New Delhi, Dec 6 : The Supreme Court on Monday observed that the court must be circumspect that rights and freedoms guaranteed under the Constitution do not become a weapon in the arsenal of private businesses to disable regulations enacted in the public interest.
A bench of Justices D.Y.Chandrachud and Vikram Nath and B.V.Nagarathna stated that the right to equality and freedom to trade cannot be combined with a right to evade and avoid regulation.
The bench also noted that regulatory mechanisms are democratically elected to set the terms of operation for private economic actors in liberalized economies.”This court does not espouse shunning of judicial review when actions of regulatory bodies are questioned,” it noted in the 55-page judgment.
Justice Chandrachud, who authored the judgment on behalf of the bench, said: “A regulated economy is a critical facet of ensuring a balance between private business interests and the State’s role in ensuring a just polity for its citizens.”
He added that a casual invalidation of regulatory action in the garb of upholding fundamental rights and freedoms, without a careful evaluation of its objective of social and economic control, would harm the general interests of the public.
The bench noted scholars across the world have warned against the judiciary constitutionalising an unregulated marketplace.
The bench said: “This court must be circumspect that the rights and freedoms guaranteed under the Constitution do not become a weapon in the arsenal of private businesses to disable regulation enacted in the public interest.The top court rejected Akshay N.Pattel’s appeal against the Madhya Pradesh High Court decision.It upheld Clause 2(iii) of Revised Guidelines on Merchanting Trade Transactions, January 23, 2020, issued by Reserve Bank of India in exercising its power under Sections 10(4) and 11(1) of Foreign Exchange Management Act 1999.
The appellant obtained a MTT contract international to act as an intermediary between a supplier of PPE products in China and a buyer in the USA.The bank informed the appellant in May 2020 that the RBI had refused his MTT contract based on Clause 2(iii), 2020 MTT Guidelines.The government had then banned the export of PPE products against the backdrop of the Covid pandemic.
The appellant contended that a prohibition of exports in PPE products was sufficient to achieve the objective of ensuring adequate supplies, and it was not necessary to also prohibit MTTs.His counsel further argued facilitating an MTT of PPE products between two countries does not impact their stock in India.
The bench said while MTTs in PPE products may not directly reduce the stock of these products in India, it still does contribute to their trade between two foreign nations.”In doing so it directly reduces PPE products available in the international marketplace, which may have been purchased by India, if necessary.” As such, MTTs help to reduce the stock of PPE products that India could acquire,” it stated .
.It also noted that the Centre’s policy of banning exports of PPE products reflects the Centre’s stance on the product’s non tradeability during the Covid pandemic.”It highlights a clear choice in policy under which Indian entities shall be prohibited from exporting these products outside India, in all likelihood to the highest buyers around the globe who may end-up hoarding the global supply.Hence, banning MTTs in PPE products was critical in ensuring that Indian foreign exchange reserves are not utilised to facilitate the hoarding of PPE products with wealthier nations,” said the bench.
Upholding the high court verdict delivered on October 8 last year, the bench said: “The measure was validly enacted, in pursuance of legitimate state interest and did not disproportionately impact the fundamental rights of the appellant.Accordingly, Clause 2 (iii) is valid under Articles 14, 19(1) (g) and 21.We do not see any reason to interfere with Clause 2(iii) for the reasons stated in this judgment.”
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