TRANSFORMING INDIA’S JUDICIAL SYSTEM TO ENHANCE INDIA’S APPEAL AS A TOP BUSINESS DESTINATION
Since designated as the protector and custodian of the Indian Constitution, India’s judiciary has played a critical role in the country’s political and economic development. The Indian judiciary serves as a watchdog against violations of fundamental rights guaranteed by the Constitution, protecting all people, Indians and non-Indians alike, from discrimination, abuse of state power and inequality. The Indian judiciary supervises a quasi-federal structure based on the common law system. In recent years, however, a number of inefficiencies have impeded the judiciary’s ability to operate. The performance of the judiciary has not been satisfactory in the past years for the country’s ability to advance economically and become a preferred business location.
In the current condition of affairs, effective courts are required in order to build a flourishing economy. Because a significant amount of trade is reliant on the existence of laws to act as a safeguard in the event of fraudulent activities, a robust and effective judiciary is essential for encouraging successful economic transactions between firms and individual consumers. When cracks arise in the very judiciary that is intended to protect the growth of commercial trade, the ramifications for the economy are catastrophic.
Amendments in Indian laws to encourage economic development
Laws in India have undergone significant amendments in recent years, bringing about substantial changes that have far-reaching implications for businesses, investors, and stakeholders. But due to the shortcomings in the Indian judicial system, the enforcement of these laws cannot be done to achieve the desired result.
One of such noteworthy amendment has been made in the Companies Act, which introduced several reforms to enhance corporate governance and ease the compliance burden. The amendment redefined the classification of small companies, raising the threshold for turnover, net worth, and borrowing limits. This change has provided relief to a larger number of businesses by reducing compliance requirements and regulatory burdens.Another significant amendment is the strengthening of penalties for non-compliance. The amendment has increased the stringency of penalties, imposing stricter punishments for violations of various provisions. This has helped in promoting a culture of compliance and accountability among businesses.
The Insolvency and Bankruptcy Code (IBC) has also witnessed amendments to streamline the resolution process and protect the interests of creditors and debtors. The introduction of pre-packaged insolvency resolutions is a notable reform that allows financially distressed companies and their creditors to negotiate and agree upon a resolution plan before initiating formal insolvency proceedings. This has expedited the resolution process and maximized the value for stakeholders.
Furthermore, the Securities and Exchange Board of India (SEBI) has implemented amendments to securities laws to enhance investor protection and promote ease of doing business. These amendments address issues such as insider trading, listing obligations, corporate governance norms, and disclosure requirements. They aim to foster transparency, strengthen market integrity, and attract investments in the Indian capital markets.
The recent addition to the pro-arbitration outlook is the amendment to the Arbitration & Conciliation Act. This is the third amendment to the Act of 1996 in the past six years, and shows the legislative intent to reform the Arbitration Act of 1996, making India an arbitration-friendly regime.The amendment has two primary changes in the Act. The first is to enable automatic stay on awards in certain cases where the court has prima facie evidence that the contract on which award is based was affected by fraud and corruption. The second change is the Eighth Schedule’s omission from the principal Act, which specifies the regulations, qualifications, experience, and norms for accreditation of arbitrators.
Infirmities in the Indian judicial system deterring economic development
Businesses operating in India lose confidence when concerns such as pervasive corruption, judicial vacancies, and the miseries of pending cases become far too evident to the world’s economic sectors, as they have in recent years. As a result, India’s position in the World Bank’s Ease of Doing Business Index is constantly shifting. Typical a case of breach of contract when taken to a district courttakes around four-five years and costs an individual approximately one third of the claim’s total value, reducing the usefulness of such a claim for the Plaintiff and decreasing its utility for the court. Organizations are discouraged from establishing their businesses in India due to the lengthy delays in executing laws and the significant costs associated with doing so.
The amount of relationship-specific investment in India has fallen dramatically as a result of obstacles in contract enforcement. A direct outcome of this is that the cost of commodities and services in the economy has risen. For instance, a landowner who is concerned about a company establishing an industrial unit on their property and then failing to pay the rent, they will initially raise the rent in order to safeguard safety and attract genuine clients, as their confidence in the judiciary is poor. Businesses are forced to reassess their intentions to invest in a country because of a lack of confidence in the court, which raises the cost of doing business and increases the risk of doing business in that country. Because of this, it goes without saying that a weak judiciary is bad news for a country’s economy.
