The burden of court cases involving government departments and PSUs continues to choke the justice delivery system in the country.
Arbitration & Conciliation Act: The inability of government departments and PSUs to take advantage of arbitration route under the law has resulted in their involvement in a large number of court cases, making the government biggest litigant in the country. According to the latest data, nearly thirty million court cases are pending in lower judiciary and more than 4 million cases are pending in high courts across the country. According to an assessment conducted by the department of justice in 2017, nearly half of the cases were related to government departments and PSUs. These were related to service matters, loan defaults, and dispute with private parties among other issues. A large number of cases were related to two different branches of the government being pitted against each other in courts. The government’s effort to resolve these cases to reduce the burden on judiciary does not seem to be succeeding despite a clarion call by Prime Minister Narendra Modi. The fear of prosecution under the prevention of anti-corruption law is holding back top public sector officials from resolving these cases through alternative dispute resolution mechanism such as mediation and arbitration, say legal experts.
In 2017, Prime Minister Narendra Modi called for substantially reducing the court cases involving the government department and PSUs. However, the government continues to be the biggest litigant in courts across the country. Even more than two decades after the passage of Arbitration and Conciliation Law, the situation has not changed much.
“I was joint secretary of the Madras High Court Mediation Centre. We did not have a single successful case of mediation with any government body because no government officer was willing to give any concession in any dispute. They always had a fear of possible vigilance case against them,” said senior advocate Arvind P Datar.
“What happens in case of private companies, they are more keen to settle a case through arbitration because they don’t want to go through a costly and time-consuming litigation process,” he told Financial Express Online in an interview.
The history of alternative dispute resolution mechanism in the country goes back to 1985 when a conference of chief ministers and chief justices of high courts resolved to encourage alternative dispute resolution mechanism. It was considered necessary to reduce the pendency of court cases. And the Arbitration and Conciliation Act was passed in 1996. The act created an International Centre for Alternative Dispute Resolution and emphasised upon the use of alternative methods of arbitration, mediation and negotiated settlement over costly and time-consuming litigation.
However, more than two decades after its passage and several amendments, the government departments and PSUs are not able to take advantage of this route. The fear of prosecution by anti-corruption agencies like Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) hangs heavy on the minds of top government officials.
“In case of public sector, no one is willing to accept a settlement. For example, a government official will not settle for Rs 70 crore recovery against a claim of Rs 100 crore. Because under the provisions of prevention of corruption act, one can accuse that he had caused a wrongful loss to the government exchequer. If, today, an officer decides for a settlement in good faith then there can be a vigilance case against him tomorrow,” said the senior advocate.
“Another disturbing feature that is coming with PSUs is that they are saying that for any case involving a certain amount of money there will be no arbitration and the case must go to a court of law. This is not done in any other country. And it is also against the Prime Minister’s policy to cut down the litigation,” he added.
The UPA government too had recognised the problem and tried to solve it by formulating the National Litigation Policy in 2010.
The policy stated: “Government must cease to be a compulsive litigant. The philosophy that matters should be left to the courts for the ultimate decision has to be discarded. The easy approach to ‘let the court decide’ must be eschewed and condemned.”
In October 2010, then finance minister Pranab Mukherjee observed that the Income Tax Department had acquired the dubious distinction of being the biggest litigant of the country. It had also become the biggest litigant within the Central government.
After taking charge in 2014, Prime Minister Narendra Modi also called for reducing the number of court cases involving the government. Sometimes, two government departments are fighting against each other in court, this should not happen, he had said in January 2017.