The Hindu Business Line : Omissions in the commissions

IN INDIA, the third arm of the state is in a flux. Endless delays, mounting litigation and rising costs have cast a shadow over the judicial system. As of October 2001, there were 2.4-crore cases pending in various courts — two crore in district/sub courts, 35 lakh in High Courts and 21,995 in the Supreme Court.

The Law Commission and the Parliamentary Standing Committee have highlighted the problem of delays in courts.

With all good intention, the Government proposed to take away the jurisdiction of the courts in certain special areas, such as company law, fiscal law and monopoly trades.

But the way the Government has chosen to give shape to the idea has not been heartening.

Competition Commission

The Competition Act, 2002 envisaged the setting up of a Competition Commission in the place of the two-decade-old Monopolies Commission.

The Monopolies and Restrictive Trade Practices Act became more or less redundant following Dr Manmohan Singh's liberal Budget of 1991. India had become a member of the World Trade Organisation, and this meant opening up the economy to competition.

The rationale for setting up the Competition Commission was to ensure more freedom for the private sector, reducing, in the process, government interference.

Unfortunately, in its anxiety to ensure that its voice prevails, the Government chose to appoint a bureaucrat to head the Commission.

The Supreme Court came down heavily on this proposal, calling the Competition Act "a piece of suspect legislation". It suggested that a judge head the Commission.

In the European Union, South Africa, Brazil, the UK and the US, economists are chosen to head such commissions. In India, however, the Government seems to swear by retired bureaucrats.

Company Law Tribunal

The Government chose to repeal the Sick Industries Act and brought in a new law for setting up the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

And with the Board for Industrial and Financial Restructuring (BIFR) to be abolished, the Sick Industrial Companies (Special Provisions) Act, 1985 was enacted to provide for timely detection of sickness and determine the expenditure required for preventive, ameliorative, remedial and other measures needed for nursing the companies back to health.

Again, the proposal to pack the NCLT and the NCLAT with civil servants led to the Madras High Court calling the tribunals unconstitutional. The Government has chosen to go in appeal to the Supreme Court. Meanwhile, with the new institutions yet to be born, the BIFR continues to be in the doldrums. Revamping the sick units meant long-drawn-out legal processes, resulting in wastage of resources during the period when the sick units incurred heavy losses on a daily basis. Closure of such units would have been the better solution. The Government has now set up the Board for Reconstruction of Public Sector Enterprises without defining the role it is expected to play vis-à-vis the BIFR.

National Tax Tribunal

The huge tax arrears prompted successive Finance Ministers to consider setting up a National Tax Tribunal (NTT) to take over the jurisdiction of the High Courts to decide tax appeals.

It is estimated that the top 500 companies listed on the Bombay Stock Exchange owe Rs 23,368 crore to the government by way of income-tax, excise duty and sales tax. There are 1,82,000 tax appeal pending at different levels and it takes at least two years for an appeal to be disposed of.

As High Courts are burdened with civil cases as well, they are often unable to dispose of complicated fiscal disputes involving highly technical interpretations of the law. While it is a good idea to set up a separate tax court to ensure uniformity and speed in the disposal of cases, the Government's proposal to appoint bureaucrats as NTT members has led to writ petitions being filed in several High Courts.

The earlier NTT ordinance has lapsed and a new one is yet to be promulgated. Meanwhile, tax cases languish, with High Courts not too eager to dispose of the cases as they know that the NTT is in the offing. But even when the NTT is set up, there is no guarantee that the burden on the High Courts will ease, as the Tribunal will have no writ jurisdiction. The Government does not seem to realise that the setting up of permanent tax Benches in various High Courts to deal exclusively with revenue cases would have sorted out many of these problems. Statistics show that in 70 per cent of the cases pending in courts, the Government is the litigant, and its success rate is a mere 20 per cent. No cost-benefit study seems to have been attempted in this regard.

Why not a National Judicial Commission?

A former Chief Justice of the Supreme Court had suggested the setting of business courts to deal with commercial laws. That would have meant a single court to deal with all such cases, rather than the present attempt to set up a Competition Commission, a National Company Law Tribunal and a National Tax Tribunal.

Judicial reform is getting derailed because of the attempts to pack judicial bodies with those from the Executive having political backing. Many of them have been quick to import their personal and political preferences into judicial decision-making. It is a pity that the Law Commission's oft-made suggestion that the Government set up a National Judicial Commission to take on the role of appointments in various judicial bodies has not been given serious thought. This is an idea whose time has come.

(The author is a former Chief Commissioner of Income-Tax.)