Corruption:For the Indian courts, corruption is a major impediment to its ability to perform optimally on a wide range of levels. The public is exposed to numerous cases of bribery and corruption in the Indian judiciary on a daily basis, which leads to the formation of a bad narrative about the Indian judiciary in the eyes of the general public, thus undermining the public’s confidence in the judiciary. The media, the fourth pillar of democracy, on the other hand, is more concerned with uncovering corruption in other areas, which is why incidents of corruption in the judiciary frequently go unreported, unlike the case in many other countries. Corrupt practises within the Indian judiciary are known to begin at the lowest levels and develop upwards to the higher courts. When it comes to the Indian legal system, bribes are regularly given to court officials in exchange for favourable and prompt decisions, as delays are a common occurrence at all levels of the system. In part due to the fact that judges in the higher courts are recruited from among the ranks of lower court judges and lawyers, the likelihood of corrupt judges being elevated to the higher courts increases considerably due to the possibility of political involvement and influence in decision-making. Appellate and higher court judges can use their contempt of court authority to suppress claims of corruption in the lower courts. These loopholes, which exist at all times, serve as a barrier to the elimination of corruption from the Indian judiciary.
Underdevelopment and underutilization of technology: The use of technology in the lower judiciary is low, which is one of the primary reasons for the Indian judiciary’s lag when compared to the judiciaries of the developed world. Many courts still perform a significant amount of work by hand and require manual labour for tasks that might easily be delegated to AIs and completed with significantly greater efficiency and utility. As a result, there is a great deal of paperwork, and human capital is required to oversee the generation and maintenance of the documentation. Due to the fact that case proceedings are mostly manually written by court officials and that no recordings are retained, revisiting a case is entirely dependent on how an individual court scribe recorded the events. This not only increases the burden on the judiciary, but it also raises the question of whether or not justice is being disseminated in a fair manner.
Lack of transparency: There is a lack of openness and transparency in the operation of the justice system in India, at all levels. The Right to Information Act of 2005, which is a critical tool in the battle against mismanagement and corruption, was placed beyond the scope of the judiciary in the first place. However, in 2019, the Supreme Court determined that the Right to Information Act (RTI) will be applied to the office of the Chief Justice of India, essentially dissolving the judicial organ’s former immunity. In spite of this, there is no defined process for monitoring and holding judges accountable for the quality of justice delivered. Improving the collegium system, which is chaired by the Chief Justice and four of the Supreme Court’s most senior judges, is necessary for increased transparency and accountability on the front lines of the court.
Judicial vacancies and pending cases: One of the primary reasons for the delay in the dispersion of justice is a misalignment between the demand and supply of judges. At the moment, the number of judges in the country is insufficient to adequately administer the judicial system and its associated burden. The appointment of judges istime-consuming, thus complicating the process of prompt and expeditious recruitment of judges. When the number of pending cases continues to grow, the core aim of the legal system is thwarted.
Policy recommendations
The Indian Judiciary is the backbone of the Indian democratic framework. However, the major challenge faced by the judiciary is that although there are plethora of laws, there is not enough dissemination of justice. Although the laws are upheld to disseminate justice to the individuals, their outcomes might not necessarily be just in nature. It is by virtue of successful policy measures and affirmative action that laws are ensured to be proactively used as a tool to enforce justice in a sustainable and equitable manner. India requires an approach that focuses on the immediate obstacles in front of its judiciary and their root causes.
Moreover, measures like establishing of an oversight committee constituting individuals from the legal fraternity, more transparency in the system of appointments and transfers of judges, filing the vacancies of judges, setting of more tribunals, use of AI in case allocation, live streaming of cases, can also be implemented to eradicate the inefficiencies of the Indian judiciary; that can prove to be substantial in rooting out all the obstacles, and alongside establish a much stronger, reliable and efficient judiciary which is undeniably the spine of the country.
Authored by: Advocate Somesh Pandey, SUO Law Offices
