How substantial are non-substantive hearings in Indian courts: some estimates from Bombay

by Pavithra Manivannan, Karthik Suresh, Susan Thomas, and Bhargavi Zaveri-Shah.

The problem

If we think about court as a services production organisation, then the number of staff, technology and other resources would be inputs to deliver well-defined outcomes of litigants' cases being decided satisfactorily. In between these inputs and outcome are hearings as the output of courts. Hearings are where the matter of the dispute is presented in front of a judge. When hearings are substantive, progress is made in resolving the dispute.

Not all hearings are substantive. Some non-substantive hearings are inevitable, involving procedural matters such as the filing of documents. When a hearing is non-substantive because the matter is rescheduled to a later date, this imposes a burden of time and cost upon litigants and the court.

Such unexpected non-substantive hearings are an important problem in the Indian legal system. The Civil Procedure Code (1909) prescribes a limit of three adjournments per case, but reality often diverges from this stated limit. In 2021, the e-committee of the Supreme Court has proposed an alert for judges to be informed about breaches in this 3-adjournment rule within its case management system. There is thus a recognition of the presence of this problem.

What is not, at present, known is a quantitative sense of the improtance of the problem. In this article, we estimate the magnitude of non-substantive hearings for one group of situations. The working of the Indian legal system varies widely by venue and case type. In order to measure the phenomenon of non-substantive hearings, we pick one relatively homogeneous class of disputes --- debt dispute resolution --- which are heard at three courts in Bombay. They are the National Company Law Tribunal (NCLT), the Debt Recovery Tribunal (DRT), and the Bombay High Court (Bombay HC). For these three venues, we seek to estimate four quantities:

1. What is the fraction of substantive hearings in these courts?
2. Out of the hearings in a case, how many are substantive?
3. How much time elapses till a first substantive hearing?
4. How likely is the first hearing to be a substantive hearing?

Definitions and estimates

An understanding of the number and likelihood of such hearings is important to set litigant expectations about the time and costs spent when seeking redress from the court. Regy and Roy (2015) use the term 'failed hearing' in their work on understanding what causes delays at the Delhi Debt Recovery Tribunal (DRT). They classify failed hearings as those hearings that satisfy three criteria: the hearing resulted in an adjournment without any judicial business, the adjournment was avoidable and the adjournment was not penalised. Khaitan et al. (2017) record hearings as 'inefficient' in their study on court efficiency, where the definition of an efficient court is based on whether the court meets set deadlines or not. In their work on cases from the Delhi High Court, they record hearings as 'inefficient' when there is a failure, either because of the court ('insufficient time to hear the case', 'absent judge') or because of either party ('counsel sought time', 'Absent counsel', 'Delay condoned', 'Restoration'). These papers present us with the earliest estimates of non-substantive hearings. Regy and Roy (2017) record 58% of hearings at the DRT as failed hearings. Khaitan et al (2017) record 48% of hearings at the Delhi HC as inefficient. Both suggest that attempts to reduce adjournments could reduce court delays by up to 50-60%, based on these estimates.

The Ministry of Law, Justice and Company Affairs, in the context of fees payable to government counsel, refer to 'Effective hearings' and 'Substantial work'. Effective hearings are where either one or both parties are heard by the court, while 'non-effective' hearings are where 'the case is mentioned and adjourned or only directions are given or only judgement is delivered by the court'. The same memorandum refers to substantial work as 'when the case has been admitted by the Court after hearing of preliminary objections or filing of the affidavits/counter-affidavits etc. by the Counsel'. These definitions guide a distinction between adjournments and non-substantive hearings.

In this article, we broaden the notion of differentiating non-substantive hearings beyond adjournments. Only hearings where there is application of judicial mind to the resolution of the dispute, are classified as 'substantive'. Thus hearings that involve disposals, withdrawal, admission, reporting settlement, are classified as substantive hearings. Adjournments are classified within non-substantive hearings. A reading of the order for an adjourned hearing may simply have a next date given for a hearing. These may be adjournments on account of paucity of time, time sought by parties, non-appearance of parties, wrongly listed or technical glitches. We also classify hearings as non-substantive when orders in which the court gives directions to file pleadings or take on record pleadings. Hearings that involve matters of procedure, without a substantial impact on the resolution of the dispute itself, are taken as non-substantive for a litigant.

The dataset

We hand-constructed a novel dataset, where for a sample of cases, we built the existing case life-cycle by collating all the hearings for a given case. We then read and classified each hearing in the case life-cycle as a substantive or a non-substantive hearing using the approach listed in the previous section. Since each judge records what transpired at the hearing in her own style, parsing and classifying every order necessarily involved a subjective judgement about whether it is a substantive hearing, or not. Therefore, once we had classified orders, we then subjected the classification to a double-blind peer review.

We built this dataset for cases of debt dispute resolution, using orders collected from the websites of the High Court (HC), DRT and NCLT in Bombay. The analysis was done for a random sample of 200 matters from each of the three courts. In these samples, we selected 100 disposed cases and 100 pending cases for each court. The hearing dates ran between 2018 and 2022.

One difference in how orders are uploaded on the Bombay HC versus the two tribunals is important to take note of: each court follows a different timeline for uploading case life-cycle data. On the Bombay HC website, the case appears from the date of filing. For the tribunal courts, the case appear on their respective websites only from the first hearing date, irrespective of the filing date of the case. Since the sample of cases from each court was drawn at random, there could be cases in the Bombay HC without a hearing, while this is not possible with cases in the sample from the tribunal courts. Further, this makes a strict comparison of hearing characteristics at the Bombay HC and the tribunal courts difficult. These differences impose constraints on how various measures are calculated for each court, in order to enable a balanced comparison across the courts.

Findings: What is the fraction of substantive hearings in the three courts?

Table 1: Fraction of substantive hearings to total hearings in three debt dispute resolution courts

Court	Hearings in full sample			Hearings in disposed cases
	Total	Substantive	Fraction		Total	Substantive	Fraction
Bombay HC*	399	192	0.34*		208	139	0.48*
DRT	575	229	0.40		267	116	0.43
NCLT	1135	258	0.23		365	145	0.40

^{*57 cases at the Bombay HC had zero hearings. The fractions reported for the Bombay HC have been adjusted to account for this.}

Table 1 shows the total number of hearings, the number of substantive hearings and the ratio of substantive to total hearings in the three courts. The number of non-substantive hearings can be calculated as (Total hearings - Substantive hearings). This table shows that the NCLT generates the lowest ratio of substantive hearings among the three courts, while the Bombay HC outputs the highest ratio.

