While the World Bank ranks India third in terms of doing business. When it comes to enforcing contracts, it appears nearly at the bottom, worse than Pakistan, Senegal, and Syria
While Prime Minister Narendra Modi is eager to make India a key location to conduct business, one ruling made by the Supreme Court could threaten to stymie businesses and scuttled deals, Bloomberg revealed.
The apex court ended the 38-year saga of an alleged turmeric forger, who was arrested in 1982, and, eventually, sentenced to a month in jail along with an Rs 500 fine. Nearly after a decade, the top court reversed his conviction. This after the two lower courts took around 14 years each to render verdicts.
Moneycontrol could not independently verify the report.
While the World Bank ranks India third in terms of doing business. When it comes to enforcing contracts, it appears nearly at the bottom, worse than Pakistan, Senegal, and Syria, the report said.
The report quotes Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank in Singapore, as saying, "The complexity, the unnecessary delays -- it shows how India lags countries like China in their judicial system and just how much further they have to go."
The report also mentions how legal and compliance expenses of companies listed in India increased to just over $3 billion in the fiscal ending March 2018, up 57 percent in five years, Mint reported.
The long time to resolution creates a lot of uncertainty for foreign companies otherwise interested in doing business in India, said Souvik Ganguly, Managing Partner at Mumbai-based Acuity Law. “Uncertainty makes investors nervous,” Ganguly said, adding that India is “competing against Singapore, Thailand and other countries, which are much faster to resolve disputes.”
According to the report, when IHH Healthcare’s attempted to take over hospital chain Fortis Healthcare, the deal was scuttled by Daiichi Sankyo Co’s four-year fight to enforce a $500 million arbitration agreement against Malvinder Singh and Shivinder Singh.
In another case, the Indian Supreme Court directed the provincial government in West Bengal to return land leased to Tata Motors’ back to local farmers after 10 years.
Part of the backlog is a result of judicial vacancies. Government data showed, that in 25 high courts, which hear most of the commercial disputes, 37 percent of judgeships were vacant as of August 1. As for lower courts, the most recent data identified a vacancy rate of around 23 percent.
The law ministry told Parliament last year that it is coordinating with the judges of the Supreme Court and high court to fill up the vacancies. Last week, a panel of Supreme Court judges recommended 11 new judges for appointments across three different high courts, the report said, adding that there the ministry did not respond to emails or phones calls seeking comment.