Prime Minister Narendra Modi is eager to convince global
companies and investors that India is a business-friendly alternative to China.
A top court ruling this summer told another story, highlighting the infamous
judicial delays that threaten to stymie businesses and scuttled deals.
companies and investors that India is a business-friendly alternative to China.
A top court ruling this summer told another story, highlighting the infamous
judicial delays that threaten to stymie businesses and scuttled deals.
The Supreme Court ended the 38-year saga of an alleged
turmeric forger, who was arrested in 1982 and, eventually, sentenced to a month
in jail and a 500 rupee ($6.70) fine. After a decade, the top court reversed
his conviction; the two lower courts took around 14 years each to render
verdicts.
turmeric forger, who was arrested in 1982 and, eventually, sentenced to a month
in jail and a 500 rupee ($6.70) fine. After a decade, the top court reversed
his conviction; the two lower courts took around 14 years each to render
verdicts.
The lifespan of the turmeric case is extreme but not unique
among the nearly 40 million cases pending across the country’s three-tiered
judicial system. Among cases in 25 state high courts, roughly 173,000 have been
pending for more than 20 years, and roughly half of those for more than 30,
government data showed.
among the nearly 40 million cases pending across the country’s three-tiered
judicial system. Among cases in 25 state high courts, roughly 173,000 have been
pending for more than 20 years, and roughly half of those for more than 30,
government data showed.
The World Bank ranks India in the top one-third of countries
for overall ease-of-doing-business, but when it comes to enforcing contracts --
a measure of legal efficiency -- the south Asian nation lands in the bottom
15%, worse than Pakistan, Syria and Senegal.
for overall ease-of-doing-business, but when it comes to enforcing contracts --
a measure of legal efficiency -- the south Asian nation lands in the bottom
15%, worse than Pakistan, Syria and Senegal.
“It’s pretty incredible,” said Vishnu Varathan, head of
economics and strategy at Mizuho Bank in Singapore. “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.”
economics and strategy at Mizuho Bank in Singapore. “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.”
Clogged Courts
Over 38 million cases pending in three tiers of Indian
judiciary
judiciary
National Judicial Data Grid
Legal and compliance expenses of companies listed in India
increased to just over $3 billion in the fiscal year ending March 2018, up 57%
in five years, according to national business daily Mint. Judicial delays have
also tied up some of the country’s biggest corporations and would-be massive
deals:
increased to just over $3 billion in the fiscal year ending March 2018, up 57%
in five years, according to national business daily Mint. Judicial delays have
also tied up some of the country’s biggest corporations and would-be massive
deals:
IHH Healthcare Bhd’s attempt to take over hospital chain
Fortis Healthcare Ltd was scuttled by Daiichi Sankyo Co.’s four-year fight to
enforce a $500 million arbitration agreement against Malvinder Singh and
Shivinder Singh.
Fortis Healthcare Ltd was scuttled by Daiichi Sankyo Co.’s four-year fight to
enforce a $500 million arbitration agreement against Malvinder Singh and
Shivinder Singh.
After 10 years, the Indian Supreme Court directed the
provincial government in West Bengal to return land leased to Tata Motors
Ltd.’s back to local farmers.
provincial government in West Bengal to return land leased to Tata Motors
Ltd.’s back to local farmers.
A twenty-year dispute ended with a $19 billion judgment
against all the country’s telecom companies, including those that have
shuttered since the case began.
against all the country’s telecom companies, including those that have
shuttered since the case began.
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. “Uncertainly makes
investors nervous,” Ganguly said, adding that India is “competing against a
Singapore, Thailand and other countries which are much faster to resolve
disputes.”
foreign companies otherwise interested in doing business in India, said Souvik
Ganguly, Managing Partner at Mumbai-based Acuity Law. “Uncertainly makes
investors nervous,” Ganguly said, adding that India is “competing against a
Singapore, Thailand and other countries which are much faster to resolve
disputes.”
Part of the backlog is a result of judicial vacancies. In 25
high courts, which hear most of the commercial disputes, 37% of judgeships were
vacant as of August 1, according to government data. In the lower district
courts, the most recent data identified a vacancy rate around 23%.
high courts, which hear most of the commercial disputes, 37% of judgeships were
vacant as of August 1, according to government data. In the lower district
courts, the most recent data identified a vacancy rate around 23%.
India’s law ministry told Parliament in 2019 that it is
coordinating with the judges of the Supreme Court and high court to fill up the
vacancies, and last week a panel of Supreme Court judges recommended 11 new
judges for appointments across three different high courts.
coordinating with the judges of the Supreme Court and high court to fill up the
vacancies, and last week a panel of Supreme Court judges recommended 11 new
judges for appointments across three different high courts.
Emails and phone messages seeking comment from the law
ministry remained unanswered.
ministry remained unanswered.
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