Table 1 also shows the data on the ratio of substantive hearings for disposed cases in the three courts. This indicates two features: first, the court generates a higher fraction of substantive hearings in the case of disposed cases. This means that there is a higher number of substantive hearings among hearings for cases that have been disposed. But, there are still fewer substantive hearings than non-substantive hearings. Less than than 50% of all hearings for disposed cases are substantive hearings. This observation holds for all three courts. This suggests that process improvements that simplify administrative hearings or reduce the incidence of adjournments will have a significant improvement in the experience of the litigant in these courts.

The above finding relates to the outputs generated by the courts as a whole, in relation to each other. The litigant focus will be more on what we observe about hearings per case. We examine these questions next.

Findings: What is the fraction of substantive hearings per case in the three courts?

Table 2 shows the summary statistics of hearings per case in the sample. The values presented include the minimum, median, maximum and average number of hearings per case.

Table 2: Number of hearings per case for three debt dispute resolution courts

Court	Hearings			Substantive hearings
	Median	Average		Median	Average
Bombay HC	1	1.21*		1	0.43*
DRT	3	2.88		1	0.82*
NCLT	5	5.68		1	0.91*

^{*Each court has a different number of cases for which substantive hearings could be observed. The counts are 79 cases in the Bombay HC, 57 cases in the DRT and 60 cases in the NCLT with no substantive hearings}

Table 2 shows two values for each court: the average number of hearings per case, and the average number of substantive hearings per case. We see that the Bombay HC has the lowest average number of hearings per case (1.21). The NCLT has the largest number of hearings per case (5.68). This indicates that NCLT has more than 3 times the hearings per case compared to the Bombay HC. It holds more than 2 times the average number of hearings at the DRT which has 2.88 hearings per case, on average.

When comparing the values of the average number of hearings per case to the average number of substantive hearings per case, Table 2 shows that all courts have less than 1 substantive hearing per case, on average. The NCLT has the highest average number of substantive hearings per case (0.91) but it is less than one. The average number of substantive hearings per case for the DRT is almost the same as the NCLT, despite the number of hearings per case being double at the NCLT. This suggests that for every 6 hearings at the NCLT, one is likely to be substantive, while for every 3 hearings at the DRT, one is likely to be substantive. If the number of hearings can be used as a proxy for the cost of filing a case in court, then NCLT is likely to be the lowest benefit to cost for the litigant.

But, the hearing or substantive hearing per case is often not the sole objective for a litigant who approaches court for the resolution of debt. What is also important is the time within which the substantive hearing can be reached. For this, we next examine what is the expected time to the first substantive hearing.

Finding: Time to first substantive hearing

When the case gets a first substantive hearing is an important milestone for a litigant. It is likely to be a hearing in which substantive oral arguments will be made on questions such as the admission of the matter before the court, questions of interim relief that will operate pending the final disposal of the matter, the impleadment of new parties to the matter, the time schedule for the filing of replies and counter-replies, and so on. Setting an expectation on when such a hearing is likely to be conducted after the case is filed, is therefore an important input to preparing for the case.

We use a survival analysis approach to estimate the time to a first substantive hearing after the filing date (Manivannan et al, 2023). Figure 1 shows two survivor functions for each court. The survivor function can be represented as a curve on a graph, which shows the chances of not getting a first hearing / substantive hearing (on the y-axis) against time from filing the case in court (on the x-axis). When the case is first filed, the chance of not getting a substantive hearing is 1 or 100%. I.e., at the outset, all cases experience no hearing / substantive hearing. As time progresses, this number starts to become lower than 1. The `faster' the curve drops from 1, the higher the chances that the case had a first hearing / substantive hearing. On each graph, the darker line shows the chances of a first substantive hearing, while the lighter line shows the chances of a first hearing.

The graph for the Bombay HC (in red) shows that at the end of one year, 40% of the cases have not obtained one hearing. When we focus on substantive hearings only, 60% of the cases have not achieved this milestone. The dark and light line are clearly separated, which indicates that these two values are distinctly different from each other.

The graph for the DRT (in green) shows that 77% of the cases have not got one hearing at the end of the first year after filing. When we focus on substantive hearings only, this is true for 80% of the cases. This means that only 20% of the cases can be expected to get a substantive hearing by the end of the first year from filing.

The graph for the NCLT (in blue) shows that at the end of one year, a little less than 50% of the cases have not got one hearing. When we focus on substantive hearings only, this fraction goes up to 70%. This means that 30% of the cases are likely to have achieved a first substantial hearing in the first year from filing. The gap between the curves for the first hearing and the first substantive hearing is the largest for the NCLT, among the three venues.

These graphs show that the litigant is most likely to get a first substantive hearing within one year of filing from the BHC.

We have chosen to estimate the chances of getting a first hearing and a first substantive hearing in one year after the case has been filed. But these same graphs can be equally used to estimate the chance of a first substantive hearing for shorter or longer periods of time also. For example, the chance of a first hearing within one month of filing the case is the highest at the NCLT, followed by the DRT, and last, at the Bombay HC. Similarly, the graphs show that the chances of getting a first substantive hearing within one month of filing is the highest at the NCLT, up to three months after filing. But if the case is not heard within this time, the chances of getting either a first hearing or a first substantive hearing are higher for a case which is filed at the Bombay HC.

Conclusion

Unpredictable non-substantive hearings constitute a process failure. In this article, we show that for one kind of matter (debt dispute resolution), at three venues, the fraction of non-substantive hearings is 64%, 60% and 77%. From the litigants' perspective of measuring the performance of courts, if a good measure is the fraction of matters that get to a substantive hearing within the first year after filing, we find that this value stands below 50% for all the courts studied.

There is merit in establishing systematic mechanisms for computing such performance metrics. These findings can help litigants estimate the possibilities of events and expenditures, after a case begins. Such information systems would help improve decision-making about suing, about settling, and the choice of venue, for the litigant. A regular estimation of these metrics can also be a useful guide for changes made in court processes, with the understanding that a change in performance metric will be some complex combination of the process change, along with the change in the response of the people who both make up the legal system, and those who use it.

Finally, this work highlights the difference in objectives for which performance metrics need to be designed. While the producer (court) will find it optimal to use the ratio of aggregate substantive to total hearings, the litigant will optimise based on the metric of substantive hearings per case which can lead to a different choice relative to what the court might expect.

