By Ameen Jauhar
As the global and Indian economies reel under the pressure brought on by the rapidly burgeoning Covid-19 cases, there is a need to assess how to stem the plummeting stock markets, and the overall economic slowdown. The present NDA government has made no secret of its acknowledgment of the World Bank’s Ease of Doing Business (EoDB) index, and how improving India’s profile therein will yield better external and internal investments. And, investments are a shot in the arm that the Indian economy certainly needs.
In its efforts to improve investor confidence, the Indian government has introduced numerous legislations that provide the anticipated fillip to its rank on the World Bank’s EoDB index. Nevertheless, under the parameter of enforcing contracts, India continues to lag behind even lesser economies. This parameter, while looking at dispute resolution capacities, captures the essence of challenges that any litigant faces in dealing with the Indian judicial system today—delays and procedural breakdowns, and lack of adequate remedy or proper enforceability of a judicial decree. To remedy these ills to some extent, Parliament enacted amendments to the Arbitration and Conciliation Act, 1996, and the Commercial Courts Act, 2015. Both these legislations were aimed, primarily, at improving commercial litigation, especially those involving higher economic stakes. Yet, no mechanism or legislation comprehensively addresses adjudication of disputes pertaining to vital infrastructure development projects. These disputes have featured in the long-standing debate on economic reforms, and on how far courts can intervene in developmental and economic policies of the state to balance divergent interests, and whether contemporary jurisprudence is emblematic of more amped up and overzealous judicial activism. Typically, if there are any violations alleged against the government(s) undertaking such infrastructure development exercises, they wind up in constitutional courts through the PIL route. Once there, these projects have the unfortunate tendency of beleaguering pendency.
Two crucial questions emerge from this context. First, should courts sit in review of these proclaimed “economic or developmental” decisions and policies, and—second—if yes, are there solutions to expedite these proceedings?
The first question can largely be answered in the affirmative. Judicial review, and the oversight of courts are an inherent check and balance prescribed by the Indian Constitution. However, as the apex court itself has upheld, when conducting a constitutional review, the courts must be circumspect, limiting it to constitutionality, and not the intent of such policies (unless it is prima facie established to be born of mala fide intent). It is pertinent here to recognise how the judiciary, in its proactive wisdom, has, on occasion, exceeded this mandate. Even though established jurisprudence cautions against whimsical PILs, instances of excessive judicial activism have faced much public criticism, and are arguably viewed as stumbling blocks impeding a booming economy.
It is within this larger debate on the powers of judicial review and intervention that injunctions emerge as the central contention. Injunctive orders have the capacity to offset developmental plans in motion, and their cost implications are significant. The Economic Survey of 2017-18 quantifies the costs of such delays. The cumulative value of multiple projects snagged by injunctions and interim orders was pegged at approximately Rs 52,000 crore (in March 2017). On average, such injunctions would remain in effect for over four years, thus causing severe delays, and adding overrun costs to the development projects. It may also be worth remembering that these figures are merely the tip of a humongous and costly iceberg, emerging from data furnished by only six central government ministries. Other ministries, as well as projects undertaken by states, were not included in the determination of the costs of these delays.
Therefore, to answer the second question, any interventions that the Indian government is seeking to make to improve its ranking under the “enforcing contracts” parameter requires reimagining the disposal of these costly development cases. One way could be to amend the Commercial Courts Act to include these, making them subject to faster procedures (in comparison to regular civil suits). Another possible intervention could be establishing exclusive courts for such disputes. The latter proposition will accrue additional infrastructural and resource costs, but the same would arguably be a one-time investment to streamline, and expedite a longstanding bottleneck in large-scale, public welfare-oriented development processes. In order to effectively implement either of these procedural reforms, a behavioural shift is also needed in the judiciary. In this regard, the advice of former Supreme Court judge, Justice Ruma Pal, would prove to be of invaluable guidance. In her Tarkunde Memorial Lecture, she lamented “judicial arrogance” as a detriment to economic growth, and instead professed the need for the judiciary (as an institution) to introspect and find a way to balance the conflicting interests in these cases, and perform its constitutional function of judicial review satisfactorily. It is time for the judiciary to practise, in letter and spirit, the constitutional morality it has long preached, with respect to its own power of constitutional review.
The writer is Senior resident fellow, Vidhi Centre for Legal Policy