Government Litigation in India and National Litigation Policy

What is Litigation?

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·      
Litigation is the term used to describe
proceedings initiated between two opposing parties to enforce or defend a legal
right.

·      
Litigation is typically settled by agreement
between the parties ,but may also be heard and decided by a jury or judge
in court.

 

Pros and Cons of Litigation

PROS

 

CONS

·      
Legal battles are costly and require a high
commitment over a significant period of time.

·      
Can create a damaging precedent if you lose,
making it harder for other communities to defend themselves against the offence
in question

·      
Can heighten conflict, making it more difficult
to repair relationships in the community later on

 

Litigation in India

·      
In India there is a single hierarchy of courts.

·      
India has three tier system of judiciary.

o   District
Courts, at the first tier.

o   High
Court at 2nd tier, which has the appellate and supervisory jurisdiction over
all the courts and tribunals in such state. 

o   The
Supreme Court of India  at the third
tier, is the highest court of justice in India having appellate and supervisory
jurisdiction over High Courts . 

 

Public Interest Litigation

Introduction
of Public Interest Litigation has democratized the access of justice to common

man.
It has paved way to a new regime of human rights by giving a wider
interpretation to

the
right to equality, life and personal liberty and DPSP.

 

Problems with Indian Litigation System

·      
 Litigation in India is very time taking
process . Indian Judicial System is marred with judicial delays and slow
process.

·      
Supreme Court is bogged down by routine
litigation .

The main culprit include-

1.
Tendency among litigants to seek special leave to appeal against any order or
decision of the high courts and tribunals

2.
Provision for statutory appeals against orders of various tribunals.

·       Eg.the Electricity
Act, 2003, and the Telecom Regulatory Authority of India (Amendment) Act, 2000,
provide for direct appeals to the Supreme Court against orders of appellate
tribunals

1.    
The
power to grant special leave is one that is meant to be used sparingly; in
practice it is used much too liberally.  This
has an impact on the time and number of judges devoted to hearing matters of
constitutional importance.

 

 

 

Time
frame for Litigation

 

 How
to solve Loop Holes in Litigation Process

·      
Suggestions by Law Commission

·      
The Law Commission in its 229th Report suggested
having a Constitution Bench in Delhi, with four Cassation Benches’ in different
regions.

 

 

Mechanism
for Enforcement of Judgments

 

SC tries to make legal services
affordable

·      
The Supreme Court has introduced a
self-supporting scheme for providing legal services to the middle and
relatively lower income groups,

·      
 According
to the Union Law Ministry The ?Middle Income Group Scheme? is meant to provide
legal services to litigants in the Supreme Court whose gross income does not
exceed ?60,000 per month or ?7.5 lakh per annum. They can avail themselves of
the services for a nominal amount. The members of the governing body, to whom
the management of the Society is entrusted as required under Section 2 of the Societies
Registration Act, include the

 

 

1. Chief Justice of India as
patron-in-chief,

2. Attorney General as ex-officio
vice-president,

3. Solicitor General as honorary secretary

4.
other senior advocates as its members.

 

 

DPSP
: Article 39 A : To promote equal justice and to provide free legal aid to the
poor

The
National Legal Services Authority (NALSA)  Constituted under the Legal Services
Authorities Act, 1987 to provide free Legal Services to the weaker sections of
the society and to organize Lok Adalats for amicable settlement of disputes.

 

Hon’ble
Mr. Justice Tirath Singh Thakur, the Chief Justice of India is the
Patron-in-Chief In every State, State Legal Services Authority has been
constituted to give effect to the policies and directions of the NALSA and to
give free legal services to the people and conduct Lok Adalats in the State.

 

The
State Legal Services Authority is headed by Hon’ble the Chief Justice of the
respective High Court who is the Patron-in-Chief In every District, District
Legal Services Authority has been constituted to implement Legal Services
Programmes in the District.

 

 

Lok adalats

·      
 NALSA
along with other Legal Services Institutions conducts Lok Adalats.

·      
Lok Adalat is one of the alternative dispute
redressal mechanisms.

·      
 It is a
forum where disputes/cases pending in the court of law or at pre-litigation
stage are settled/ compromised amicably.

·      
 Under the
said Act, the award (decision) made by the Lok Adalats is deemed to be a decree
of a civil court and is final and binding on all parties and no appeal against
such an award lies before any court of law.

·      
 If the
parties are not satisfied with the award of the Lok Adalat though there is no
provision for an appeal against such an award, but they are free to initiate
litigation by approaching the court of appropriate jurisdiction by filing a
case by following the required procedure, in exercise of their right to
litigate.

