The Hindu Business Line : Modernising the legal system

In India, litigation is time-consuming and costs the litigants a lot, with no finality in several cases. Writ petitions challenging validity or fairness of legislation or seeking resolution of political disputes largely contribute to the delays. Judicial reform can begin with revamping the education system (exposing students beyond the regular law procedures) and inculcating a spirit of public service among the legal fraternity.

EVEN as the economic reform process proceeds , there is growing concern that our legal system, though independent , is not able to keep pace with the increasing number and complexity of legal issues cropping up.

Business contracts are becoming highly techno-economic in character requiring understanding of crucial business and legal technicalities, be it in the telecom, power sector or even traditional revenue matters where litigation seems endless.

Authorities such as SEBI and TRAI come up with legal mandates and the public and corporates are on a learning curve all the time.

Take for example, the case of takeover guidelines where the safe holding limit and transparency in dealings has always been debatable. With effect from 30th December 2004, SEBI has amended the Substantial Acquisition of Shares and Takeovers Regulations , commonly known as the Takeover Code, whereby the upper limit on acquisitions through market purchases and preferential allotment has been brought down to 55 per cent of the voting shares of the company from the 75 per cent permitted earlier.

Transparency of acquisitions through public announcement (to acquire higher than the ceiling) is a must as per the Takeover Code. The new ceiling under the Takeover Code is a bone of contention between promoters and potential acquirers.

On one side, who are the promoters? Are they permanent ? On the other side, are investors motivated by pure economic criteria or do they capture a going concern by takeovers?

There is no harm in a genuine takeover provided the organisation being taken over is not destabilised. Of course, mandatory public offer and transparency clauses are intended to take care of these issues.

Corporate governance is another new area where the SEBI guidelines are obligatory. The SEBI Chairman, M. Damodaran, has made it clear that SEBI will insist on strict compliance to corporate governance norms, as several companies are yet to comply with the same. Though these are not full-blown legal issues corporates or investors have to learn to comply with them.

At the domain of traditional litigation, the level of pendencies in courts, particularly at district and subordinate courts level is high. Moreover, with expanding judicial activism and writ jurisdiction, the time and manpower resources of the High Court and Supreme Court are overstretched.

In India litigation is a time-consuming exercise, casting a heavy financial burden on the litigants and with no finality in several cases.

There are at least three tiers of litigation, including appellate jurisdiction, up to the Supreme Court thatmakes the cost of and delay in disposal of cases go on increasing . The legal fraternity is not able to come to terms with the problem of delays.

Recently, New Delhi hosted two important conferences on legal and judicio-legal reforms to address these problems and find ways to improve the functioning of the system.

The paper circulated by FICCI on Judicio-Legal Reforms quotes the 85th Report titled "Law Delays: Arrears in Court" by the Standing Committee of the Home Ministry, which identified 2.4 crore pending cases as on October 31, 2001. Over 80 per cent of these were pending in district and subordinate courts,15 per cent in High Courts and a mere 1 per cent in the Supreme Court.

In a writ filed before the Supreme Court, Common Cause, a public interest organisation has quoted the Law Commission, which had recommended in 1988, that the ratio of 10.5 judges per million population be increased to at least 50 per million by 1998and subsequently to 107 judges per million. Today, it is claimed that the figure is about 12 judges per million. The shortfall in filling the vacancies is seen to be a primary cause of backlog in courts. The President, Dr Abdul Kalam, while inaugurating the conference, asked the judiciary to work overtime (even on Saturdays) to clear the backlog.

However, this suggestion does not provide a complete solution.

Mr. F. S. Nariman, legal luminary and Member of Rajya Sabha, pointed out that standards in judiciary must vastly improve, not merely the number of judges. One cannot disagree with this view.

There are many cases on frivolous grounds (`small causes' litigation) that take up the valuable time of the lower courts. Most of these could be settled outside the court, either through arbitration or mutual consent among the parties.

This calls for re-orientation of judicial machinery as a conciliator and a necessary mindset change among lawyers who should not view all cases they take as income generators. The habit of frequent adjournments on unreasonable grounds must be dissuaded.

At higher levels, writ petitions challenging validity or fairness of legislation or seeking resolution of political disputes contribute to delays.

One has only to recall some recent actions by the judiciary in a State, where the Supreme Court intervened and called for punitive action against those found to be guilty of corruption in the judiciary.

A recent newspaper report indicates that about 28 judges in the lower judiciary in another State are to face compulsory retirement for corruption and moral turpitude.

Judicial activism is another area of growing concern. When the administrative machinery fails to discharge its functions, either at citizens intervention or suo motu, the judiciary has to go into specific issues and almost lay down a declaratory pronouncement to enforce conformity to civic discipline.

The cases of controlling vehicular pollution and, more recently, preventing stray cattle roaming on roads are examples of such judicial activism.

Likewise, the move by the executive to be involved in the appointment of members of the Bench, is an intrusion into the judiciary's independence. Judicial reform is a long and detailed process.

For example, the academic course in legal learning should expose students beyond basic civil and criminal law and procedures to Income-tax and company law, indirect taxes and WTO issues, environmental law, laws relating to capital market transactions and functioning of regulatory bodies like SEBI, the Telecom Regulatory Authority, and so on.

Revamping the education system and inculcating a spirit of public service among the legal fraternity is also part of the reform process. The time is right, not only for modernising the legal machinery but also introducing new areas of specialisation in the academic content of law courses.

(The author is a New Delhi based financial and management consultant.)

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