References

Nitika Khaitan, Shalini Seetharam and Sumathi Chandrashekaran (2017), Inefficiency and Judicial Delay: New Insights from the Delhi High Court , Vidhi, March 2017.

Pavithra Manivannan, Susan Thomas and Bhargavi Zaveri-Shah (2023), Helping litigants make informed choices in resolving debt disputes, The Leap Blog, 15 June 2023.

Prasanth Regy and Shubho Roy (2017), Understanding Judicial delays in debt tribunals, NIPFP Working Paper 195, May 2017.

Pavithra Manivannan, Karthik Suresh, and Susan Thomas are researchers at XKDR Forum, Mumbai. Bhargavi Zaveri-Shah is a doctoral candidate at the National University of Singapore. We thank Geetika Palta for data support, and Purbasha Panda for her support in reading through the case orders. We also thank two anonymous referees and Ajay Shah for useful feedback and comments.

The journey of Indian finance

by Ajay Shah.

A great tool for making sense of things is a sense of history. At each point in time, we should wonder: what was the situation, what was the problem that was sought to be solved, what was done, how did it work out? This helps in all fields; e.g. we understand special relativity better when we understand the journey of ideas leading up to Einstein.

In this spirit, economic history is central to understanding economics. One of the great failures of modern economics is the loss of the economic history perspective. Most people in a formal education in economics do more convex optimisations than economic history, and that's unwise.

Latika Chaudhary, Tirthankar Roy and Anand V. Swamy invited me to write for their edited book, the Cambridge Economic History of Modern South Asia (forthcoming). I wrote a paper on the journey of Indian finance, starting at 1947. Many odd features of Indian finance make sense when viewed in this economic history perspective.

There is an important kind of economic history, an epsilon-delta tradition, where data, archival texts and documents are precisely pinned down. Alongside this, it is good to also have a strategic view. The paper has such a high level treatment of the journey of ideas, interests and institutions. It is organised as 10 sections on banking, the equity market, other financial firms, capital controls, bankruptcy, monetary policy, household finance, systemic risk, the working of financial agencies and the policy process.

In each of the 10 areas, I try to offer the birds eye view, a sense of what happened and why, of what got done and what didn't, and the forces at work. There is a unified chronology, evaluation and bibliography. Many epiphenomena are glossed over, so as to focus on the essence of finance: the play of time, risk, information, individual optimisation, and principal-agent problems. Each of the 10 area-essays needs to be turned into a full blown economic history paper, including epsilon-delta style work. This paper can help others get started on such research projects.

There are two ways to interpret the journey of Indian finance: a market failure view, and a public choice view.

On one hand, there was a journey of ideas, with learning (in some areas) about how state coercion can counter the market failures in finance. This is a story of building knowledge about the place of the state in Indian finance, and then building state capacity to try to help with useful interventions. The story contains many crises, some useful feedback loops, and some loss of institutional memory.

And then, there was the power conflict. The financial system constitutes the commanding heights of the economy. The Indian state has tried to control the financial system, and direct its resource allocation in ways that suit the state. There has been an ebb and flow of different degrees of state control, and different methods through which the control is achieved. Alongside this, policy makers have sought praise through isomorphic mimicry.

A lot was done in the two phases identified in the paper. But it is far from finished. The basic machinery of markets and financial firms is quite incomplete. State coercion in finance requires fundamental reorientation towards state capacity in addressing market failure, through clarifying the objectives of financial agencies and establishing their checks and balances. These difficulties are an important source of Indian economic underperformance: finance remains central to the journey of Indian economic development. The future of Indian finance lies in building the knowledge and the community for these tasks.

Announcements

DAKSH is hiring for its Research Team

Responsibilities

• Research and writing on access to justice, the working of the justice system, technology, data and the impact of procedural and substantive law on the administration of courts.
• Collating, cleaning and analysis of data.
• Project management including managing external stakeholders and proactively tracking tasks and project deliverables.
• Developing high-quality knowledge products (reports, white papers, working papers) with research findings and disseminating such products to donors, partners and the general public.
• Developing and implementing advocacy strategies.
• Cultivating relationships and building networks with researchers, practitioners, policymakers and technology experts.
• Engaging in public discourse by publishing articles, blog posts, and op-eds.

Education and skills

• Undergraduate degree in law, any other post-graduate degree desirable.
• At least five years of demonstrable work experience.
• Strong research and writing skills.
• Strong analytical skills and the ability to synthesise complex information into clear, actionable recommendations.
• Good interpersonal skills and ability to work collaboratively.
• Willingness to travel.
• Ability to work with strict deadlines.
• Deep passion to make an impact in the field of judicial reforms.
• Knowledge of Hindi or Kannada with verbal fluency – writing skills would be an advantage.
• Prior working experience in legal practice or a research organisation would be an advantage.

This will be a three-year engagement.

Location: Bangalore

Interested candidates may send their CVs and a writing sample to careers@dakshindia.org

About DAKSH

DAKSH is a non-profit working on law and justice reforms since 2015. We have done original research that highlights ground realities and presents systemic reforms required in the law and justice system from a citizen's perspective. DAKSH works at the intersection of data science, public policy and operations research. We are actively involved in creating sustainable solutions to improve judicial efficiency, process, administration and management.

Announcements

Call for Student Research Associate: JDC- Justice Definitions Project

About Judicial Data Collaborative

The Judicial Data Collaborative is a community of researchers, technical experts, academics, organisations and interested people who want to create a platform to exchange ideas and collaborate on judicial data. The Judicial Data Collaborative is convened by DAKSH, a Bangalore-based nonprofit working on judicial reforms and access to justice.

One of the initiatives of the Judicial Data Collaborative is the Justice Definitions Project, in which we are co-creating an interactive, research-oriented wiki. This initiative aims to connect official literature, databases, and research on terms that affect the study of the justice system in India. For more information, visit

Position: Student Research Associate

Project Overview

The Justice Definitions Project aims to compile, organise, and make accessible crucial data about the Indian justice system. This initiative will enhance the understanding of the legal landscape, enabling informed decisions and research. The Student Research Associates will work on the assigned definition terms by collating information relating to it and uploading it on our wiki, in the prescribed format. The Student Research Associates will be guided by the team at DAKSH, and the work will be reviewed by the members of the collaborative. The Student Research Associates will be awarded certificates based on their contribution to the project.

