Thursday, December 10, 2015

DO COURTS ADD OR DESTROY VALUE?

FROM BUSINESS WORLD OF 28 SEPTEMBER 2006


Give it more thought


Common people have great faith in our courts. They turn readily to the judicial system in their fight against the state, and applaud when the courts make governments do the right thing or stop them from perpetrating injustice. The result of this popular bias is that the courts often have to judge what are matters of administration rather than law. The Supreme Court’s intervention in the conversion of Delhi’s public vehicles to compressed natural gas is an example. It was not certain that the conversion was the most economical solution to the capital’s atmospheric pollution; there are so many cities abroad where vehicles run on petrol and diesel and which nevertheless have very low levels of pollution. However, monitoring of vehicular engines had been tried out and was generally seen to have failed. In the circumstances, the forcible conversion of vehicles was implemented at a heavy cost to the vehicle owners. Today, everyone is happy with the result.
It would appear that similar reasoning drives the efforts of Delhi High Court to bring Delhi’s buildings in conformity with building laws. The High Court’s activism has upset the commercial property owners, who obtained the protection of the local and the central governments in Delhi. But to no avail. The Supreme Court is in the process of hearing arguments on the Centre’s legislation. But it has since inception stood firm against the Centre’s attempts to circumvent judicial decisions. It has consistently taken the view that whilst it is the function of legislatures to make law, they cannot circumscribe the courts’ prerogative to determine whether the law is lawful or a usurpation of power that cannot belong to legislatures. This position, taken over decades, suggests that the Centre’s attempt to pre-empt the courts’ decisions would fail this time as well.
That makes it all the more necessary that whatever action the courts initiate be taken with due deliberation, not only of the law, but of the process of implementing it. The courts are inclined to take the view that the building regulations of Delhi’s local authorities are the law and must be enforced in letter and spirit. When confronted with the havoc that action based on that view involves, they are inclined to make some exceptions. But they are also intent on ensuring that the exceptions are not so extensive as to make a mockery of the law.
The massive illegalities in the state of Delhi real estate are impossible to ignore. But if the courts make an exception in favour of one or other business they approve of, they are in effect modifying the law. They would not be defending the rule of law so much as exercising the right to modify it that the executive holds as its own prerogative. In the jurisdictional tussle between the two, the fact should not be lost sight of that both agree on the desirability of amending the law. The truth is, that the local authorities in charge of property registration have been so massively corrupt that even builders who obeyed the regulations had to bribe them. The bribe was in effect an unavoidable tax, and hence infractions of regulations were free of cost. No wonder that adherence to the regulations was an exception rather than the rule, and that punishment for their breach was so exceptional as to be absent.
Hence the means at the disposal of the local authorities to set right infractions are hopelessly insufficient. At the behest of the courts, the Delhi Municipal Corporation’s bulldozers have been active in making gaping holes in refractory properties. But if they were to bring down all such properties, it would take them over 200 years.
That must be why, more recently, the commissioners appointed by the court have changed over from destruction to sealing. It is cosmetically less shocking. But it is no less damaging. The closure of businesses hurts their customers; and the loss of business hurts their owners. The courts do not try to make estimate the loss; but if they did, they would find that the actions they have sanctioned have destroyed the gross product of Delhi on a colossal scale.
Is there an alternative? The alternative businessmen and their political patrons can think of is buying time. When the time they buy comes to an end, they will try to buy more. The courts are justifiably wary of this ploy.

But there is another alternative, better suited to the courts’ skills, namely to amend the building laws. The present regulations belong to an imperial Delhi which is gone forever. Having taken legislators’ powers into their own hands, the courts must ask themselves: what are the objectives of building regulations, and what building laws would achieve them with minimum disruption of property and business. And after defining and promulgating such laws, the courts must give owners the maximum chance to implement them in a realistic time period.