Ease of doing business in INDIA|Curated Content | Economic Survey Of India|

The now iconic scream of Tarikh-par-Tarikh, Tarikh-par-Tarikh (“dates followed by dates followed by dates”) by Sunny Deol was Bollywood’s counterpart to Shakespeare: two different expressional forms–the one loud and melodramatic, the other brooding and self-reflective–but both nevertheless united in forcefully articulating the frustrations of delayed-and-hence-denied justice. India jumped thirty places to break into the top 100 for the first time in the World Bank’s Ease of Doing Business Report (EODB), 2018. The rankings reflect the government’s reform measures on a wide range of indicators. India leaped 53 and 33 spots in the taxation and insolvency indices, respectively, on the back of administrative reforms in taxation and passage of the Insolvency and Bankruptcy Code (IBC),It also made strides on protecting minority investors and obtaining credit, and retained a high rank on getting electricity, after a 70 spot rise in EODB, 2017 due to the government’s electricity reforms. This year’s report did not cover other measures such as the Goods and Services Tax (GST), which are expected to further boost India’s ranking in the coming years.

This striking progress notwithstanding, India continues to lag on the indicator on enforcing contracts, marginally improving its position from 172 to 164 in the latest report, behind Pakistan, Congo and Sudan.The importance of an effective, efficient and expeditious contract enforcement regime to economic growth and development cannot be overstated. A clear and certain legislative and executive regime backed by an efficient judiciary that fairly and punctually protects property rights, preserves sanctity of contracts, and enforces the rights and liabilities of parties is a prerequisite for business and commerce.The government has taken a number of actions to expedite and improve the contract enforcement regime. For example, the government: scrapped over 1000 redundant legislations; rationalized tribunals; amended The Arbitration and Conciliation Act, 2015; passed The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015; reduced intra-government litigation; and expanded the Lok Adalat Programme to reduce the burden on the judiciary. The government has also advanced a prospective legislative regime to ensure legal consistency, reducing chaos due to unpredictable changes in regulations. The judiciary has simultaneously expanded the seminal National Judicial Data Grid (NJDG) and is close to ensuring that every High Court of the country is digitized, an endeavor recognized in EODB, 2018. However, economic activity is being affected by the realities and long shadow of delays and pendency across the legal landscape. This chapter is a preliminary stab at quantitatively highlighting these developments based on new data that has been compiled for the Economic Survey.

Analysis of six prominent appellate tribunals that deal exclusively with high stakes commercial matters reveal two patterns. First, there is a high level of pendency across the six tribunals, estimated at about 1.8 lakh cases (Figure 1). Second, pendency has risen sharply over time. As Figure 2 shows, nearly every tribunal started with manageable caseloads, disposing instituted cases every year, but that soon spiraled out of control. Compared to 2012, there is now a 25 percent increase in the size of unresolved cases. The average age of pending cases across these tribunals is 3.8 years. It is noteworthy that in two cases—telecommunications and electricity—the explosion in pendency resulted from interventions by the Supreme Court.

Further, the creation of tribunals at different points in time did not alter pendency at the High Courts of the country nor their ability to deal with other economic cases. Three sets of economic cases pending at five High Courts were studied for the Economic Survey: company cases, arbitration cases and taxation cases. The overall pendency of the High Courts (Annex III), and the case-wise pendency of these economic cases at High Courts (Figure 4) continue to increase. The total backlog in High Courts by the end of 2017 as per the National Judicial Data Grid was close to 3.5 million cases. While the volume of economic cases is smaller than other case categories, their average duration of pendency is arguably the worst of most cases, nearly 4.3 years for 5 major High Courts. The average pendency of tax cases is particularly acute at nearly 6 years per case.Reductions in pendency, if any, were achieved either due to changes in the counting methodology of pending cases, or due to changes in pecuniary jurisdictions that led to a mass transfer of cases from the original side of the High Courts to District Courts. After such changes, the new stock of pending cases continued to grow at previous, if not higher rates.Intervening measures like the setting up of the National Judicial Data Grid and creation of tribunals have helped, but more is needed to improve the situation. One reason for the rising pendency of economic cases at the High Courts could simply be the generalized overload of cases. Further, economic and commercial cases are usually complex, require economic expertise in their handling and disposal, and hence, require more judicial time. In some instances, however, this increased overload is due to the expansion of discretionary jurisdictions by Courts, without any countervailing measures that either balance the scope of other jurisdictions or improve overall administration and efficiency.

For example, Articles 226 and 227 of the Constitution of India empower High Courts with carefully circumscribed writ jurisdiction.6 In practice, however, High Courts have permissively and expansively interpreted this provision over a period of time, which has resulted in a substantial increase in Article 226 cases.7 There are currently one million Writ Petitions pending at the 6 High Courts studied, constituting between 50-60% of the Court backlog, with average pendency fluctuating between 3-10 years. Data available for 2008- 2013 for 5 High Courts captures the continued rise in the pendency of Writ Petitions even in recent years, which is crowding out judicial time for other cases.

Some High Courts of the country retain a unique original jurisdiction, under which the High Court, and not the relevant lower court, transforms into the Court of first instance for some civil cases.9 These cases occupy a significant share of the Court’s docket. The Delhi and Bombay High Courts have original jurisdictions that occupy nearly 10-15% of their workload (Annex VII). In 2014, the share of original side cases was as high as 30% for the Delhi High Court. Data compiled for the Economic Survey suggests that the High Courts take longer to clear civil suits as compared to their district court counterparts. The average pendency of civil suits at the Delhi High Court is 5.84 years, while that at the lower courts of Delhi is 3.66 years.

The above mentioned facts show us an optimistic picture of things but they also tell us that more improvement is needed. The above mentioned content is taken directly from the economic survey website and is posted here to enhance its reach and for benefit for our readers.

 

 

Source: GOI, Economic Survey Of India

 

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

More To Explore

Do You Want To Boost Your Business?

drop us a line and keep in touch

Submit Your Details

Please fill in your basic details to schedule a free call.