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July 11, 2018

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Dispute Resolution In India Problems & Perspectives


- V. Chakradhar, Head - Corporate Legal [ Godrej Industries Limited ]
- Mita Tanna Chandarana, Manager – Corporate Legal [ Godrej Industries Limited ]
- Amit Murjani, Manager – Corporate Legal [ Godrej Industries Limited ]

V. Chakradhar, Mita Tanna Chandarana & Amit Murjani

The culture to be developed by legal professionals should be to emphasize rights as per the rule of law and not to impliedly drive the approaching public lose (a) focus of their rights on account of time taken to deliver results or (b) faith in the justice delivery system altogether...

Throughout the world, lawful methods adopted for dispute resolution are meant not only for resolution but also to instil and maintain faith in due process and rule of law as to the protection of individual rights. The common man’s need to seek justice must be served with a timely remedy through institutions; therefore, strong mechanism and suitable methods for justice administration ought to be a high priority for the state.

In India, the process for dispute resolution is laid out through the establishment of constitutional courts, constitutional appellate courts of remedy, commissions and tribunals constituted under specified enactments, subordinate judiciary (district courts, magistrate courts), consumer fora, formation of judicial enquiry commissions, appellate fora, revenue/quasi-judicial besides an emphasis on alternative dispute mechanisms such as mediation and/or arbitration.

The Constitution of India, Parliament, State Legislatures are the creators of law on various subjects, while the Supreme Court of India too, in the past four decades, exercised its extraordinary constitutional powers to prescribe laws through judicial precedents on important topics such as environment, sexual harassment, to name a few. The prescription of THREE LISTS of various subjects in the Constitution to frame laws has been best utilized by Parliament and the states to ensure the rule of law.

The Supreme Court of India as the highest court of the country is at the top of the hierarchy for the enforcement of the rule of law, and the High Court functioning in each state is also equally a court of credibility for the rule of law for each state within India. The subordinate judiciary establishment thereafter flowing downwards to enlarge the writ of the judicial system and the rule of law is in existence in each state in the country. All this labyrinth of institutional credibility for the judiciary is just meant to help the citizenry seek appropriate remedy for their disputes or issues, in the most efficacious and timely manner, of course generally with professional help and aid of learned brethren known as ‘Advocates’ so that the mechanism works for the betterment of dispute resolution in the country.

Except the panchayat system known to villagers, the general trend of the common man of rurban India has always been to seek out the court machinery as the preferred choice to resolve disputes. Methods like mediation and conciliation were earlier restricted conventions applicable to specific trade practice or a village. However, with the enactment of the Arbitration and Conciliation Act, 1996, things changed a tad for the better.

Advocates and the general public who need resolution of their disputes/cases are the ones who need to change the way in which they approach the system. Use of judiciary or any other dispute resolution mechanism to delay any proceeding or to pressurize the adversary should neither be a motto nor be a means and should never be encouraged

In recent times, both rurban Indians as well as the international trading community which has been dealing with the Indian judicial system have had a fair share of discontent in terms of effectiveness and timeliness of the judicial system in reinforcing the rule of law. There have been many other limitations that demotivated people approaching courts and arbitrators. A few of them are as follows:

  • Delay as a tactic used by litigants in almost all proceedings;
  • Insignificant budgetary allocation of funds for improving court infrastructure;
  • Judges with caliber, competence, and experience;
  • Transparency & apolitical decision making as to the appointment of judges (memory is still fresh as to the Government of India’s decision regarding the recommendation of the SC collegium);
  • Malaise of corruption creeping into the judiciary;
  • Remunerations for judicial officer positions being subpar as in comparison to highly remunerative private legal practice or in-house counsel jobs in the private sector.
  • No regulation or upper cap with respect to senior counsel and retired Supreme Court or High Court judges’ professional fee charges.

Our judicial system is currently stretched to the limit, and the criminal justice system, too, is on a roller-coaster ride in terms of credibility, added up with the long-overdue police law reforms despite the Supreme Court making a case in favor. India is currently facing a situation where the debate is still on as to whether the Supreme Court should ideally hear and deal with cases involving constitutional issues which involve substantial questions of law or whether it should continue to meander and spend its valuable time hearing cases and appeals arising from statutory appellate mechanism. We are all aware that the question is now open as to whether a National Court of Appeals needs to be constituted.

