Thursday, December 10, 2015

MY LORDS, WHAT ABOUT THE ECONOMY?

FROM BUSINESS WORLD OF 2 NOVEMBER 2006


The Unheard Petitioner


The Supreme Court has finally imposed its will. The government put up dogged resistance, but capitulated in the end. Sealing of non-conforming commercial properties in Delhi has begun.
No one can dispute the Supreme Court’s interpretation of the law. Law is like theology; only its anointed priests may speak about it. And the priesthood is headed by the Supreme Court; no one can dispute its judgments. So let us take it for granted that the Supreme Court read the law correctly, and that all the nonconforming businesses are in contravention of the law.
But without any disrespect to the Supreme Court, it is possible to ask whether the businesses are the primary lawbreakers. All the nonconforming businesses are recog- nised by the Municipal Corporation of Delhi, which is part of government. They pay taxes to it; they receive water and power from it. If the existence of these businesses is contrary to law, so surely would it be to collect taxes from them, or to send them utility bills and receive money from them. If breach of zoning regulations is a crime, then it is a crime of two accomplices – the businesses, and the government. And if the law is broken, then surely the party whose responsibility it is to enforce the law must bear half the guilt at least. And yet, the Supreme Court has let off the government, and punished only the businessmen. Such selective justice is tantamount to injustice.
It may be said that it was not the government but its corrupt employees that recognized, aided and abetted the nonconforming businesses. Such a distinction would, however, be highly questionable. Employees of the government are given immunity for what they do in the course of duty. But immunity for them cannot mean immunity for the government. If it did, bureaucrats would get away with murder and mayhem. Such an interpretation of immunity would be an invitation to every criminal to join the government. The Supreme Court must force the government to assume its responsibility for the corrupt and illegal acts of its employees.
In the particular case of nonconforming businesses, it must make the government pay them compensation for the loss they may suffer from sealing. The correct compensation would be restitution of status. A business that is asked to close down should be given equal space in an equivalent location, plus whatever the replacement cost of the immovable investment it made in the original location may be. Since equivalent locations do not exist, such restitution of status would be impossible for the half million businesses which must close down; insofar as the government fails to restore a business, it must pay equivalent compensation for value destroyed. If for no other reason, the Supreme Court should recognize the principle of compensation because it would eliminate the corruption that led to the emergence of nonconforming businesses. If the government knew that it would have to pay through its nose for removing nonconforming businesses, it would be far more intent on not allowing them to come up in the first place.
The compensation that would have to be paid to nonconforming businesses in existence would be soEnormous that it would far exceed the government’s capacity to pay. If the Supreme Court calculated it, it would have to reflect upon how the government was to raise the resources for compensation. That single consideration would show the unfairness and undesirability of the present sealing order.

That compensation would be a measure of the damage to the economy of Delhi that wholesale sealing will do – the inconvenience to customers, the loss of production and employment, and the deflationary impact on the economy of north India. No government would willfully impose such a loss on the country it governs. We cannot believe that even the Supreme Court would have done so if only it had calculated the loss.

It would then have been led to consider four questions. First, what are the objectives to be achieved by laws governing land use? Second, the optimum distribution of space between different uses will change over time with a city’s expansion and a change in its place in the economy of the country and the world; how can law embody the flexibility in land use that could accommodate these changes? Third, how must the present law be changed so that it can serve those objectives and accommodate those changes? And finally, by what process and over what period can the present pattern of land use be made to conform to that ideal law at the lowest cost and with the least disruption?

Now that it has thrown every petitioner out of court, no one will bring these questions before the Supreme Court. But it should still ask them, suo motu, for it never heard the most important petitioner of all – the economy.