While Deciding Cases, Adopt A View Which Subserves Nation’s Economic Interest: SC [Read Judgment]

"Courts are increasingly receptive to economic arguments while deciding these issues. In such an environment it becomes the bounden duty of the Court to have the economic analysis and economic impact of its decisions. We may hasten to add that it is by no means suggested that while taking into account these considerations specific provisions of law are to be ignored. First duty of the Court is to decide the case by applying the statutory provisions. However, on the application of law and while interpreting a particular provision, economic impact/effect of a decision, wherever warranted, has to be kept in mind"

Where two views are possible or wherever there is a discretion given to the Court by law, the Court needs to lean in favour of a particular view which subserves the economic interest of the nation, the Supreme Court has observed in Shiva Shakthi Sugar Ltd Vs Shri Renuka Sugar Mills Ltd.

A bench comprising Justice AK Sikri and Justice AM Sapre observed that the court needs to avoid that particular outcome which has a potential to create an adverse affect on employment, growth of infrastructure or economy or the revenue of the state and it is very important to have an economic analysis of the decision.

“On the application of law and while interpreting a particular provision, economic impact/effect of a decision, wherever warranted, has to be kept in mind,” the court said while disposing of an appeal preferred by Shivashakti Sugar Mills against a Karnataka High Court judgment.

The moot question involved in this appeal was whether the establishment of the sugar mill by Shivashakti Sugar Mills and its activity to crush sugarcane since 2011 may be permitted to continue.

The bench, on the facts of the case, observed that no purpose is going to be served in getting the unit closed and rather the public purpose demands that the factory remains in operation and continue to function.

“These factors, particularly, bank loans, employment, generation and production at the factory serve useful public purpose and such economic considerations cannot be overlooked, in the context where there is hardly any statutory violation,” the court said while allowing the appeal.

The court further elaborated: “Interface between law and economics is much more relevant in today‘s time when the country has ushered into the era of economic liberalisation, which is also termed as ‘globalisation’ of economy. India is on the road of economic growth. It has been a developing economy for number of decades and all efforts are made, at all levels, to ensure that it becomes a fully developed economy. Various measures are taken in this behalf by the policy makers. The judicial wing, while undertaking the task of performing its judicial function, is also required to perform its role in this direction. It calls for an economic analysis of law approach, most commonly referred to as ‘Law and Economics’”.

Read the Judgment here.