Subject Group on Administrative And Legal Simplifications

Report on
Implementable Action Plans in the area of
Administrative and Legal Simplifications.

Information Technology (IT) has a vital role to play in improving system efficiencies. It has got the ability to promote integrated working of various departments, instantaneous updation of information, quick processing of data, rapid and secure communication, efficient dissemination of information and allow effective monitoring of work under process. It is imperative that Government departments employ information technology to facilitate their efficient working. By this the Task Force means that IT should be implemented to computerise the individual ministries/departments and their offices all over the country while simultaneously integrating the functioning of various Government ministries/departments. The effect of this would be to process clearance / permissions simultaneously and monitor them for timely approvals. This would also lead to significant reduction in paper work as well as to eliminate duplication of submission of data.

The Task Force also recommends that the system should also permit industry to file documents electronically, whether it is of one time nature (in case of new project etc.) or day-to-day record keeping for the purpose of Excise and Customs. This can subsequently be upgraded to create an interactive media to obtain any information from any ministry.

The Task Force recommends that eventually the States also be linked up with the Centre and all the regulating agencies, into one network. This means that the corresponding ministries in the States should also be linked to the Centre, ensuring a smooth flow of information between the two.

A special team of IT experts / consultants along with senior members from ministries / Government departments will have to be created to go into this task with the following objectives.

Study the present systems.

Examine process simplification opportunities within a department/ministry.

Work out a simplified work flow system meeting all requirements.

Identify areas of integration / data sharing required between departments/ministries.

Suggest Software, Hardware, Communication systems for implementation.

It is also recommended that all ministries / Government departments have their own websites, which are regularly updated, to provide comprehensive information regarding their area of operation. This will enable industry as well as people at large to access the updated information easily.

The Task Force held dialogues with various associations and individuals and elicited their views on the reforms that need to be introduced in the administration of justice.

The Task Force is of the view that there is no denying the fact that courts in India are reeling under the burden of huge backlog of cases and it takes years for matters to get decided.

Alternative Dispute Resolution has not gained much ground in India and the recent Agreement between the World Intellectual Property Organisation (WIPO) and the Indian Arbitration Council of India should help create an atmosphere of conciliation and dispute resolution besides providing a reliable machinery for arbitration on Intellectual Property Rights. Such similar agreements with international bodies like ICC, Paris would augur well to create an effective dispute resolutions machinery in India and infuse confidence in the international investing community.

The Arbitration and Conciliation Act of 1996 based on the "UNCITRAL" model is a good move and has to some extent reduced the challenge of Arbitral Awards before the courts. Under the Arbitration Act of 1940, it was mandatory that an award by the arbitrator should be made a Rule of the court prior to its enforcement. The new Act by dispensing with this requirement has not only made the award enforceable from the day it is passed, but has substantially curtailed the scope for challenging the awards in courts and blocking their enforcement for several years.

The new Act provides for Conciliation which was not provided under the 1940 Act. The process of Conciliation under the 1996 Act is a welcome change as it encourages parties to explore the possibilities of amicably resolving their disputes through the mediation of a mutually acceptable person, acting as the Conciliator and to the extent the disputes are resolved, there will be no need for even going into arbitration.

But more needs to be done in order that disputes get resolved with the least delay and at much lesser cost. Just as the creation of family courts has been able to address disputes that concern only individuals, it is necessary to create within the existing framework a separate court to address only the litigation that involves corporates. The Government should recognise that if the corporates litigate on a particular issue involving large amount of money or on a matter of principle, it is doing so only with the view of protecting and enhancing share holders’ value. It is therefore just and appropriate that corporates are not burdened with enormous amount of stamp duty for filing suits. As a thumb rule, currently as much as 10% of the claim amount is being charged as court fees and at the end of the litigation, the succeeding party seldom gets back what has been spent. This aberration needs to be rectified. All the costs incurred by the party must be to the account of the party who fails in the suit.

Indian Judicial Services

The Task Force has taken serious note of the delays in rendition of justice. This is not a reflection on the ability of the judges or the officers of the court, but is due to under staffing as well as the presence of fewer number of courts dealing with too many cases. It has also got to do with attracting good talent to the judiciary. Currently there is no system at the Central level for creation of a Judiciary, except that the Government is involved at the stage of appointment of the Judges to the High Courts and Supreme Court. The State Governments conduct an examination through which candidates are selected at the lowest rung of the Judiciary as Munsiffs-Magistrates.

The Task Force therefore strongly recommends that the Government creates just like the Indian Administrative Services and the Indian Revenue Service etc., a separate cadre for the Indian Judiciary Services and similarly the State Government should be encouraged to create State Judicial Services. The emoluments and working conditions should be such that they are on par with the officers in the IAS. The competitive exams must be held as is done in the case of IAS for entry to Indian Judicial Services or State Judicial Service. This will not only attract talent but also improve substantially the quality of the judges and also the manner in which cases are dealt with.

