.

  10. Instead of a temporarily booming economy by allowing black money and crony business culture it’s ok to face repurcussions of slow down temporarily for a few years and then get in to good practices and pick up from there on .a person earning 20 lakhs income is not able to buy individual house in decent area what kind of bullshit economy is this ..this needs to be repaired .

  11. Agree with salve for once! And. It only SC, the govt has killed some of th sectors mainly power and EPC/construction. They have caused investments to die on account of one sided policies. Yes we need to go after the unscrupulous promoters n businesses but the honest n hard working ones need fair policy. And then we look outward for investment and facilities policies and then strike on them once they come crying foul. Buddy your own people engage in foul play and then you punish the honest guys as well there by sullying the reputation of an entire country. Someone rightly commented how come SC decide on scientific n economic matter with such authority! Are the legal guys demigods? And the rest of the folks who have toiled so hard in their respective fields mean nothing???
    Anyway all’s not lost if the govt takes proper cognisance with a sincere purpose for the benefit of the country.

  12. The whole Problem is on account of Bench Fixing/Judgement Fixing Lobby of SC led by Mr Bhushan and Ms Jaisingh who File PILs with Total Ulterior Motives under the Grab Human Rights RTI etc.

  13. I agree with Mr. Salve. An analogy could be if a builder in a corrupt way gets a land parcel with all approvals in place with authorities and home-buyers buy flats built on that land. Court should not destroy the building but criminal offence or penalties should be levied. The coal blocks or 2G licenses should not have been cancelled but appropriate penalties etc should have been done. we would have been better placed now.

    • Absurd. That means any one can take the law in hand and do anything at his whims & caprices and then pay fine to justify his deed. That means there is No Rule of Law

  14. Many comments made above are not focusing on the irresponsible behavior of CAG and Vinod Rai, who published inaccurate and assumed losses, which carried away the minds of people and the SC. He must be squarely blamed for this predicament, but current Govt decided to award him a very plum position with BCCI ……

  15. Perhaps Mr. Harish Salve must join for a crash course in regulatory economics. Because he neither understands the economics of the rule of law or the laws of economics. The country was going to dogs and it’s natural resources were being plundered by a caucus of vested interests. We Indians are relieved that the Apex court intervened to ensure that the coal resources or spectrum allocation were lawfully distributed for the best price and for the right purposes. We cannot have foreign investors foray into our key sectors for the wrong reasons. We’d rather let them go since unconscionable exploitation of our scarce and depletable natural resources adversely affects what our great grand children will inherit from the earth. Salve earned in billions as a SC lawyer and it is most unbecoming of him to blame the Apex court for erosion of GDP. Why is he shedding Crocodile tears for India when his interests lie elsewhere? Ever since stopped his law practice in SC the general worth of SC lawyers has gone up. More work is coming to deserving lawyers. Salve is the only lawyer who has appeared for both sides in the same case.

    • Dude, you used big words like ‘regulatory economics’ but your comment is meaningless. Shri Salve did not support looting of India’s natural resources. He has criticized two particular features of the Supreme Court’s handling of these lawsuits. One, wholesale cancellation of all allocations without considering their effects on foreign investment, which he has elaborated one. Two, inconsistent handling of the lawsuits leading to unreasonable judgement differentials. Without understanding him, you have made a general comment plus you attacked him personally – both hallmarks of a loser.

  16. Harish Salve speaks on behalf of his clients. That is his job as a lawyer. The opposing council had their submissions in the argument, and the SC made a decision upon hearing both sides. These cases were not heard suo moto and came to the SC only upon failure of so many systems in place, which the govt of the day had control over and had the opportunity to be transparent about. In the name of economy, you cant let crony capitalism be the way of business. That is malicious and farcical. Stupidity and cluelessness about how the economy functions can negatively impacting the Indian economy more than the two scams of the past.

  17. SC has indeed been found wanting in quality of its judgments on many commercial and technical matters, most obvious has been the case of CNG in Delhi. However, many government decisions have also been quite capricious and corruption can be easily inferred. But SC has to understand the implications of its judgment not only from the purely legal angle but from public policy, economy, jobs etc and then reach a compromise in the overall ‘national interest’. It is one thing to punish a corrupt official or politician but decisions which impact other areas need to be taken with utmost due care and review. Another though slightly of the track decision in recent times was the Rafale case, where SC called team from IAF to get a few lessons on air force requirements in the open court room. This was clearly getting into operational and purely technical issues where the legal issue was simple- is there a proof of corruption and if so, how acceptable that proof is from legal point of view.

