Over the past few months, the judiciary and the government have taken steps which may result in the quick disposal of disputes pending across various forums in India.
The Law Commission of India, via its 188th Report, presented the Commercial Division of High Courts Bill, 2009, for consideration by the parliament and a select committee. In view of recommendations from the parliament and the select committee, the Law Commission revised the bill and, via its 253rd Report, presented the Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015.
The latest report acknowledges that there exists a perception that the Indian judicial system may have “collapsed” over the years due to inordinate delays, and accordingly calls for steps to ensure the fast disposal of high value commercial disputes so as to provide assurance to investors. The 2015 bill widely defines commercial disputes, in section 2(1)(a), and proposes that all disputes over ₹10 million (US$160,000) be adjudicated by commercial divisions in the high courts or commercial courts (section 3 read with section 13).
Further, appeals from decrees by a commercial division or court would be heard by a commercial appellate division of the high court (section 15); judges with expertise in adjudicating commercial disputes would be appointed for a term of two years (section 4 read with section 5); existing disputes would be transferred to the proposed courts (section 10); and the Code of Civil Procedure, 1908, would be substantially amended to improve the efficiency of the disposal of disputes (chapter V).
The Law Ministry has forwarded the report to the state governments for their responses and plans on introducing the bill during the current session of the parliament.
The bill would bring much needed change in aspects of laws that needed an overhaul generally, such as imposing of costs (at times exemplary), which were otherwise previously governed, e.g. in Mumbai, by various regimes which are over 100 years old and are unrealistic based on the costs of commercial litigation today.
The Supreme Court has acknowledged that over 10,000 tax cases are pending before it, which represent over 18% of the cases pending in the Supreme Court. The Supreme Court recently took the lead to ensure the quick disposal of tax cases and decided to constitute a special bench to only hear tax disputes. On 28 February the registry of the Supreme Court issued a notification which stated that all tax matters will be listed before this special bench. Accordingly, from 9 March the special bench, comprising Justice AK Sikri and Justice RF Nariman, began exclusively hearing tax disputes from Monday to Friday.
Meanwhile, the government has directed the Central Board of Excise and Customs to set up additional benches of the tribunal in the largest cities and new benches in three cities to reduce the backlog of pending cases. The government has instructed its officers to not file appeals in a mechanical manner on frivolous grounds. Illustratively, the officers decided not to appeal the Vodafone and Shell cases, which were conclusively decided by the high courts.
Additionally, the government has notified that if the revenue involved is less than ₹200,000 or ₹500,000, appeals should not be filed in the high court or the Supreme Court respectively.
The National Legal Services Authority recently drew up a calendar aimed at reducing pendency and preventing additional litigation before the courts, where settlements are possible. In line with the schedule, over 880,000 cases related to land acquisition, revenue and the National Rural Employment Guarantee Act, 2005, were settled, involving over ₹2 billion, at National Lok Adalats that were held across the country in the second week of March.
Further, the finance minister, in his budget speech on 28 February, announced that the government plans to introduce a “comprehensive Bankruptcy Code” as suggested by the Bankruptcy Law Reform Panel, with the aim of bringing legal certainty and speed into the bankruptcy process.
The above measures could facilitate the quick disposal of the over 32,000 civil suits which are pending in Delhi, Kolkata, Chennai and Mumbai.
The impact of these steps will result in a major overhaul in the manner in which litigators and advocates approach litigation in India. These measures also indicate that the government and the judiciary are attempting to bring in much needed expertise to resolve complex commercial and tax disputes, in terms of specialized courts and advocates, which is a refreshing change. However, whether this will achieve the intended result of quickly disposing of litigation in India will depend on whether these measures percolate through the entire system.
Bharucha & Partners Advocates & Solicitors
Cecil Court, 4th Floor, MK Bhushan Road
Tel: +91-22 2289 9300
Fax: +91-22 2282 3900