Currently judges are being recruited through examinations conducted by the State Public Service Commission. Lawyers who have put in 5 years of practice are eligible to take this examination and the successful candidates are recruited to the lowest rank of the judiciary i.e. Munsiff-Magistrate. In addition, there is also provision for direct recruitment of District Judges from out of lawyers who have put in 7 to 10 years of experience. These appointments are often branded as adhoc and political but this Task Force does not subscribe to such views. The creation of the Indian Judicial Service will attract talents from institutions like the National Law School which is currently located in Bangalore. Similar National Law Schools should be set up in Eastern, Western and Northern regions of the country and given the status of Deemed University. A person who has put in 5 years of service with a practising lawyer can take up the Indian Judicial Service examination. The graduates from the National Law School can similarly opt for judicial service and they can instead of practising under a lawyer, be provided opportunity to work as Law Clerks under a District Judge for about 3 years where they will understand the procedures involved in trial of suits and criminal cases. Thereafter, they can be attached to a High Court judge for a period of 2 years during which time they will be given exposure to the appellate work of the judiciary and also understand how constitutional issues are dealt with. Thereafter they can take the examination and enter the India Judiciary Service. This will help create State Cadre based Judicial Service which will be highly talented and motivated.

The Task Force has also found from its interviews that corporates are being harassed in any part of the country by various consumers and organisations and at times corporates are dragged into frivolous litigation. The Task Force therefore recomends that by a suitable amendment to the provisions of the Civil Procedure Code and the Companies Act as the case may be, it should be made obligatory on the person suing a corporate, to file the case where the Registered Office or the Corporate office is located.

The Task Force has also looked at the tendency on the part of various enforcing machinery to proceed against Directors of the company without there being any basis for impleading them. The provisions of the criminal procedure should be amended, making it mandatory for the magistrate taking cognisance of an offence to issue a show cause notice before actually putting a Director or a Principal Officer of the company in the position of an accused. This gives the corporate to preserve and protect their image as also to vindicate their stand through a counsel without having to appear in person in all cases. The Task Force is not for a moment suggesting that such a course should be followed in the case of grave economic offences but it is worth considering such a procedure in matters that concern minor infractions, under various enactments, as also complaints filed by certain persons as a measure of retaliation or retribution.

Chamber Adalats

During the course of its dialogue with Chambers of Industry, the Task Force also got a sense that the Chambers can be in a position to provide machinery for Alternative Dispute Resolution. The Task Force therefore recommends creation of "Chamber Adalats" whereby two or more corporates in dispute over a commercial matter can submit themselves to the decision of a 3-man Committee constituted by the Chamber and abide by the decision given by the Chamber. The Government should make adequate provisions for enforcing decision of the Chamber if not complied with by the parties. The Chamber’s decision should be made appealable to the respective High Court only on points of law. This, the Task force believes, will obviate the need to go through the expensive and long winded process of litigation before courts and thereby reduces the burden that exists today on the judiciary.

The Task Force realises that the proposition may be easier said then done but believes that it is a suggestion worth pursuing. Accordingly, the Task Force suggests that a beginning be made, making it obligatory on the part of the corporates which are members of a given Chamber to refer their commercial disputes to the "Chamber Adalats". The Task Force believes that the majority of disputes can be sorted out through the Adalats in an atmosphere of give and take and only those matter which require elaborate evidence and which involve complex questions of law need to be taken to the Court of Commercial Causes, the creation of which the Task Force has recommended. There should also be a provision for the Chamber Adalats to decide if the matter cannot be gone into by it, but should be referred to the Court of Commercial Cause keeping in view the complexity of the case.

The Task Force is conscious of the fact that the views of various Chambers of Commerce and Industry in the country will need to be taken into account on creation of such Adalats and the Task Force recommends creation of a Special Group comprising of top officials of CII, FICCI and ASSOCHAM to examine the proposal and come with a structure on which the such Adalats can be modelled. The practice of facilitating dispute resolution by the Chambers of Commerce in Germany as also by the Indo-German Chamber of Commerce is worth looking at in this context.

Administration of Criminal Justice

In the realm of administration of Criminal Justice, much needs to be done to strengthen the investigative process for the speedy disposal of cases. It is common knowledge that in the past few years there have been scams of different sorts, which have eventually robbed the small investor.

Schemes are allowed to be floated and fly by night operators are allowed to trap unsuspecting customers with tall promises of high returns. Such operators create an euphoria and when the bubble bursts it leaves a host of investors disillusioned and devastated.

People who perpetrate such fraud on the investors eventually go scot-free taking advantage of the current dispensation of Criminal Justice, the legal technicalities and on top of it all the enormous delay in concluding a trial. Delay in administration in Criminal Justice dilutes the evidence and witnesses, who could have deposed effectively at the infancy of an offence, become men of imperfect recollection. Hence discrepancies in evidence helps the accused get the benefit of doubt. We should also not forget that long drawn litigation is a drain on the public exchequer and also leads to intimidation of witnesses. It is in these circumstances that the Task Force believes that there should be a court which is designated to deal with such cases where people set-up companies, lure investors and eventually defraud them.

In the United Kingdom, there exists a system of Bureau of Frauds, which is known to deal with such matters with speed and alacrity. The Task Force is aware that there are courts in India which are dealing with economic offences and there are also special courts set-up to try a case involving a mega fraud. But these courts are not separately created, but are taken out of the existing system, thereby reducing the number of courts and allowing cases to mount. It is for these reasons that the Task Force recommends that a select committee be set-up to study the system that is prevalent in United Kingdom as also in other countries, so that India too can have a Judicial forum which exclusively deals with public frauds.