Deference to people's will stops courts from interfering in economic policy: SC

NEW DELHI: Less than a week after the President and the PM expressed anguish over frequent interference in policy decisions by the judiciary, the Supreme Court on Monday said the cardinal rule for the courts is not to interfere with the government's economic and regulatory policies.
Upholding a decision of the Reserve Bank of India to decline permission to an Indian merchant, Akshay N Patel, from entering into an agreement to facilitate the export of Chinese-made PPEs to the USA, a bench of Justices D Y Chandrachud, Vikram Nath and B V Nagarathna said the deference of the RBI to the government policy banning the export of PPEs was justified as it was in the public interest to stop shortage of PPEs during the pandemic.
It said that exports from a foreign country to yet another country may not have caused a shortage of PPEs in India but would surely have depleted the stocks in the world, which could have been grabbed by rich countries for hoarding and reduced India's share to import PPEs from the open market. Patel had challenged the denial of permission to execute the bank documents for giving effect to facilitating the export of PPEs from China to the USA as well as the policy banning exports of PPE.
Writing the judgment, Justice Chandrachud examined in detail the regulatory role of RBI in sync with the economic as well as regulatory policies of the government to nuance the role of the constitutional courts in issues involving such policies.
Justice Chandrachud said, "It is trite law that courts do not interfere with the economic or regulatory policy adopted by the government. This lack of interference is in deference to the democratically elected government’s wisdom, reflecting the will of the people." On the case in hand, he said, "... the regulations introduced by RBI are in the nature of statutory regulation and demand a similar level of deference that is accorded to executive and Parliamentary policy."
The three-judge bench said the constitutional courts must be circumspect that "the rights and freedoms guaranteed under the Constitution do not become a weapon in the arsenal of private businesses to disable regulation enacted in the public interest." This issue was specifically alluded to by the President and the PM, who had said that some vested interests were resorting to PILs in the guise of violation of fundamental rights to impede the economic development of the country.
Explaining the ruling, Justice Chandrachud-led bench said, "The Constituent Assembly Debates had carefully curated restrictions on rights and freedoms, in order to retain democratic control over the economy. Regulation must of course be within the bounds of the statute and in conformity with executive policy. A regulated economy is a critical facet of ensuring a balance between private business interests and the State’s role in ensuring a just polity for its citizens."
In what could be heartening for the political executive, the bench said, "Regulating the economy is reflective of the compromise between the interests of private commercial actors and the democratic State that represents and protects the interests of the collective. Scholars across the world have warned against the judiciary constitutionalising an unregulated marketplace."
"With the transformation in the economy, the Courts must also be alive to the socio-economic milieu. The right to equality and the freedom to carry on one’s trade cannot inhere a right to evade or avoid regulation. In liberalized economies, regulatory mechanisms represent democratic interests of setting the terms of operation for private economic actors," it said.
The bench added, "This Court does not espouse shunning of judicial review when actions of regulatory bodies are questioned. Rather, it implores intelligent care in probing the bona fides of such action and nuanced deference to their expertise in formulating regulations. A casual invalidation of regulatory action in the garb of upholding fundamental rights and freedoms, without a careful evaluation of its objective of social and economic control, would harm the general interests of the public."
Upholding the RBI's decision not to allow permission for PPE export, the bench said, "This Court retains its role as the constitutional watchdog to protect against State excesses. It continues to exercise its role in determining the proportionality of a State measure, with adequate consideration of the nature and purpose of the extraordinary measures that are implemented to manage the pandemic. Democratic interests that secure the well-being of the masses cannot be judicially aborted to preserve the unfettered freedom to conduct business, of the few."