Advocates and citizens are part of the very same system and are like one side of the coin, while the justice administration system aimed at resolution and the rule of law are the other side of the coin. Advocates and the general public who need resolution of their disputes/ cases are the ones who need to change the way in which they approach the system. Their approach should be to ensure that the spirit of the rule of law is upheld. Use of judiciary or any other dispute resolution mechanism to delay any proceeding or to pressurize the adversary should neither be a motto nor be a means and should never be encouraged.

We are all aware of the pendency of cases in courts in India, and there is no statistics as of now as to how many arbitration awards, while having already been delivered, are still not settled. Thus, the quality of dispute resolution in India is at crossroads, and the recent changes in 2017 and 2018 in the law through Ordinances, be it for the Arbitration Act, IBC, or the Commercial Courts Act, are all meant to address the malady of a very low level of timeliness in providing resolution to disputes. Still, unless the value system of the approaching public changes towards the objectives of the institutions meant for dispute resolution, not much change can be expected in terms of reduction of pendency of cases/ disputes.

The Arbitration and Conciliation (Amendment) Act, 2015 has brought a ray of hope in the commercial world to make arbitration the preferred choice for the resolution of disputes. The specific amendment which is worth highlighting is the introduction of sub-section 29A(1) that provides for a time-bound disposal and publication of award. Under the amended law, the parties may agree to decide to adopt a fast-track procedure on the basis of written pleadings, documents, and submissions filed by the parties without any oral hearing. The Arbitral Tribunal may call for further information or clarification from the parties in addition to the pleadings. To expedite the process and to keep the pressure on the arbitrator and the parties, the laid down condition with rare exceptions is that in case the Arbitral Tribunal fails to publish the award within 12 months as provided under Section 29A(1) of the Act or extended period of further six months under Section 29A(3) of the Act, the mandate of the Arbitrator shall terminate.

In a bid to ensure speedy adjudication of commercial and business-related disputes in India, the legislature enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Act) in 2015, and further, an Ordinance passed brought in the international parity required for such commercial courts aided by the in-depth study of Commercial Courts of the United Kingdom, the United States of America, Singapore, France, etc. carried out by the Law Commission of India. The introduction of the Commercial Courts Act has made courts once again the preferred forum for resolving complex disputes. Section 16 of the Act provides for amendment to the provisions to CPC, in their application to any suit in respect of a commercial dispute starting with just `300,000. It prescribes timelines and procedures, so that cases can be resolved more efficiently and parties cannot cause/create unwarranted delays in the process of adjudication.

The Insolvency & Bankruptcy Code (IBC), too, as a matter of legislative change, has been impactful. It has introduced completion of the insolvency process within 180 days extendable to a maximum of 270 days. The Code has attempted to address the need of the hour for insolvency and bankruptcy of companies, while the changes as insolvency and bankruptcy of partnerships and individuals are yet to be notified for implementation. The upside is that this legislation is time-driven and the creditors to corporations can make significant utilization of this law and the institution of National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) to ensure that the judicial process efforts move fast in case of bankruptcy or insolvency. The NCLT is the institution for adjudication of cases arising out of the Companies Act, 2013 as well as the IBC.

To sum up, while all recent changes in law have made the case relevant for dynamic progress and movement for the resolution of cases/disputes, what is also materially relevant and most necessary is that professionals as well as the approaching public who put to use and move the wheels of the judicial system should work with the spirit that the system is well recognized to make things move faster for resolution. The culture to be developed by legal professionals should be to emphasize rights as per the rule of law and not to impliedly drive the approaching public lose (a) focus of their rights on account of time taken to deliver results or (b) faith in the justice delivery system altogether. Only then, the other side of the coin, i.e., judges and arbitrators, will be able to perform more effectively as executors and interpreters of laws to ultimately derive the benefits of a fast-paced judiciary and dispute resolution mechanism. It will be ideal here to quote Mahatma Gandhi, ‘Be the change you want to see’.

Disclaimer – Views expressed here are purely personal and are not attributable to any organization


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