Key Responsibilities:

• Collaborate with a diverse team of researchers, legal experts, and data analysts to curate and validate judicial data.
• Contribute to the creation and maintenance of a comprehensive database related to the Indian legal system and its terminology.
• Engage in data quality control and ensure the accuracy of information.
• Collaborate on data visualization and presentation of research findings.

Qualifications:

• Current enrollment in a recognised undergraduate Law Program. (Third year or Senior).
• Strong analytical skills and a keen interest in legal research.
• Excellent communication and team collaboration skills.
• An inclination towards meticulous and detail-oriented work.

Duration:

This is a part-time position requiring a commitment of approximately 5-7 hours per week, with a flexible schedule to accommodate your academic commitments. The position will be based remotely, allowing you to work from your location.

Benefits:

• Valuable hands-on experience in legal data analysis, research and writing.
• Exposure to the work of a leading public policy research organization.
• Opportunity to contribute to transparency and accountability in the Indian legal system.
• Mentorship and guidance from experienced professionals in the field.

Apply Now

Join us in our mission to drive transparency and accountability within the India by filling out the google form here

Announcements

TrustBridge Rule of Law Foundation and XKDR Forum run a monthly seminar series on "Contracts and Contract Performance". This seminar series builds knowledge and community on the subject of the design and functioning of contracts, both private and public, in the Indian economy.

The first seminar in this series is being held on 28th November, 2023.

Registration

Prior registration required for attendance. Register here.

Venue

TrustBridge Rule of Law Foundation, 2nd Floor, B-40, Voluntary Health Association of India (VHAI), Qutab Institutional Area, New Delhi-110 016

Program

17:00 -- 17:10	Opening remarks
17:10 -- 17:45	Session 1: Mediation as a mechanism for contractual disputes resolution
	Presenter: Karan Gulati and Saurabh Modi, TrustBridge
17:50 -- 18:25	Session 2: Delays in S. 138 NI Act cases: are cheques an effective lever of contract performance
	Presenter: Siddharth Raman, XKDR Forum
18:25 -- 18:30	Closing remarks

Announcements

TrustBridge is an organisation that works on improving Rule of Law for better economic outcomes. We focus on understanding the gaps in the existing legal and regulatory framework, evaluating how they impact economic growth, and studying the various ways that these could be improved upon. We aim to undertake legal, quantitative and policy oriented research and dissemination that will inform principles and evidence-based policy making. We believe that implementing ideas that emerge from our research will help bring us closer to our objective of improving the Rule of Law. Our work is in the areas of Energy Transition, Financial Markets, Contract Performance in government and private contracts, and Governance in the start-up ecosystem.

An area of work for TrustBridge is to understand how contracts function and how frictions in contracting can be reduced to achieve better economic outcomes.

Some of our work in this field includes:

• Improving judgment enforcement: Let judgment creditors file insolvency resolution applications, Karan Gulati and Anjali Sharma, October 2023.

• Reducing challenges to arbitration awards: lessons from court data, Madhav Goel, Akshay Jaitly, Renuka Sane and Anjali Sharma, October 2023.

• Litigation in public contracts: some estimates from court data , Devendra Damle, Karan Gulati, Anjali Sharma and Bhargavi Zaveri, May 2021.

TrustBridge is looking for one full time researcher to work on its projects in the contracts space. The position is based in Delhi.

Job requirements for Policy Research Associate position

As a policy research associate, you will work on project deliverables under the supervision of a project lead. You will be expected to review laws and government policies, undertake literature survey and quantitative analysis, write blogs, articles and papers and interface with collaborators and stakeholders.

The requirements for the role are:

• An academic background in the fields of Data Science, Economics, Engineering, Management and/or Public Policy.

• Two to three years of work experience, preferably in a research intensive organisation. Candidates with more experience can be considered for mid-senior level roles.

• You must possess high quality research skills and some understanding of statistics and quantitative analysis.

• You must have demonstrable writing skills, preferably in the public policy domain.

• Coding skills and a functional understanding of any one programming language, such as R and HTML will be an advantage. A working knowledge of LaTeX and Linux are preferred.

• You must be comfortable with working in an interdisciplinary research environment consisting of people from varying backgrounds such as economics, law, public policy and data science. You should be curious and passionate about research and willing to work on outputs independently as well as in teams.

The remuneration offered will be commensurate with your skill and experience and will be comparable with what is found in other policy and impact institutions. Interested candidates must email their resume to info@trustbridge.in with the subject line: Application for "Research Position: Contracts"

Author: Karan Gulati

Karan Gulati is a Researcher at the TrustBridge Rule of Law Foundation, New Delhi.

On this blog:

• An evaluation framework for public procurement processes, 17 July 2024.
• Improving judgment enforcement: Let judgment creditors file insolvency resolution applications, 26 October 2023.
• Litigation in public contracts: some estimates from court data, 26 May 2021.
• Grievance Redress by Courts in Consumer Finance Disputes, 23 March 2021.
• Why do we not see class-action suits in India? The case of consumer finance, 3 May 2020.
• India’s low interest rate regime in litigation, 11 March 2020.
• Delays in deposit insurance, 9 April 2019.

On the usefulness of Parliamentary law in achieving fiscal responsibility

by Pratik Datta, Radhika Pandey, Ila Patnaik and Ajay Shah.

Economists in India have long pondered the design of a fiscal rule. It is felt that once that ideal rule is embedded into the FRBM Act, we would solve the long-standing excesses of Indian public finance.

Pratik Datta, Radhika Pandey, Ila Patnaik and I looked under the hood, at the legal mechanisms through which such a Parliamentary law works. In a recent paper, Understanding deviations from the fiscal responsibility law in India, we argue that the difficulty lies not in economics but in the Indian constitutional arrangement. Because the budget is enacted through a `money bill', it can readily contain clauses that amend the FRBM Act. We argue that the problem with the FRBM Act lies not in the economic thinking but in the notion that Parliamentary law can constraint leviathan.

On the subject of public finance, the following design elements are embedded in the Constitution:

1. The executive cannot raise money (tax or borrow) or spend money without the authority of the Parliament.
2. The power to raise money (tax or borrow) or spend money belongs exclusively to the Lok Sabha. The philosophy of checks and balances associated with the presence of the Rajya Sabha, so eloquently described by Suyash Rai in 2016, is absent when it comes to money bills.
3. The Parliament cannot authorize expenditure except on demand by the Executive.
4. The Parliament cannot authorize taxation except on recommendation by the Executive.
5. The Lok Sabha has the power to assent to, reject or reduce but not to increase the amount of any demand made by the Executive under Article 113(2). The Parliament can neither suggest any new expenditure nor propose an increase in demand over and above what the government suggests in the Demand for Grants.

