1) Double-edged sword: On Supreme Court’s cryptocurrency ruling
That the Supreme Court struck down as “disproportionate” a 2018 circular by the Reserve Bank of India (RBI) that directed entities not to provide services to those trading in “virtual currencies” (cryptocurrencies) is understandable.
After all, despite ministerial committee recommendations, and warnings by institutions such as the RBI about the problematic nature of their payment and exchange methods, the use of virtual currencies over the Internet continues to remain legal in India.
But the immediate effect of the RBI circular was to choke the agencies that sought to provide a platform to facilitate trading in cryptocurrencies by cutting them off from banks.
This, the petitioners claimed, had a chilling effect on the fledgling cryptocurrency exchanges industry in India and went against their entrepreneurial right to operate a business enshrined in Article 19(1)(g).
The Court conceded this limited point saying that the
“RBI has not come out with a stand that any of the entities regulated by it... have suffered any loss... on account of [cryptocurrency] exchanges” and this provides relief to the firms providing the virtual exchanges.
After a decade or so of deployment and use, the pros and cons of cryptocurrencies are now well known.
The primary misgiving with cryptocurrencies such as Bitcoin has remained the highly speculative nature of assessing their value.
From humble beginnings, the cryptocurrency traded at a peak of $20,000 in mid-2018 before crashing to $3,000 by the end of the year, signaling the volatility that came to be associated with this instrument.
This limited its original purpose of becoming an alternative and stable currency that is not backed by any central institution but derives trust from its intricate blockchain ledger system.
Moreover, reports suggest that bitcoins, with their assured anonymity, remain popular with currency speculators, and in use in illicit transactions over the “dark web”.
But their utility due to the robust nature of the blockchain algorithm is also not to be sneezed on.
Cryptocurrencies have now been adopted by international trading firms for use in lending, raising funds for other cryptoprojects besides facilitating easier cross-border payments.
It is for these utilities that the Indian government should err on the side of jurisdictions such as the European Union which have not outrightly banned the instrument and have sought to regulate its functioning.
The 2019 Bill even proposed the creation of a “digital rupee” as official currency.
It is now imperative on authorities to find the right “regulatory balance” on cryptocurrencies, a task that is easier thought than done, considering their ever-evolving nature due to technological innovation.
The SC ruling gives relief to cryptocurrency exchanges, but they still need to be regulated.
2) Banking on bailouts: On Yes Bank crisis
Just one day after it placed the financially troubled Yes Bank under a moratorium, the Reserve Bank of India announced a draft ‘Scheme of Reconstruction’ that entails the State Bank of India (SBI) investing capital to acquire a 49% stake in the restructured private lender.
The alacrity with which the bailout has been proposed is commendable, given that Yes Bank’s stock tumbled 56% on the BSE on Friday, eroding shareholders’ holdings and dragging the 10-bank S&P BSE Bankex down with it, an indicator of the contagion risk that a sudden bank resolution can pose to the financial system.
SUSPENDING NORMAL BUSINESS:
However, the decision to suspend normal business operations raises several worrying questions, both about the health of the banking sector, and the adequacy of the oversight role that regulators essay.
Yes Bank’s troubles are not exactly new or unique and its problems with mounting bad and dodgy loans reflect the underlying woes in the borrower industries, ranging from real estate to power and non-banking financial companies.
The continued inability of several corporates to repay their loans resulting in many landing up in insolvency proceedings has meant that lenders have been the hardest hit.
Yes Bank, which is yet to report third-quarter financials, suffered a dramatic doubling in gross non-performing assets over the April-September six-month period to â‚¹17,134 crore, even as it scrambled to raise capital to shore up its balance sheet.
With the economy in the throes of a persistent slowdown, the prospects of banks’ burden of bad loans easing soon are limited.
The fact that the lender ended up at the resolution stage, without ever being placed under the central bank’s Prompt Corrective Action (PCA) framework.
It raises a question mark over how and why Yes Bank eluded the specifically tailor-made solution to address weakness at banks.
Some have pointed to the fact that the lender’s stated operational metrics had not breached the pre-set thresholds for triggering the PCA action.
The central bank had in recent years flagged several concerns, including a distinct divergence between the reported and RBI’s own findings on the bank’s financials.
This could then be a good opportunity for the RBI to review its PCA guideposts and revise them to ensure that such a slipping under the radar does not recur.
The choice of SBI as the investor to affect the bailout reflects the paucity of options the government has.
With several other public sector banks currently engaged in merging with weaker peers as part of the Centre’s plan, it has fallen on the country’s largest bank to play the role of a white knight to a private rival.
While Yes Bank’s depositors are sure to heave a huge sigh of relief, India’s banking sector is still far from out of the woods. Clearly, the RBI and Centre have their task cut out in ensuring that the need for such bailouts is obviated.
3) Making the environment conducive for justice
Some of the areas affected by the recent riots in Delhi that I visited resemble a battlefield — burnt shops and buildings dot virtually every street in the area. It’s terrible, but property can eventually be restored.
Can life be restored? More than 50 people have died in the riots, virtually for no reason at all, except generated hate.
Children have been traumatised for what their parents believe — right or wrong. Is this justice or injustice?
Is monetary compensation good enough to alleviate the pain and suffering that many children and parents have gone through?
Is that all that can be offered?
A visit to the Idgah presented a depressing picture. It had doubled up as a relief camp and I was told of the presence of about a thousand persons residing there.
