CJI’s take on recent rows: Loss fact,gain a matter of opinion

With Prime Minister Manmohan Singh sharing the dais with him,Justice Kapadia said: “Sometime we see certain (TV) programmes and we build our perceptions. How many of us know the basic principle of valuation? Today a number of controversies on valuation are discussed but the basic principle of valuation is that loss is a matter of fact and profit or gain is a matter of opinion. Please apply this test to the controversies going on. I do not want to discuss anything further. Loss is a matter of fact and profit and gain is a matter of opinion. So if you understand these principles,we will be able to judge. Our perceptions will become more sound and we know where the shoe pinches.

The CJI was addressing the opening session of a conference here on ‘Economic Growth and Changes of Corporate Environment in Asia’.

Referring to a recent judgment of the German supreme court on the constitutional validity and powers of the president to enter into deficit control treaty with other members of the European Union,Justice Kapadia pointed out that the court said “it would not decide on matters of policy or economic content and refused to grant injunction to establishment of European stability mechanism”. “This is for judges to understand the difference between judicial activism and judicial restraint. If we do not have the model to apply,we need not and we cannot sit in judgment over economics or policy decision,” he said.

Saying that the biggest challenge that India faces now is “not economic growth but inclusive growth”,the CJI,who retires at the end of this month,said the framers of the Constitution wanted future governments to achieve economic democracy. “It should not so happen that when growth increases,300 million prosper and 700 million don’t get the benefits… That is why Dr (B R) Ambedkar used the word economic democracy which till today has somehow not been exercised even in the judgments of the Supreme Court,” he added.

“We need investment in infrastructure. Not just investment in FMCG (fast moving consumer goods). We need to uplift by inclusive growth the younger population of this country,” Justice Kapadia said.

Talking about the need for economic literacy,he quoted former RBI Governor C Rangarajan to say that the common man needs to be convinced that certain decisions while unpopular still have to be taken. “Today there is a fear that development equals displacement. This fear needs to be addressed,” he said.

Lauding the message in Prime Minister Manmohan Singh’s address to the nation on Friday on the economic situation,the CJI said it brought out that “if we are not careful the young will suffer”.

Observing that there is a debate around the world whether rule of law promotes economic growth or whether it is an impediment to economic growth,he said it is important to understand what rule of law actually is. “Leaders of this country must understand that law is not discretion. Rule of law as a principle enforces a minimum standard of balance,” he said.