Normative public finance in India needs to grapple with this design of the Constitution. The power of the executive, embedded in this design, should be seen as part of the larger problem of the Indian administrative state. A generation of public finance economists in India have tried to solve the chronic deficits of the union government through Parliamentary law. We suggest that this is not a fruitful line of inquiry.

Reducing challenges to arbitration awards: lessons from court data

by Madhav Goel, Akshay Jaitly, Renuka Sane and Anjali Sharma.

Contracts form the bedrock of economic activity in the formal economy. As an economy grows, so does its reliance on contracts. Delays and friction in contract enforcement erode trust in contracts and inhibit the pace of economic growth. In India, contract enforcement generally falls in the jurisdiction of the civil court system, which, according to the National Judicial Data Grid, has more than 11 million pending cases and takes, on an average, more than three years to dispose of a case. One of the solutions to an increasingly overburdened court system in India has been to move certain types of matters to a different judicial forum, either a specialised court or tribunal or by using an alternate dispute resolution (ADR) mechanism. Arbitration is one such alternative mechanism, the framework for which is provided by the Arbitration and Conciliation Act, 1996 (A and C Act).

Contract enforcement by private persons against the state in India brings its own set of problems. Increasingly, government contracts provide for dispute resolution by arbitration. However, anecdotal evidence suggests that the state consistently challenges adverse arbitration awards. In this article, we use Delhi High Court data on challenges to arbitration awards for matters in which the National Highways Authority of India (NHAI) was a party. We analyse the grounds on which these awards were challenged and the manner in which the court dealt with these challenges.

Our main finding is that both the NHAI and the private parties challenge adverse arbitration awards, most often on the merits, even though the A and C Act specifically prohibits this. We also find that the court generally does not interfere with arbitral awards, which is in line with the legislative intent. However, this does not deter such challenges. This may be for a variety of reasons, such as the relatively low cost of litigation vis-a-vis the award value or the incentives of decision makers within the state.

Our analysis adds to the intersection of two growing bodies of recent work in India on the subject. The first that studies government contracting, both from a public administration lens and from the lens of how the government impacts ease of doing business and business outcomes (Chitgupi and Thomas (2023), Burman and Manivannan (2022), Mehta and Thomas (2022), Manivannan and Zaveri (2021), Shah (2021), Roy and Sharma (2020)). The second studies the functioning of courts and the manner in which they deal with a variety of matters (Manivannan et. al. (2021), Damle et. al. (2021), Sharma and Zaveri (2020), Gulati and Sane (2021), Bhatia et. al. (2019)).

The organisation of this article is as follows. We first provide an overview of the legislative and judicial framework to challenge an arbitral award, i.e., Sections 34 and 37 of the A and C Act. We then describe our data set and our methodology for analysis. This is followed by our findings and some recommendations on the way forward.

An overview of Sections 34 and 37 of the A and C Act

The design of the A and C Act allows for a two-stage sequential challenge to outcomes of arbitration proceedings, first under Section 34 and then under Section 37 of the Act. Section 34 provides 5 procedural and jurisdictional grounds, along with 3 additional grounds to set aside an arbitral award. These are:

• Procedural and Jurisdiction:
• The party was under some incapacity while entering into the arbitration agreement;
• The arbitration agreement was not valid under the law to which the parties have subjected it;
• The party making the application was not given proper notice of appointment of arbitrator or of arbitral proceedings, or was otherwise unable to present its case;
• The arbitral award dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contained decisions on matters beyond the scope of the submission to arbitration; or
• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or the A and C Act, as the case may be.
• Additional Grounds:
• The subject matter of the dispute was not capable of settlement by arbitration;
• The award is in conflict with the public policy of India, i.e., award is affected by fraud or corruption, or is against the fundamental policy of Indian law, or is in conflict with the most basic notions of morality or justice; or
• The award is vitiated by patent illegality appearing on the face of the award.

It is useful to note that Section 34 proceedings are not appeals (Delhi Airport Metro Express (P) Ltd. v. DMRC (2022)), and the grounds for challenge are limited by the A and C Act itself (Union of India v. Annavaram Concrete Pvt. Ltd. (2021)). Under the scheme of Section 34, an arbitral award cannot be set aside on merits, that is, on the grounds of erroneous application of law or by re-appreciation of evidence (MMTC Limited v. Vendanta Limited (2019); PSA SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin (2021)). Therefore, unless an arbitral award is set aside under the grounds laid down in Section 34, it is ready for execution as a civil court decree against the award debtor. Section 37 of the A and C Act, on the other hand, is an avenue of appeal against an order under Section 34 of the Act. Accordingly, proceedings under Section 37 are governed by the Code of Civil Procedure, 1908 (CPC) and are in the form of an appeal. However, through consistent judicial pronouncements, the grounds for appeal under Section 37 have been restricted, even as compared to the grounds under Section 34 (Mahanagar Telephone Nigam Limited vs. Applied Electronics Ltd. (2014)).

While the A and C Act is, to a large extent, modeled on the UNCITRAL Model Law on International Commercial Arbitration, 1985, it deviates from the Model Law in two important ways. First, it introduces an additional ground to challenge an arbitral award: patent illegality appearing on the face of the award. Second, it provides for a two-stage appeal process, where Section 37(1)(c) of the Act allows an appeal against an order under Section 34 setting aside or refusing to set aside the arbitral award. These two deviations from the Model Law have implications for the efficacy of the arbitration framework in India. The ground of patent illegality introduces ambiguity and discretion in the otherwise procedural nature of the process of challenging awards. The two-stage appeal process adds to this ambiguity and discretion, and introduces delays in the enforcement of the award. Section 36 of the A and C Act, under which an award is enforced as a decree, adds to these challenges. Section 36(2) specifically gives the court the power to stay the enforceability of an award. Section 36(3) specifies the conditions under which the court may grant such a stay.

Data and methodology

For our analysis, we collected judgments from Delhi High Court for the years 2018 and 2019 pertaining to matters where the NHAI is a party. Our choice of Delhi High Court is due to its importance as a court for arbitration matters, as well as because NHAI matters are likely to be brought before it.

