Arun Kumar Agrawal vs. Union of India & Others, Writ Petition (Civil) No. 69 of 2012,
Decided on May 9, 2013
Petitioner,
through this Public Interest Litigation, challenged the approval granted by the
Government of India for the acquisition of majority stake in Cairn India
Limited (CIL) and also for a direction to the Oil and Natural Gas Corporation
of India (ONGC) to exercise its right of pre-emption over sale of shares of CIL
on the same terms without causing any loss or profit to the Cairn Energy, and
also for a direction to CBI to investigate the reasons for ONGC, a Government
of India Undertaking, in not exercising their legal rights under the Right of
First Refusal (RoFR) and giving clearance to the CAIRN – Vedanta Deal on the
basis of the existing right to share the royalty and cess on pro-rata basis and
also for the consequential reliefs.
The
question before the Court was that ‘whether the Court sitting in writ
jurisdiction is justified in interfering with a complex economic decision taken
by a State or its instrumentalities in the absence of violation of any
statutory provision or proof of mala fide or on extraneous and irrelevant
considerations’?
The Hon’ble Supreme Court held:
“Matters relating to
economic issues, have always an element of trial and error, so long as a trial
and error are bona fide and with best intentions, such decisions cannot be
questioned as arbitrary, capricious or illegal”. [Para 39]
The Court dismissed the writ petition filed by the
petitioner by holding that:
“we find no merits in
the writ petition which was filed without appreciating or understanding the
scope of the decision or the making process concerning economic and commercial
matters which gives liberty to States and its instrumentalities to take
appropriate decision after weighing advantages and disadvantages of the same
and this Court sitting in this jurisdiction, as already indicated, is not
justified in interfering with those decisions, especially when there is nothing
to show that those decisions are contrary to law or actuated to mala fide or
irrelevant considerations. The writ petition, therefore, lacks merits.”
The Court also noted the following case laws:
State of M.P. and others v. Nandlal Jaiswal and others
(1986) 4 SCC 566 held that
“we must not forget that in complex economic matters every
decision is necessarily empiric and it is based on experimentation or what one
may call “trial and error method” and, therefore, its validity cannot be tested
on any rigid “a priori” considerations or on the application of any straight
jacket formula.”
Life
Insurance Corporation of India v. Escorts Ltd. and others (1986) 1 SCC 264 this
Court held
“that the Court will not debate academic matters or concern
itself with intricacies or trade and commerce. The Court held that when the
State or its instrumentalities of the State ventures into corporate world and
purchases the shares of the company, it assumes to itself the ordinary role of
shareholder, and dons the robes of a shareholder, with all the rights available
to such a shareholders and there is no reason why the State as a shareholder
should be expected to state its reasons when it seeks to change the management
by a resolution of the company, like any other shareholder.”
Liberty
Oil Mills and others v. Union of India and others (1984) 3 SCC 465, the Court
held that expertise in public and political, national and international economy
is necessary, when one may engages in the making or in the criticism of an
import policy. Obviously, courts do not possess the expertise and are
consequently, incompetent to pass judgments on the appropriateness or the
adequacy of a particular import policy
Villianur
Iyarkkai Padukappu Maiyam v. Union of India (2009) 7 SCC 561, the Court held as
follows:
“It
is neither within the domain of the courts nor the scope of judicial review to
embark upon an enquiry as to whether a particular public policy is wise or
whether better public policy can be evolved. Nor are the courts inclined to
strike down a policy at the behest of a petitioner merely because it has been
urged that a different policy would have been fairer or wiser or more
scientific or more logical. Wisdom and advisability of economic policy are not
amenable to judicial review. In matters relating to economic issues the
Government has, while taking a decision, right to “trial and error” as long as
both trial and error are bona fide and within the limits of the authority. For
testing the correctness of a policy, the appropriate forum is Parliament and
not the courts.
Bajaj
Hindustan Limited v. Sir Shadi Lal Enterprises Limited And Another (2011) 1 SCC
640, the Court held that economic and fiscal regulatory measures are a field
where Judges should encroach upon very wearily as Judges are not expert in
those matters”
Bhavesh
D. Parish and Others v. Union of India and Another (2005) 5 SCC 471, the Court
took the view that, in the context of the changed economic scenario, the
expertise of people dealing with the subject should not be lightly interfered
with. The consequences of such interdiction can have largescale ramifications
and can put the clock back for a number of years. The process of
rationalisation of the infirmities in the economy can be put in serious
jeopardy and, therefore, it is necessary that while dealing with economic
legislations, this Court, while not jettisoning its jurisdiction to curb
arbitrary action or unconstitutional legislation, should interfere only in
those few cases where the view reflected in the legislation is not possible to
be taken at all.
Centre
for Public Interest Litigation and Another v. Union of India and Others (2000)
8 SCC 606, the Court held as follows:
“20. It is clear from the above observations of this Court
that it will be very difficult for the courts to visualise the various factors
like commercial/technical aspects of the contract, prevailing market
conditions, both national and international and immediate needs of the country
etc. which will have to be taken note of while accepting the bid offer. In such
a case, unless the court is satisfied that the allegations levelled are
unassailable and there could be no doubt as to the unreasonableness, mala fide,
collateral consideration alleged, it will not be possible for the courts to
come to the conclusion that such a contract can be prima facie or otherwise
held to be vitiated so as to call for an independent investigation, as prayed
for by the appellants…….