 

Nature of Cases to be Referred to Lok Adalat

·      
A Lok Adalat has the jurisdiction to settle, by
way of effecting compromise between the parties, any matter which may be
pending before any court, as well as matters at pre-litigative stage i.e.
disputes which have not yet been formally instituted in any Court of Law.

·      
Such matters may be civil or criminal in nature.

·      
But any matter relating to an offence not
compoundable under any law cannot be decided by the Lok Adalat even if the
parties involved therein agree to settle the same.

·      
National Lok Adalat National Level Lok Adalats
are held for at regular intervals where on a single day Lok Adalats are held
throughout the country, in all the courts right from the Supreme Court till the
Taluk Levels wherein cases are disposed off in huge numbers.

·      
Permanent Lok Adalat The other type of Lok
Adalat is the Permanent Lok Adalat, organized under Section 22-B of The Legal
Services Authorities Act, 1987.

·      
Permanent Lok Adalats have been set up as
permanent bodies with a Chairman and two members for providing compulsory
pre-litigative mechanism for conciliation and settlement of cases relating to
Public Utility Services like transport, postal, telegraph etc.

 

 

EXCESSIVE GOVERNMENT LITIGATION

·      
Government litigation  constitutes nearly half of all litigation in
the Indian judiciary.

·      
Besides being a constraint on the public
exchequer, government litigation has contributed to judicial backlog,
thus affecting justice delivery in India.

·      
Supreme Court, since the 1970 has criticized
successive governments for being callous and mechanical in pursuing
litigation

 

The Law Commission of India also studied this problem in
its 126th Report in 1988, and made appropriate observations on this front.

 

 

National Litigation Policy” (NLP) 2010

 

 

 “National Litigation
Policy” (NLP) 2010 failed as it was generic and without any scope for
implementation.

 

Problems in NLP 2010

·      
It fails to provide a yardstick for
determining responsibility and efficiency. The text does not define
“suitable action” against officials violating this policy.

·      
 It
creates “Empowered Committees” to regulate the implementation of the
policy. But there is ambiguity about their role and powers.

·      
It also lacks any form of impact assessment to
evaluate actual impact on reducing government litigation.

 

Way forward

? Revision of the NLP needs to ensure certain critical features
are not missed out:

??It must have clear objectives that can be assessed;

??The role of different functionaries must be enumerated;

??The minimum standards for pursuing litigation must be
listed out;

??Fair accountability mechanisms must be established;

??The consequences for violation of the policy must be
provided;

??A periodic impact assessment programme must be factored
in.

 

A
litigation policy can have a profound effect on how the government thinks about
itself as a litigant, and can help curb the problem, provided it is a constructed
with a thorough understanding of the problem and offers solutions based on
evidence rather than conjecture.

 

MAKING INDIA HUB
OF ARBITRATION

·      
 Committee, under the Chairmanship of
Justice B. N. Srikrishna, to review the institutionalization of arbitration
mechanism and suggest reforms thereto has submitted its report recently.

The
Government of India has laid emphasis on making Arbitration a preferred mode
for settlement of commercial disputes by taking legislative and administrative
initiatives on arbitration.

The
initiatives aim at minimizing court intervention, bring down costs, fix
timelines for expeditious disposal, and ensure neutrality of arbitrator and
enforcement of awards.

 Arbitration is often the first alternative
amongst various ways to manage contract related disputes and it holds the
promise of flexibility, speed and cost-effectiveness.

 

The
Arbitration and Conciliation (Amendment) Act, 2015 envisages various
ways to encourage foreign investment by projecting India as an investor friendly
country having a sound legal framework and ease of doing business in India.

 

 

Problem

·      
The World Bank’s Ease of Doing Business ranking
for 2017 reveals that India continues to fare badly on enforcement of
contracts, with an average of 1,420 days taken for enforcement. The absence of
effective means for enforcement of contracts is a serious fetter on the legal
system and impedes economic growth and development. ? Also, it was found that
judicial intervention and failure of the government and its agencies to use
institutional arbitration has, among others, led to India’s reputation as an
“arbitration-unfriendly” jurisdiction. ? In India, both ad hoc arbitration
mechanism and institutionalised mechanism are riddled with various problems.
Besides this a lack of awareness about the advantages of institutional
arbitration and the existence of certain institutions leads to parties avoiding
institutional arbitration or preferring foreign arbitral institutions over
Indian ones.

·      
 

·      
Report Recommendations ? The committee in
its report has recommended strengthening of institutional arbitration in
India.The Committee has divided its Report in three parts.