Our choice of the years 2018 and 2019 is driven by three factors. First, the arbitration framework has undergone significant legislative change since 2015 and more recent data reflects the current framework. Second, the period from 2020-2022 was marked by disruptions in the judicial system due to the COVID-19 pandemic, and therefore, may not represent the ordinary course of dispute resolution. Finally, the choice of 2018 and 2019 allows for the possibility of extending our analysis to studying the entire life-cycle of such litigation all the way to the Supreme Court.

We focus on the NHAI because of its status as an autonomous, specialised statutory body that has been tasked with development, maintenance and management of India's national highways. NHAI is also one of the largest contracting bodies within government, accounting for nearly 10 percent of the total union government expenditure on public procurement (Sharma and Thomas (2021), Chitgupi, Gorsi and Thomas, (2022)).

We find 96 judgments in Delhi High Court where NHAI is a party. Of these, 82 pertain to matters under Sections 34 and 37 of the A and C Act (details can be found by clicking here) From these 82 judgments, we collect the following details:

1. The nature and quantum of claims filed before the arbitral tribunal;
2. The party that won the arbitration;
3. The time taken between filing the petition under Section 34 or 37 of the A and C Act to the final judgment;
4. The nature of disputes and grounds for the petition under Section 34 or 37; and
5. Which party won, and the quantification of the claims that were upheld/set aside by the Court.

Findings

Our main finding is in regards to the win-loss record for a challenge to an arbitral award under Sections 34 and 37 of the A and C Act, i.e., the likelihood of success in challenging the arbitral award (Table 1).

Table 1: Outcome of Section 34 and 37 Challenges

Categories	2018	2019	Total
Petitioner won	4	4	8
Petitoner lost	44	30	74
Total	48	34	82
Source: Delhi High Court judgments

We find that in 74 of the 82 cases (90.2%) involving NHAI, the court refused to interfere with the arbitral award, irrespective of whether the party challenging the award was the NHAI or the private party. This suggests two things. First, the Delhi High Court's action of ordinarily not setting aside the arbitral award is in line with the legislative intent of Sections 34 and 37 of the A and C Act. Second, despite the court not interfering with the award, parties continue to mount such challenges. This is especially so for NHAI, which is the petitioner in 67 out of the 82 matters.

When we look at the grounds under which awards are being challenged in court (Table 2), we observe that the bulk of the challenges, 77 out of 82 (93.9%), are under Section 34(2A), which is unlike the provisions of the UNCITRAL Model Law, and is an Indian innovation that allows the award to be reviewed on the basis of the substantive merits of the case. Patent illegality is a subjective formulation whose treatment may change from case to case and from court to court.

Table 2: Nature of Section 34 challenges

Provision	2018	2019	Total
S. 34(1)	2	1	3
S. 34(2)	-	-	-
S. 34(2A)	45	32	77
S. 34(3)	1	1	2
Source: Delhi High Court judgments

The findings from Tables 1 and 2 together indicate that award debtors routinely challenge arbitral awards on substantive merits, even though the courts routinely turn down such challenges.

We also find that, on average, it takes the court 805 days (2.2 years) to dispose of a Section 34 challenge and 208 days (0.6 years) to dispose of a Section 37 challenge. A matter in which both Section 34 and 37 challenges are brought will be in court for about 3 years after the award has been made by the arbitral tribunal.

In 36 of the 82 matters, we get data for the size of the claim. The total value of claims, across these 36 cases, is Rs. 17.5 billion and the average per case claim value is Rs. 485 million. While these may not be significant for an entity of NHAI's scale, for private parties dealing with NHAI, these may be consequential. And so may be the additional time of three years and the cost of litigation to secure these claims.

Some simple calculations also give us a sense of what these challenges with minimal chance of success mean for the government. At an interest rate of 8% per annum (MCLR during 2018 and 2019 was in this range), compounded annually, after the three year litigation challenging the arbitral award, the government will have to bear an additional interest cost of Rs. 4.5 billion on these awards. This does not take into account the cost and time consumed by the litigation.

Why do parties challenge arbitral awards?

There may be two main reasons why parties continue to appeal even though the chances of the award being overturned are low:

• Low costs: for large value awards, the cost of the litigation challenging the arbitral award is lower than the expected benefit to the award debtor even at low probability of the award being overturned (Mehta and Thomas (2022) supra). Additionally, for the government, the economic considerations around litigation costs may not be as relevant as for private litigants. Empanelled lawyers for the government and its agencies are often remunerated far less than lawyers representing private parties. Further, incentives of the bureaucracy are often such that they do not accept adverse outcomes in contractual disputes and litigate till the last available forum, regardless of cost.

• Delaying the enforcement: parties may resort to challenging the award to delay enforcement. Filing a petition under Section 34 of the A and C Act often forces the award holder to delay an execution petition under Section 36 of the Act. This could be because of the uncertainty regarding the outcome of the challenge, and due to potentially wasteful litigation costs, should the award be stayed or overturned. Anecdotal evidence shows that the executing court is often cognizant of the filing of a petition under Section 34 while taking substantive decisions under Section 36 of the Act. The executing court typically awaits the outcome of proceedings under Section 34 or 37 before taking any coercive action against the award debtor. Therefore, it is likely that much of the litigation under Sections 34 and 37 is a means of delaying enforcement of the award, and not because the litigants expect to succeed.

Legislative solutions

Disincentivising litigants from challenging arbitral awards on merits, especially if the litigant is the government, is important to ensure that the A and C Act remains relevant as an alternate dispute resolution mechanism. This can be achieved through two levers. First, that courts take up Section 34 challenges only in cases where there is a high likelihood of the challenge succeeding. Second, the cost of challenging the award either under Section 34 or Section 37 are high enough to alter the economic incentives of the award debtor. To this effect, we suggest three legislative solutions:

1. Amending Sections 34 and 37 of the A and C Act to introduce a prima facie test of satisfaction: As the law stands currently, the courts must hear petitions under Sections 34 or Section 37 and decide them on merits, irrespective of the grounds of challenge and the chances of success. This takes up significant resources. Introducing a prima facie test of satisfaction will enable the Court to dismiss the petition at the pre-notice stage itself, unless the petitioner is able to satisfy the court that it has a good case on merits. This will be similar to the procedure adopted by the Supreme Court while hearing fresh special leave petitions under Article 136 of the Constitution of India. The decision of the court to entertain a petition under Section 34 or Section 37, based on a prima facie view of the merits, has cost advantages to the litigants as well as the court. Dismissal at the pre-notice stage means that the litigants do not bear the cost of a full appeal and the court also spends less time and resources in deciding the petition on merits (Shavell (2010)). Further, deciding the merits at the pre-notice stage may also reduce time and costs during the full appeal as part of the assessment of the merit will already have been done by the court.

