In what could be a very significant observation, the Supreme Court has called for an analysis of economic implications while rendering judgments..This significant observation was made by a Bench of Justices AK Sikri and AM Sapre in a judgment relating to the closing of Sugar factory in Karnataka in the case of Shivashakti Sugars Limited v. Shree Renuka Sugar Limited..The factual matrix of the case pertains to a Rule mandating that two sugar factories cannot be set up within distance of 15 kilometers..The contentious issue was regarding the appellant, Shivashakti Sugars setting up its factory within 15 kilometers of another factory, M/s. Raibagh Sahakari after obtaining an NOC from Raibagh Sahakari. Raibagh sahakari, subsequently, went into liquidation. However, the Government of Karnataka sought to revive Raibagh Sahakari and invited tenders to restart the factory. The same was bagged by Shree Renuka Sugar Limited..Shree Renuka then went on take the stand that since Raibagh Sahakari was within the radius of 15 kilometers from the place where Shivashakti had set up its factory, no permission could have been given to Shivashakti to start its factory, as per the provisions of clause 6A of Sugarcane (Control) Amendment Order, 2006..The Karnataka High Court ruled in favour of Sree Renuka leading to an appeal in the Supreme Court. It is while answering deciding this dispute that the Court went on to make some pertinent observations on law and economics..The Court observed that law is an inter-disciplinary subject and the impact of other disciplines of law is to be necessarily kept in mind while taking a decision. It then alluded to the interface between law and economics in the era of liberalisation..“Interface between law and economics is much more relevant in today‘s time when the country has ushered into the era of economic liberalization, 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”..The Court then observed the necessity of judiciary also making an effort in that direction..“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’….…it becomes the bounden duty of the Court to have the economic analysis and economic impact of its decisions.”.The Court, however, also made it clear that provisions of law should not be ignored while taking into consideration economic factors. However, if in a situation 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 is favourable to the economic interest of the nation..“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. Likewise, in a situation 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. Conversely, the Court needs to avoid that particular outcome which has a potential to create an adverse effect on employment, growth of infrastructure or economy or the revenue of the State.”.The Court, therefore, allowed the appeal of Shivashakti Sugars Limited..Read the judgment below.
In what could be a very significant observation, the Supreme Court has called for an analysis of economic implications while rendering judgments..This significant observation was made by a Bench of Justices AK Sikri and AM Sapre in a judgment relating to the closing of Sugar factory in Karnataka in the case of Shivashakti Sugars Limited v. Shree Renuka Sugar Limited..The factual matrix of the case pertains to a Rule mandating that two sugar factories cannot be set up within distance of 15 kilometers..The contentious issue was regarding the appellant, Shivashakti Sugars setting up its factory within 15 kilometers of another factory, M/s. Raibagh Sahakari after obtaining an NOC from Raibagh Sahakari. Raibagh sahakari, subsequently, went into liquidation. However, the Government of Karnataka sought to revive Raibagh Sahakari and invited tenders to restart the factory. The same was bagged by Shree Renuka Sugar Limited..Shree Renuka then went on take the stand that since Raibagh Sahakari was within the radius of 15 kilometers from the place where Shivashakti had set up its factory, no permission could have been given to Shivashakti to start its factory, as per the provisions of clause 6A of Sugarcane (Control) Amendment Order, 2006..The Karnataka High Court ruled in favour of Sree Renuka leading to an appeal in the Supreme Court. It is while answering deciding this dispute that the Court went on to make some pertinent observations on law and economics..The Court observed that law is an inter-disciplinary subject and the impact of other disciplines of law is to be necessarily kept in mind while taking a decision. It then alluded to the interface between law and economics in the era of liberalisation..“Interface between law and economics is much more relevant in today‘s time when the country has ushered into the era of economic liberalization, 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”..The Court then observed the necessity of judiciary also making an effort in that direction..“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’….…it becomes the bounden duty of the Court to have the economic analysis and economic impact of its decisions.”.The Court, however, also made it clear that provisions of law should not be ignored while taking into consideration economic factors. However, if in a situation 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 is favourable to the economic interest of the nation..“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. Likewise, in a situation 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. Conversely, the Court needs to avoid that particular outcome which has a potential to create an adverse effect on employment, growth of infrastructure or economy or the revenue of the State.”.The Court, therefore, allowed the appeal of Shivashakti Sugars Limited..Read the judgment below.
![Bounden duty of the Court to consider economic impact of its decisions, Supreme Court [Read judgment]](http://media.assettype.com/barandbench%2Fimport%2F2017%2F06%2Fak-sikri-and-am-sapre.png?w=480&auto=format%2Ccompress&fit=max)