·      
 

·      
 The part
I is devoted to suggest measures to improve the overall quality and
performance of arbitral institutions in India and to promote the standing of
the country as preferred seat of arbitration. Important points in this part
are-o Setting up of an autonomous body called Arbitration Promotion Council
of India (APCI), having representatives from all the stakeholders for grading
arbitral institutions in India. o APCI may recognize professional
institutes providing for acceleration of arbitration. o Creation of a specialist
arbitration bench to deal with commercial disputes in the domain of the
courts. o The committee also opined that the National Litigation Policy must
promote arbitration in government contracts. ? The Committee in Part II of
the Report reviewed the working of International Centre for Alternate
Dispute Redressal(ICADR). It called for declaring the ICADR as an
Institution of national importance. ? In the III part, the committee has
recommended for the creation of post of ‘International Law Advisor’ (ILA) to
advise the Government and coordinate dispute resolution strategy for the
Government in disputes arising out of its international law obligations,
particularly disputes arising out of BITs. Significance ? With India’s
focus gradually shifting towards greater growth and development through
increased Foreign Investment, it is essential for the government to make India
safer for the foreign investments. ? To achieve this goal institutionalization
of the arbitration mechanism can help to make dispute settlement easier and
quicker. ? As also the mechanism, has become crucial for commercial dispute
resolution, particularly for high-value disputes involving international
parties, in most advanced jurisdictions. ? The recommended steps might not
necessarily lessen the burden of judiciary but will push the developmental
agendas of the government further.

 

Arbitration and Conciliation

Arbitration
is a method for settling disputes privately, but its decisions are enforceable
by law.

An
arbitrator is a private extraordinary judge

between
the parties, chosen by mutual consent

to
sort out controversies between them.

Arbitrators
are so called because they have an

arbitrary
power; for if they observe submissions

and
keep within due bounds their sentences are

definite
from which there is no appeal.

Arbitration
offers greater flexibility, prompt

settlement
of national and international private

disputes
and restricted channels of appeal than

litigation.
In the words of Richard Cobden “At

all
events, arbitration is more rational, just, and

humane
than the resort to the sword.”

Arbitration
is a simplified version of a trial

involving
no discovery and simplified rules of

evidence.
Either both sides agree on one

arbitrator,
or each side selects one arbitrator and

the
two arbitrators elect the third to comprise a

panel.
Arbitration hearings usually last only a

few
hours and the opinions are not public record.

Arbitration
has long been used in labour,

construction,
and securities regulation, but is

now
gaining popularity in other business

disputes.
Litigation is expensive, time consuming

and
full of complexities.

 

Kinds
of Arbitration


Adhoc Arbitration: In the course of a commercial transaction if a
dispute arises and could not be settled amicably either by way of mediation or
conciliation, the parties have the right to seek Adhoc arbitration.


Institutional Arbitration: In this kind of

arbitration
there will be a prior agreement

between
the parties regarding the institution

that
they will refer to in order to resolve their

disputes
in the course of a commercial

transaction.


Contractual Arbitration: In the present

scenario,
where the number of commercial

transactions
as well as the number of

disputes
are increasing, the parties entering

into
a commercial transaction prefer to

incorporate
an arbitration Clause in their

agreement.
The arbitration Clause provides

that
if in future any dispute arises between

the
parties they will be referred to a named

arbitrator(s).


Statutory Arbitration: If by operation of law

the
court provides that the parties have to

refer
the matter to arbitration it is termed as

Statutory
Arbitration. In this kind of

arbitration
the consent of the parties is not

required.
It is more of a compulsory

arbitration
and it is binding on the parties

as
the law of the land.

The
Arbitration and Conciliation Act, 1996 provides two alternate methods of ADR:

Arbitration
and Conciliation.

Arbitration
may be conducted ad hoc or under institutional procedures and rules.

Institutional
arbitration is conducted under the guidance and well-tested rules of an
established

arbitral
organization whereas under Adhoc arbitration, the parties have to draft their
own

rules
and procedures to fit the needs of their dispute. There are number of national
and

international
organizations set up with the main object of settling commercial disputes by
way of arbitration and other alternative dispute resolution mechanism.

 

These
organizations lay down rules for the conduct of arbitration. These rules,
however,

cannot
override the Act. These organizations handle the arbitration cases of the
parties and provide valuable services like administrative assistance,
consultancy and recommending

names
of arbitrators from the panel maintained by them.

 

 

The
Act contains general provisions on arbitration, enforcement of certain foreign

awards,
conciliation and supplementary  provisions.
The three schedules reproduce the

texts
of Geneva Convention on the execution of Foreign Arbitral Awards, 1927, the
Geneva

Protocol
on Arbitration Clause, 1923 and the New York Convention on the Recognition and

Enforcement
of Foreign Arbitral Awards, 1958.

 

 

The
Act differs from previous Acts in many ways.