2. Amending of Sections 34 and 37 of the A and C Act to introduce a mandatory pre-deposit of fees proportionate to the arbitral award for the admission of petitions to set aside arbitral awards: As pointed out earlier, the economic incentives are stacked in favour of a challenge to the award. One way of counteracting this would be to increase the cost of a challenge. This can be achieved by adopting a mandatory pre-deposit of a proportion of the award value with the court before a challenge can be instituted. Such a pre-deposits can be tiered, with a higher proportion being required under Section 37 as compared to Section 34.

Another way of achieving this outcome will be to amend Section 82 of the Act to introduce a clarification that empowers the courts to frame rules to introduce barriers to unmeritorious challenges. These could include, as suggested above, a prima facie test or a mandatory pre-deposit of a proportion of the award value under challenge. This method leaves the discretion of framing such rules, and the substance of these rules with each High Court which could take into account local conditions while framing them. Further, the desired objective will be achieved without hard coding too much detail in the statute itself, which might make it inflexible and require more amendments going forward.

In October, 2021, the General Financial Rules, 2017 (GFR), the procurement rules for union government and its agencies, were amended to introduce Rule 227A which requires government departments challenging arbitral awards to pay 75% of the award value into an escrow account, to be used sequentially for the settlement of lender's dues, project completion and then as payment to the contractor. However, the impact of this change is in respect of of government challenges to arbitral awards. Our analysis shows that even private parties routinely challenge arbitral awards, and hence an amendment to the A and C Act introducing a pre-deposit may be desirable.

3. Amending Section 37(1)(c) to remove the second challenge avenue for the award debtor: Section 37(1)(c) of the A and C Act permits an appeal of the order of the court either setting aside or refusing to set aside an arbitral award under Section 34. This affords the award debtor a second avenue to continue litigation and stave off enforcement of the award. Our analysis shows that while courts generally uphold the award even during this challenge, both time and resources of the court and the litigants are consumed. Further, even at this stage courts may adjudicate the matter on merits, despite this already having been done at the award stage and at the Section 34 stage. Further, as mentioned earlier, no analogous provision to Section 37(1)(c) exists even in the Model Law as well as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

   One possibility is to completely remove Section 37(1)(c) from the A and C Act and align the framework for challenging an arbitral award with the Model Law. Alternatively, Section 37(1)(c) could be amended to remove the appeal available to the award debtor, but retain the appeal available to the award holder. This will protect against frivolous appeals by the award debtor, while providing adequate remedy in matters where an award has been erroneously overturned under Section 34.

Conclusion

In India, delays of the court system have increasingly led both government and private parties to opt for ADR mechanisms such as arbitration to resolve contractual disputes. However, for arbitration to be used effectively, it is important that challenges to the outcome of arbitration are limited to the procedural and jurisdictional grounds laid down in the A and C Act. Our analysis shows that this may not be so, and that both government and private parties routinely challenge arbitral awards on merits. Challenges to arbitration awards appear to have become a way of delaying enforcement. The Delhi High Court has been sanguine in the manner of its dealing with these challenges, most often refusing to interfere with the arbitration outcome. However, this does not seem to have deterred challenges, especially from government agencies.

One way of disincentivising such challenges is to amend the A and C Act to remove the legislative loopholes. These include: (i) introducing a prima facie test of the merits of the challenge, (ii) seeking a pre-deposit of a part of the award value before allowing a challenge, and (iii) removing the second challenge permitted under the Act. These changes could go a long way in curbing the litigious behaviour of parties to delay enforcement of high value awards.

Contract enforcement is hard when there exists an imbalance of power and resources between the parties to a contract or where the incentives of one of the parties are not driven entirely by commercial considerations, as in the case of government contracting with private parties. Creating legislative boundaries against strategic actions by parties, whether government or private, is one way of dealing with this challenge. There are other ways, that seek to change the behaviour of government departments and agencies, through measures such as a National Litigation Policy or the government procurement rules.

References

Aneesha Chitgupi and Susan Thomas, Learning by doing for public procurement, XKDR Working Paper No. 22 (2023).

Pavithra Manivannan, Susan Thomas, and Bhargavi Zaveri-Shah, Helping litigants make informed choices in resolving debt disputes, The Leap Blog (2023).

Anirudh Burman and Pavithra Manivannan, Delays in government contracting: A tale of two metros, The Leap Blog (2022).

Aneesha Chitgupi, Abhishek Gorsi, and Susan Thomas, Learning by doing and public procurement in India, The Leap Blog (2022).

Charmi Mehta and Susan Thomas, Identifying roadblocks in highway contracting: lessons from NHAI litigation, The Leap Blog (2022).

Pavithra Manivannan and Bhargavi Zaveri, How large is the payment delays problem in Indian public procurement?, The Leap Blog (2021).

Ajay Shah, The bottleneck of government contracting, Business Standard (2021).

Anjali Sharma and Susan Thomas, The footprint of union government procurement in India, XKDR Working Paper No. 10 (2021).

Devendra Damle, Karan Gulati, Anjali Sharma, and Bhargavi Zaveri-Shah, Litigation in public contracts: some estimates from court data, The Leap Blog (2021).

Karan Gulati and Renuka Sane, Grievance Redress by Courts in Consumer Finance Disputes, The Leap Blog (2021).

Anjali Sharma and Bhargavi Zaveri, Judicial triage in the lockdown: evidence from India's largest commercial tribunal, The Leap Blog (2020).

Shubho Roy and Anjali Sharma, What ails public procurement: an analysis of tender modifications in the pre-award process, The Leap Blog (2020).

Surbhi Bhatia, Manish Singh, and Bhargavi Zaveri, Time to resolve insolvencies in India, The Leap Blog (2019).

Steven M. Shavell, On the Design of the Appeals Process: The Optimal Use of Discretionary Review versus Direct Appeal, 39 J. Legal Stud. 63 (2010).

Delhi Airport Metro Express (P) Ltd. v. DMRC, (2022) 1 SCC 131.

Union of India v. Annavaram Concrete Pvt. Ltd., (2021) SCC OnLine Del 4211.

MMTC Limited v. Vendanta Limited, (2019) 4 SCC 163.

PSA SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin, (2021) SCC OnLine SC 508.

