The government plans to designate five district and city civil courts in Delhi and Mumbai as "commercial courts" to tackle the problem of cases getting clogged in high courts.
NEW DELHI: The poor track record on enforcement of contracts haunts businesses, with India faring poorly. But the law department is seen to be moving slowly to fix the problem that spans from an agreement to bundle a mobile handset with a tariff plan to contracts between a multinational and a domestic company.
On the World Bank's Ease of Doing Business (EoDB) rankings, where India was ranked a low 130th among 190 countries, it was ranked 170th when it came to enforcing contracts, raising demands for the government to quickly address the concern.
While the plan has been thrashed out, it emerges that a proposal made from one wing of the law and justice ministry is not being acted upon by another wing. A task force headed by justice secretary Snehlata Srivastava has already prepared the blueprint with a few amendments proposed to existing statutes, while also seeking to enact a new law that will help put in place a framework for conciliation and ease the pressure on courts.
The absence of progress on this front is seen to be detrimental not just to the EoDB rankings, due to be released next month, but more importantly to the investment climate as foreign investors often shy away from India, citing the weak legal framework on the issue. After all, to get a verdict of a Rs 3-lakh contractual dispute can take almost four years in a civil court in Mumbai. And, if the case goes to higher courts, the wait can be a few years more and by then the cost can be more than the amount involved.
It's been months since the task force finalised the report which, among a host of issues, made a case for e-filing and e-summons in district courts and ensuring that the number of adjournments are limited so that the number of pending cases comes down. In fact, the large number of adjournments — against the ideal situation of three — is being cited as a major problem area, something that the judiciary has to tackle, sources said.
What is held up due by the law department are amendments to the Commercial Courts Act to explicitly provide for setting up of courts at the district level, which will deal with cases up to Rs 1 crore. The government plans to designate five district and city civil courts in Delhi and Mumbai as "commercial courts" to tackle the problem of cases getting clogged in high courts.
In addition, the government is contemplating either enacting a new law or amending the Arbitration and Conciliation (Amendment) Act, 2015 to provide legal backing to pre-litigation mediation and reduce the number of cases coming to the courts. The view in the task force is that this can done through incentives such as refund of court fee or even some tax rebates, as is the practice in Singapore.
The government has also requested high courts in Delhi and Mumbai to implement pre-litigation voluntary mediation for the time being. Sources said the Delhi government's experience has been very favourable as of the 47,000 petty cases, such as disputes involving neighbours and family members, 17,000 cases had been sorted out through this process.
(This article was originally published in The Times of India)