  18. Is this some sort of selective amnesia? Supreme Court stepped in when there was policy paralysis under UPA2 and the corruption was a norm. Of course, cancellation of 2G licenses and coal block allotments hurt the GDP. IT had to. By how much can be debated. But then, it is also a fact that the UPA government was the one making those decisions. It’s not the court’s job to probe crimes. It’s the various agencies like CBI that have been in cahoots with all governments as a caged parrot. The fact that criminality can’t be proved against Raja and Kanimojhi should not be surprising. It’s the same CBI again. And frankly speaking, there is enough comradery amongst the ruling class to not go against other politicians in the opposition, despite regular showoffs as in the case of Chidamabaram. But the fact is people like Chidamabaram have been laughing their way out. There has been NO chargesheet against him yet. This shindig has gone for too long.

  19. This list of candidates potentially single-handily responsible for the slowdown is expected to grow. Won’t discount someone naming even Bollywood to this list. Anyone will do except those actually in charge of running the show.

  20. The Law is an Ass and the supreme Court is a Colossus riding on that.. Why do lay men judges take decisions, which are best left to scientific decision making/ policy making by the govt. I refer to the decision of the honourable SC,4 years ago, when as a knee jerk reaction to air pollution in Delhi roads, it banned sale of ALL diesel cars of more than 2000 cc capacity..I mean, that was mind boggling.. These were high end cars by Mercedes, Toyota, BMW etc.. Highly refined cars, which cause less sir pollution than one tenth of the average auto ricksaw.. This decision, which was referred after 9 months, caused immense economic damage, especially in the eyes of the foreign car makers.. This govt just had no credibility.. Of course the financial damage was very small, compared to the Goa iron ore mining ban or the coal mining ban, which shaved off lakhs of crores off gdp, besides causing much unemployment and misery.. I’m only referring to the lack of scientific sense in the SC and the habit of using a hammer, when it’s only a chisel that’s required. Criminal negligence, is what I would say mylord

    • 1) Are you trying to say that, the foreigners were not aware of the corruption involved in obtaining the 2G spectrum license ?
      2) Are you trying to say that, the foreigners were not affiliated with their Indian counter parts before the Licenses were issued ? Check their MOU dates or the negotiation dates !!!
      3) It is alleged that, Earlier the Telecom companies gave unlawful gratification to the Politicians and now it is the Politicians who are giving unlawful gratitude to the Telecom company…….

  21. Please read a long letter published in the Chat Corner of the Economic Times. The writer has squarely blamed the mindless application of the Insolvency & Bankruptcy Code to hound even honest businessmen and industrialists, as if account becoming NPA is grave crime. This has created a fear psychosis amongst the business community and new projects are hardly coming. Next is the mindless arresting of bankers when loans fail. Obvious corrupt bankers have to pay for their crime. But if one goes on arresting Bank chairpersons left and right, why would they take decisions. What happened in the Bank of Maharashtra case? Banks chairman and MD both were arrested on the same day by the local police and the Bank was rendered headless. And this was on account of default made by a Real Estate company to its depositors ( depositors of the Bank were safe and sound).. Now, why bankers should be held accountable for crimes committed by borrowers? If you do that, you will have another fear psychosis amongst the banking community. Thankfully, late Arun Jaitley intervened and the these functionaries were released. Primarily, government should not be in the business of banking. But, however, if the country and its political class insist, one should be able take the phenomenon of NPA generation in its stride. It is inevitable. and each business failure cannot be equated to crime.

  22. He is right.SC was reckless in cancelling licences both in 2G ad well as in Goa mines cases.In 2G the only irregularity was of the minister Raja abusing his powers to allot few licenses using FCFS policy arbitrarily.We do not know he could have taken some bribe on that but what got wrongly blown up was the figure of loss of Ex-chequer to tune Rs1.76 LCr which was certainly not the case.
    It was only a notional loss CAG had projected but media with assistance of then opposition BJP blew it out of proportion while MMS govt. failed to explain to ppl. Fact of the matter is CAG audits bring out only the shortfalls in thruput,revenues etc and lists reasons.It is for investigations to take on from CAG and establish corruption because the shortfalls could also be due to policy,right or wrong or even due to corruption.Look how Modi handled CAG report on Rafale.In fact the reports were not even fully transparent and still doubts remain.

  23. Such selective amnesia! Indeed the SC decisions did harm the economy. But the government of the day did it’s bit too. I find no mention of that.

  24. One facet, perhaps, not the whole diamond. It has become fashionable to knock the figure of 1.76 trillion because Raja and Kanimozhi got let off. The gifting away of spectrum and coal blocks was a scandal and one salutes the apex court for upholding the public interest. It is for the government of the day to both protect the public interest in economic terms and frame policies that are constitutionally sustainable. Sometimes the apex court uses a scalpel, at others a sledge hammer, but I would not blame the economic crisis on the Court. Not one teeny weeny bit.

    • Why this piece of writing appearing today? But for the SC verdicts, the composition of Lok Sabha would have been quite different…..

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