Firstly,
where there is an arbitration agreement, the judicial authority is required to direct
the parties to resort to arbitration as per the agreement, provided the
application for that purpose is made before or when a written

statement
on the merits is submitted to the

judicial
authority by the party seeking

arbitration.

 

Secondly,
the grounds on which award of an arbitrator may be challenged before the court has
been severely trimmed. For e.g., a challenge

will
now be permitted only on the basis of

invalidity
of the agreement, want of jurisdiction

on
the part of the arbitrator or want of proper

notice
to a party of the appointment of the

arbitrator
or of arbitral proceedings or a party

being
unable to present its case. At the same time,

an
award can now be set aside if it is in conflict

with
“the public policy of India” — a ground

which
covers, inter–alia, fraud and corruption.

Thirdly,
the powers of the arbitrator himself

have
been amplified by inserting specific

provisions
on several matters, such as the law to

be
applied by him, power to determine the venue

 

Advantages
of Arbitration over Litigation

1.
In a civil court, the proceedings are held in public. While Arbitration
maintains privacy.

3.
Arbitration provides liberty to choose an arbitrator, who can be a specialist
in the

subject
matter of the dispute. Thus, arbitrators who are sector specialists can be
selected who resolve the dispute fairly and expeditiously.

4.
The venue of arbitration can be a place convenient to both the parties.
Likewise the

parties
can choose a language of their choice.

5.
Even the rules governing arbitration proceedings can be defined mutually by both
the parties.

6.
A court case is a costly affair. The claimant has to pay advocates, court fees,
process

fees
and other incidental expenses. In arbitration, the expenses are less and many times
the parties themselves argue their cases. Arbitration involves few procedural steps
and no court fees.

7.
Arbitration is faster and can be expedited. A court has to follow a systematic procedure,
which takes an abnormally long time to dispose of a case.

8.
A judicial settlement is a complicated procedure. A court has to follow the procedure
laid down in the Code of Civil Procedure, 1908 and the Rules of the Indian Evidence
Act. An Arbitrator has to follow the principles of natural justice. The Arbitration
and Conciliation Act, 1996 specifically states that the Arbitral Tribunal shall
not be bound by The Code of Civil

Procedure,
1908 and The Indian Evidence Act, 1872.

9.
Section 34 of the Act provides very limited grounds upon which a court may set
aside

an
award. The Act has also given the status of a decree for the award by
arbitrators.

The
award of the arbitrators is final and generally no appeal lies against the
award.

10.
In a large number of cases, ‘Arbitration’ facilitates the maintenance of continued
relationship between the parties even after the settlement.

 

Other Solutions –

The
Gram Nyayalaya was proposed by the 114th Law Commission way back in 1986. The

report
recommended the concept of the Gram Nyayalaya with two objectives. While addressing
the pendency in the subordinate courts was the major objective, the other objective
was the introduction of a participatory forum of justice. To make it
participatory the Law Commission recommended that the Magistrate be accompanied
by two lay persons who shall act as Judges, that the legal training  of the Magistrate will be complemented by the
knowledge of the lay persons who would bring in the much required
socio-economic dimension to adjudication. It was proposed that such a model of
adjudication will be best suited for rural litigation. The Law Commission also observed
that such a court would be ideally suited for the villages as the nature of
disputes coming before such a court would be ‘simple, uncomplicated and easy of
solution’ and that such disputes should not be enmeshed in procedural claptrap.

 

INTERNATIONAL ARBITRATION MECHANISM

Why in
news?

? India has urged the BRICS
nations to develop an arbitration mechanism among them.

? A
proposal was made by Finance Minister at BRICS Conference on International
Arbitration.

 

Need
for such a mechanism

? West’s domination:
It is observed that the arbitration centers are concentrated in west with apprehensions
of biased awards against emerging economies.

? Further, the emerging
economies are not adequately represented in the arbitration area thus the
exigencies and concerns of developing nations are not put forward properly.
Thus, there is a need for developing nations to build capacity.

?
Recent example- British oil and gas explorer Cairn Energy had initiated
international arbitration seeking $5.6 billion in compensation from the Indian
govt. against a retrospective tax demand of Rs. 29,047 crore.

 

India’s
efforts

? India is already working
towards making itself as global Arbitration hub. Earlier in June 2016,
Singapore Arbitration center had agreed to open its branch office at GIFT city.

? It has made changes to its
Bilateral Investment Treaty regime.

? Further, we need to show
restraint as far as domestic jurisdictions of courts to interfere in those
arbitrations. The enthusiasm of domestic courts to interfere in the
international arbitration proceedings has brought bad publicity to Indian
economy in the past.

? It
has made crucial changes to the