'Public utilities provide the best examples of old and dysfunctional laws'

One of the biggest obstacles to economic reform in the country today is the fact that the judicial system in India is not in tune with what is needed. Apart from the fact that several of the laws are archaic and have become dysfunctional, a lot of them are at cross - purposes and cause confusion.And in areas where technology has staged a quantum leap - like, say, automatic teller machines, depositories for shares and laws to protect bio-diversity and plant and seed varieties - there are no laws at all. In these areas, the law has to be made as one goes along, and this leaves the room for litigation wide open. Globalisation also means harmonisation of our legal system with those in the rest of the world. If our system appears archaic, we're bound to have more companies like Enron wanting lo opt for arbitration in the US or the UK. And if it takes 20 years for a case lobe settled in India, this raises the costs of transactions to unbearable levels in fact, speedy justice comes under the ambit of Article 21 of the Constitution. Public utilities provide the best examples of old and dysfunctional laws. Legislation on public utilities grants a monopoly to the Government, and it is exempt from all responsibility. Section 9 of the Indian Telegraph Act of 1885 and Section 4 of the Indian Post Office Act of 1898 are instances of this. There is for example, no guarantee that a telegram will reach its intended destination. There are statutes like the Transfer of Property Act of 1882, which allows foreclosure without going through a court under three different conditions. Section 69 of the Act, for example, allows a mortgagee to foreclose without court intervention where, "neither the mortgagor, nor the mortgagee is a Hindu, Mohammedan or Buddhist..." Is it surprising then that there are 4,46,018 pending suits in which banks and financial institutions are trying to execute decrees in their favour? The total sum involved is Rs 760 crore.And while public-sector enterprises are supposed to become commercially viable, the Prevention of Corruption Act of 1988 specifically prevents this. Under Section 1 3(D). a public servant is guilty of criminal misconduct if he "(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest." Clause (iii) cuts across the board and can be invoked for any decision that a public servant might take.There are several areas where overlapping statutes need to be harmonised because they do not agree. There are 51 different Central Acts on labour legislation alone and they have different definitions of child, wages, bonus and workman. While Section 21(K) of the Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act of 1981 states that HRA and DA should not be included in wages, Section 2 (RR) of the Industrial Disputes Act of 1947 states that they arc included in wages.There is also a lot of statutory control over what ought to be purely administrative decisions. Take The Standards of Weights and Measures (Packaged Commodities) Rules of 1977. Under Rule 5, there is a stipulation that specific commodities must be packed and sold in standard packages. The Third Schedule says that pan masala can be only sold in packets of 50,100,2 50,500 grams and 1 kilogram. This is honoured in the breach rather than in the observance, as the sachets demonstrate.There are 20 million cases pending in courts today-9 7,170 are pending in the Supreme Court, and 2.4 million are pending in high courts. With such a backlog, it is not surprising that judicial redressal takes so long. The Law Commission has at least 18 reports that directly or indirectly deal with improving justice delivery, but few of the recommendations have been implemented.Many unnecessary cases also turn up before the Supreme Court - in 1959 it debated whether charcoal is coal; in 1961 it debated whether betel leaves are vegetables; in 19 74 it debated whether chillies and lemons are vegetables: in 1977 it debated whether green ginger is a vegetable and in 1985 it debated whether coconut is a vegetable. One also needs to get the Government out of courts.In a sample survey in Bangalore, the National Law School discovered that in income tax cases, 60 per cent of the time the Government was a litigant. For company matters, the figure was 44 per cent. A large number of these cases were appeals. The success rates for government appeals were 2 to 3 per cent for income tax, and 3 to 4 per cent for company matters. Another critical requirement is the improvement of arbitration procedures. Arbitration has not worked satisfactorily so far because it has not been cut loose from the apron strings of courts. Unless such reforms are made in the legal system, it is unlikely that economic reforms will click. The author heads a project for the UNDP and the Ministry of Finance on legal reforms required in the country. Published By: AtMigration Published On: Dec 31, 1995 00:00 IST--- ENDS ---

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'Public utilities provide the best examples of old and dysfunctional laws'

A big obstacle to economic reform is that the judicial system in the country is not in tune with what is needed.

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