Based on data computed as of June last year, India ranks ahead of only of Timor-Leste, Bangladesh and Angola
Yet another Doing Business survey from the World Bank Group presents yet again a telling story of the state of affairs with the process of contract enforcement in India. The Doing Business 2015 survey places India fourth from the bottom (rank 186 out of 189 countries) in ease of enforcing contracts. The study of ease of enforcing a violated contract is an assessment of how efficiently the judicial system functions after a commercial sale of goods goes wrong.
The study tracks the time, cost and number of procedures involved from the initiation of a suit until payment is actually received. The methodology involves computation of the number of steps required, and the time required, to file and serve the suit, the steps involved in trial and judgment and in enforcement of the judgment rendered. The costs for these procedures in terms of costs of lawyers, costs of the court and costs of enforcement are also studied and compared.
Based on data computed as of June last year, India ranks ahead of only of Timor-Leste, Bangladesh and Angola – in that order. That ranking is a result of the study being made across 17 Indian cities ranging from large ones such as the four metro cities to smaller ones such as Guwahati and Indore. Within India, Hyderabad ranks the first with a timing of 770 days (about two years), costs of 17.8 per cent of the disputed claim, with 46 procedural steps. The commercial capital Mumbai ranks the worst, with the study projecting that it would take 1,420 days (about four years) to enforce a contract, with 39.6 per cent costs, with the same number of procedural steps.
The assumption in this study is that the loser of the dispute does not challenge the judgement and that enforcement of the judgment begins right after the time limit for an appeal expires. In reality, this is hardly the case. Worse, even against interim orders and process decisions, appeals go up routinely and get entertained without infliction of costs on parties that waste court time.
Appeal courts intervene, or take time to determine that they should not intervene, which adds to the burden. Appeals also go up all the way to the Supreme Court, which routinely acts as the last court of justice rather than as the last court of law – the overriding objective of rendering justice often results in cases being almost re-heard in the apex court. The net result is that the sad picture of ranking 186 out of 189 countries is based on data assumptions that in fact make this grim picture not reflect even worse reality.
India has a fiercely independent judiciary – clearly the Republic’s strength. However, the administration of the conduct of day-to-day business of the judiciary has hardly kept up with times.
Attempts to “digitise” filings have been ineffective due to absence of common standards across the food chain of litigation from the lowest court to the highest court. A lot of digitisation projects have resulted in physical documents being scanned into images (the documents’ contents thereby being incapable of being electronically searched and processed).
Every court has its own systems and processes. High Courts have their own rules over and above the general law on procedure.
Within a court, different judges adopt different processes on how to handle their work. Some allow cases to be “mentioned” for out-of-turn consideration on grounds of urgency while others lay down norms that would make counsel shudder to attempt an out-of-turn engagement. Not all of these approaches are reduced to writing, necessitating physical checking with court staff on how the judge would approach matters. On any given day, hundreds of cases are listed. At times, the “mentioned” matters upstage the cause list for a few hours. Most matters on the cause list are merely posted to another day, on which day, a similar routine would ensue.
It is time for surgical intervention – a lot of which can inflict short-term pain. The business processes of justice administration ought to be handled by an autonomous, professional and independent body corporate that develops uniform systems and processes across the country.
There is no reason for a dispute in Hyderabad to be handled differently from a dispute in Mumbai. Three critical administrative elements – real estate, non-judicial human resources and information technology – are areas that judges should not have to waste time with. They are standard resource requirements across all courts.
The professional corporate could be “demutualised” and owned by a consortium of governments. A chief executive officer overseen by a board of directors independent of shareholders, with representation from the judiciary and the ministries of finance and law, could run the show. Other jurisdictions have such organisations in place. Her Majesty’s Courts and Tribunals Service, an executive agency sponsored by the Ministry of Justice in the United Kingdom is a classic example.
Even while India struggles to get her act together, disputes involving Indian law are being resolved outside India by retired Indian judges acting as arbitrators, hearing arguments from Indian lawyers.
The only loser is the Indian justice delivery system. Judicial systems across the globe are competing for market share offering effective and timely resolution. Such arbitrage coupled with speedy tribal justice from khap panchayats, could render the official local justice delivery system practically redundant. Time to heed the wake up call.
(This piece was published in the April 27, 2015 edition of Business Standard)