Well-intentioned groups and individuals had donated matting and blankets, food, medicines and provided comfort to many.
A ‘media section’ had several individuals recording the statement of riot victims. Hopefully, these statements will be used by investigators as soon as the establishment gets its act together, if at all.
Whatever little assistance could be given to victims by way of rehabilitation was being provided by NGOs and well-meaning individuals, little by a welfare state.
But, the blame game for the riots has already begun and will continue even after investigations are over or a commission of inquiry gives its report.
One conclusion is inevitable – if someone in the executive had an idea of good governance and if the establishment had taken prompt action, many lives could have been saved and damage to property could have been avoided.
The bureaucratic ineptitude of the authorities coupled with authoritarian ineptitude led to the bloodbath, which was not over in a day but went on for three days.
It seems that the establishment consisting of the police and the Executive suffered a mild attack of ‘Kumbhkaranitis’, and at what cost. Whose job is it to wake up a sleeping guard?
NO COHERENT RESPONSE:
As a lifelong student of law, I was appalled at the virtual absence of any coherent response from the justice system.
The law entitles every victim of a mass disaster or ethnic violence to legal services for filing a case, such as one for compensation.
Under a law enacted by Parliament, the Delhi State Legal Services Authority (DLSA) ought to have swung into action to assist the victims, but where was it?
Access to justice is an objective and not a mere slogan. DLSA did set up five ‘helpdesks’ about a week after the mayhem, but the lawyers at two ‘helpdesks’ that I visited themselves needed help and had no clue about their active responsibilities.
I do not wish to belittle the efforts of these well-meaning lawyers, but I am sure the Annual Report of DLSA will highlight what it believes was a tremendous effort put in for the benefit of riot victims. Let’s be real.
DELHI HC ACTION:
However, the Delhi High Court acted immediately when approached for relief. It held a late night hearing and provided the necessary relief to victims and asked accountability questions of the establishment.
However, the next day — remember, tomorrow is another day — the sentinel on the qui vive found the environment not conducive to registration of a First Information Report (FIR) and adjourned the case hearing by six weeks.
Imagine a victim of domestic violence or of sexual assault going to a police station to lodge an FIR and being told by the Station House Officer (SHO) that the environment is not conducive since the victim might again face domestic violence or sexual assault.
Amazing, isn’t it! It has taken the Supreme Court to request the Delhi High Court to show urgency in the hearing. How many can afford going to the Supreme Court?
The registration of an FIR results in investigations into the commission of an alleged offence.
Conversely, if there is no FIR, there cannot be an investigation into anything. There are any number of decided cases where the courts have asked questions about the delay by the victim in lodging an FIR.
In many cases, the delay has been adequately explained, but in many, it has not been, thereby leading to an acquittal; such is the importance given to an FIR.
Perhaps the most important feature of an investigation is the collection of evidence, and if it is more than likely to be tampered with or if the witnesses to a crime are sought to be influenced, an accused person may even be arrested by the investigating officer.
Therefore, if consideration for registering an FIR is delayed by four weeks, as per the Delhi High Court, a smart accused can manoeuvre to have the delayed investigation scuttled through destruction of crucial evidence and witnesses.
Compromised through inducements or threats, eventually leading to the police filing a no offence report and closing the sordid chapter.
Would this be classified as justice or injustice?
JUDICIARY’S MORAL AUTHORITY:
The role of the judiciary in riot situations is extremely important, in that it could prevent a slide into chaos.
The judiciary does not wield a sword nor does it control the purse strings of the state. But it is possessed of a more powerful alloy — moral authority, public trust and confidence.
What the judiciary says or does has tremendous influence and it should never forget that, regardless of who wields the sword or controls the purse strings.
Therefore, in such situations requiring urgent action, the judiciary cannot be expected to grant adjournments on the asking and for what it believes is an environment that is not conducive.
Intervention by the court can, more often than not, make the environment conducive on occasions where all wings of the state, particularly the police, need whatever muscle is given to them in the Constitution and the law.
The colonial belief that courts should be reactive should be forgotten and substituted by the public interest belief that courts should be proactive.
If that is not appreciated, the decision of the Supreme Court in ADM Jabalpur will resurface from ten fathoms deep and continue to haunt us.
CRIMINAL JUSTICE SYSTEM:
Prosecutions form the last chapter of criminal justice. Recent events have clearly suggested that the police all over has completely mixed up and mangled freedom of speech and hate speech.
Inflammatory statements and induced sloganeering by the powerful in Delhi, which may or may not be seditious but can certainly be categorised as ‘hate speech’, are left untouched.
On the other hand, the weak are put behind bars for sedition for something that does not even cause a ripple, let alone ‘bring or attempt to bring into hatred or contempt, or excite or attempt to excite disaffection towards the government established by law’, proving Bruce Lee’s famous “boards don’t hit back” jibe at O’Hara.
So, the question, blame games apart, is: will those guilty for the Delhi riots ever be identified and booked and, if they are, will they ever be punished?
It took our justice delivery system 35 years to find Sajjan Kumar guilty of offences in the 1984 riots in Delhi.
When will the system find and punish the guilty for the recent riots but who cares, by the way?
Final thoughts — let’s read the Preamble to our glorious Constitution and appreciate four crucial words — justice, liberty, equality and fraternity. Are we making sense of all of them or some or none?