(Source: BloombergQuint)

Commercial Courts And The Ease Of Deciding Cases

BloombergQuintOpinion

Each year, the World Bank publishes a report in which it ranks countries according to the ‘ease of doing business’ there. One of the factors which it takes into account while preparing its rankings is whether a “specialized commercial court, section or division dedicated solely to hearing commercial cases” exists in a legal regime. Countries which have these courts get better rankings. In 2015, India’s Parliament enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, which introduced the concept of ‘commercial courts’ in India. However, one gets the sense that the Commercial Courts Act was enacted primarily to enhance India’s rank in the World Bank index, rather than to bring about any meaningful change in the judicial system.

The Statement of Objects and Reasons in support of the law said that its enactment would “improve the international image of the Indian Justice delivery system”. Whether by coincidence or otherwise, India’s ranking improved from 142 to 130 after the Commercial Courts Act was enacted. Recently, while approving amendments to the law (which have, for the moment, been enacted in the form of an ordinance), the government expressly spoke of enhancing “India’s ranking in the Ease of Doing Business”.

The Commercial Courts Act has merely rebranded some of the existing courts in India, like parts of high courts and district courts, as ‘commercial courts’, without setting up any new infrastructure or appointing any fresh judicial personnel with specialised expertise.

This has made the implementation of its provisions impossible. For example, the Commercial Courts Act requires that oral evidence be recorded on a day-to-day basis and final arguments in a case must close no later than six months from the first “case management hearing”. This is simply unrealistic. According to statistics published by the Supreme Court, as on June 2017, there were 5,259 original civil suits pending in the Bombay High Court.

There are, at the most, only about 2-3 judges who handle such cases there. 

To expect this handful of judges, with the existing backlog, to decide entire suits within a few months, is just preposterous. Presently, even an application for interim relief in a civil suit at the Bombay High Court may not get decided within six months.

The Commercial Courts Act fails to address many of the archaic judicial practices which are in still in vogue in India.

For instance, recording evidence in a civil suit here is an unnecessarily tedious exercise.

During a cross-examination, the cross-examiner asks a question to the witness, the witness answers, and the judge dictates the answer—and, at times, even the question—in his own words to the court stenographer.

This substantially slows down the process of recording evidence, and sometimes blunts the effectiveness of the cross-examination (as witnesses get to think of answers while the questions are being dictated, and answers are recorded in the judge’s, not the witness’s, words). Such processes are outdated in a world where technologies like live transcription are available.

Further, to save judicial time, cross-examinations sometimes take place outside court before a court-appointed ‘commissioner’. Commissioners don’t have any powers to tell a lawyer what questions he can and can’t ask, with the result that cross-examinations run into hundreds of—often irrelevant—questions. Since a commissioner can’t rule on an objection to a question either, witnesses have to answer all questions asked to them by the cross-examiner, even those that are prohibited by an evidentiary rule. Cross-examinations typically end with a long-drawn-out series of superfluous questions in which a lawyer 'puts his case' to the witness. This too can easily be done away with.

Much valuable court time in India is spent on outdated practices like ‘framing issues’ and ‘marking documents’ which also deserve to be reconsidered.

Once the pleadings in a suit are complete, the case won’t progress any further until issues have been framed by the court, i.e., until the court first determines what points must eventually be decided by it. The idea behind this procedure is that it narrows down the controversy in the case, and gives hints to parties about what evidence they will have to lead in order to succeed. In practice, however, issues scarcely limit the scope of a suit. They are often drafted by the parties themselves and it is not uncommon to see several issues being drawn up with the consent of both sides in an otherwise uncomplicated suit. Even in the absence of issues, it is not difficult for parties to figure out what evidence they must lead in order to win. On account of the heavy docket of Indian courts, it may be a while before a case comes up for framing issues.

Before a document is entered in evidence, it has to be ‘marked as an exhibit’ by the court. For example, an email or text message will not be admitted in evidence unless a witness testifies that his computer or phone was working properly. In heavy commercial matters involving hundreds of documents, hours of precious court time can be spent on marking documents. Once documents are marked in evidence, their ‘probative value’ still remains open for a court to determine.

In other words, even though a document has been admitted in evidence, a court may decide that its contents are completely unworthy of credence. 

The practice of marking exhibits makes sense in a jury system, where lay jurors may be influenced by legally inadmissible documents. For example, even if a juror is told to disregard an inadmissible photograph of a gruesome murder, it may still weigh on his mind while deciding the case. However, in India, where trained judges have to look at all documents in order to rule on their admissibility anyway, this practice makes little sense and adds to the clogs in the litigative pipeline.

There are several other judicial practices in India which require a close rethink. For example, judges in the subordinate judiciary in Maharashtra are often transferred from place to place, perhaps with the idea that this will reduce corruption, as judges will not have much time to form bonds with lawyers or clients in any one place. However, this has substantial disadvantages. For example, judges at the City Civil Court in Mumbai (which hears suits of the value of up to Rs 1 crore) sometimes come here from places where court proceedings (like pleadings and arguments) are conducted entirely in Marathi. In Mumbai, they are thrown into a system in which everything is supposed to be done in English. This makes it difficult for them to grasp arguments and dictate orders with ease.

Further, many of those judges may not have been previously exposed to the intense commercial litigation which goes on in a place like Mumbai, having done mostly criminal law in the districts, which makes them disinclined to decide heavy civil suits.

There are, of course, some well-intentioned provisions in the Commercial Courts Act. For instance, defendants in commercial courts cannot file their written statements more than 120 days after the date of service of summons, though earlier they could file their statements much beyond this period and delay the trial. However, many of its good provisions are just impossible to implement. While we may be able to fool the World Bank into believing that the Commercial Courts Act has genuinely improved the ease of doing business in India, the practical reality is very different. What India needs is meaningful amendments to its laws of civil procedure, tailored to meet its own peculiar institutions and practices, and not utopian changes meant to artificially boost its standing in the international community.

Abhinav Chandrachud is an advocate at the Bombay High Court.

The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.