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: There is a strong sense of relief all round that the 17-year-old tussle between the Centre and ITC has finally been resolved. But if the tobacco major has come out trumps in the process, the government most certainly has not. The final compromise, which saw the Centre back off from its demand for Rs 453 crore from the company, makes it look weak and incompetent. The public perception that not enough homework was done either in fighting the case in court, or in the promulgation of the ordinance, has only been reinforced.
ITC was required to pay the remaining penalty of Rs 453 crore by the end of January, failing which it was required to pay 15% penal interest per month. In reality, however, the company did not pay either the penalty or the interest. The government too seemed to rest content with that state of affairs. The reason, it now appears, was that there was a compromise in the making. And while compromises often make more sense than prolonged legal battles, what is distressing is the lack of transparency in this instance. The final outcome sets a bad precedent and sends out a signal that the government can be arm-twisted into waiving huge sums of money.
The issue isn’t so much about the fact that the government was cornered. It is about the way the whole case has been handled. First, the ordinance itself was a retrograde step. The SC judgement in favour of ITC should have convinced the government that it didn’t have a case on hand. However, the Centre got itself into a corner, with an ordinance that empowered it to change the law with retrospective effect. It thus undermined the authority of the Supreme Court. But, more important, the government went into a face-saving mode. It tried to hide one wrong with another. Such a hard-nosed stance, it appears now, was only for public consumption. The Centre was not backing it by taking the ordinance to its logical conclusion. ITC neither paid the interest, nor the penalty. This indicated that while there was a tacit understanding between the government and ITC, a deal was also cooking in the background. The final contours of the deal, however, have shown the government in poor light. Hopefully, the Centre will take a cue from this and not repeat such mistakes in future.
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