Mahanagar Telephone Nigam Limited vs. Applied Electronics Ltd., AIR (2014) Delhi 182.

Madhav Goel, Renuka Sane and Anjali Sharma are with the TrustBridge Rule of Law Foundation. Akshay Jaitly is the co-founder of TrustBridge Rule of Foundation and Partner, Trilegal. We thank Karan Gulati, Ajay Shah and two anonymous referees for their inputs and comments.

Improving judgment enforcement: Let judgment creditors file insolvency resolution applications

by Karan Gulati and Anjali Sharma.

Judgments form the basis of a sound legal system. However, the mere issuance of judgments, without ensuring their prompt enforcement, takes away the incentive to turn to the courts. It also reduces trust in contracts and property rights, the bedrock of economic activity. This discourages investment, curbs entrepreneurial enthusiasm, and impedes national development (World Bank 2003; Chemin 2007; Rao 2020). Beyond economic consequences, a delay or failure in enforcing judgments diminishes public confidence in the judiciary (Salzman and Ramsey 2013).

In India, enforcing monetary judgments is particularly challenging, as evidenced by its low ranking on the World Bank’s ‘Enforcing Contracts’ indicator and data from the National Judicial Data Grid (NJDG). To ensure and expedite the enforcement of such awards, we propose that judgment creditors – holders of a judgment by a court or tribunal – should be allowed to initiate insolvency resolution proceedings against judgment debtors. Due to the severe consequences under the Insolvency and Bankruptcy Code (IBC), such proceedings will deter non-compliant debtors from evading their obligations.

The problem

Enforcing judgments with monetary components is an especially difficult problem. In 2020, India ranked 163rd out of 190 countries on the World Bank’s Doing Business indicator for ‘Enforcing Contracts’. This metric measures the time and cost of enforcing a standard contract in a civil court. In India, once a dispute is initiated, it takes 1,445 days till enforcement, costing 31% of the claim value. In addition to the time already spent securing a judgment, enforcement takes 305 days. As per the NJDG, while approximately 4.5 lakh new execution petitions are instituted each year, only 3.9 lakh are disposed. Even then, less than 15% result in an award or decree.

This poor track record on court-led enforcement also dilutes alternate dispute resolution mechanisms, which operate in the shadow of the law. When parties understand that enforcing settlement agreements is likely to be prolonged, often with poor outcomes, their incentives change. Consequently, such mechanisms are used not to resolve disputes but to avoid payments and cause delays. In fact, poor performance on contract enforcement may be why Indian and international businesses often include international arbitration clauses in contracts when dealing with cross-border transactions.

At present, enforcement of civil judgments is governed by the Code of Civil Procedure 1908 (CPC). To ensure enforcement, a court can attach a judgment debtor’s (a person against whom a judgment capable of execution has been passed) assets, imprison them, or appoint an individual to manage their property. Once attached, the debtor cannot dispose of or transfer the property. If they fail to fulfil the judgment claim, the attached property can be auctioned off. While the CPC comprises intricate and complex procedures, which may be necessary to deal with the myriad of matters adjudicated by the civil court system (for example, specific performance, partition trusts, inheritance rights, etc.), there are no provisions to determine the true value of the debtor’s assets or reverse undervalued or preferential transactions. This allows assets to be unduly siphoned off. Due to the non-specificity of provisions regarding monetary awards, judgment debtors can also exploit procedural gaps and employ dilatory tactics to delay or frustrate the enforcement of such awards.

A proposed solution

The IBC already recognises judgment creditors as ‘creditors’ (Section 3 (10)) with legitimate ‘claims’ (Section 3 (6)) against a debtor. However, because they have not been explicitly recognised as financial or operational creditors, they cannot initiate insolvency resolution proceedings. Instead, they must wait for a financial or operational creditor or the corporate debtor to set the ball rolling on insolvency proceedings and, even then, only file their claims during the process without any participatory rights. This inability to initiate insolvency takes away a potent lever to ensure compliance with judgments.

We propose that judgment creditors be allowed to initiate insolvency resolution proceedings under the IBC. Such a move will pose a significant threat to non-compliant debtors. This is because the IBC creates two significant deterrents against wilful non-payment of claims: (i) the displacement of the promoter when the insolvency resolution proceedings commence, and (ii) a possibility of liquidation of the company if the resolution fails. Given these grave consequences, the judgment debtor’s incentive will be to voluntarily fulfil the judgment claim. This change should be prospective, allowing all creditors to adjust to evolving dynamics.

In fact, when allowed, admission of an insolvency application filed by a judgment creditor should be made simpler than one filed by other creditors. This is because the IBC requires that four factors be considered before admitting an insolvency resolution application: (i) whether there is a claim of a certain threshold, (ii) whether it is undisputed, (iii) whether it has become time-barred, and (iv) whether it has come to the correct bench of the tribunal. In the case of judgment claims, the first three are validated by a court or a tribunal; hence, there are no ambiguities that may delay the admission proceedings.

This is not a novel solution. Judgment creditors can initiate insolvency proceedings in both the United Kingdom and the United States of America.

• United Kingdom: Judgment creditors have specific rights to push a debtor into administration or winding up (analogous to insolvency resolution and liquidation proceedings in India, respectively). Under paragraph 11 of schedule B1, read with Section 123, of the Insolvency Act 1986, a creditor may file an administration application if an order of any court in their favour is returned unsatisfied. Under Section 122, a creditor can file a winding-up application on the same grounds. When it comes to individuals, the process is slightly different. Section 267 of the Insolvency Act allows a creditor to present a bankruptcy petition if the individual owes a judgment debt of £5,000 or more.

• United States of America: Judgment creditors possess distinct rights to push a debtor into involuntary bankruptcy proceedings. Under 11 USC § 303 of the US Bankruptcy Code, upon satisfying the prerequisites, creditors can file an involuntary bankruptcy petition against a debtor. If the court determines the involuntary petition is valid, it will issue an “order for relief,” initiating the bankruptcy process. For individual debtors, this often translates to a Chapter 7 liquidation or a Chapter 13 repayment plan.

To enable this in India, the IBC must be amended to recognise judgment creditors of a monetary award as financial creditors holding financial debt under Sections 5 (7) and 5 (8), respectively. This is because the award includes interest, penalties, or costs, and aligns with the time-value-of-money considerations intrinsic to financial debts. As loans accrue interest over time, judgment awards accumulate interest until settled, mirroring the financial obligations of the judgment debtor. Once a court has passed a monetary award, the claim is rooted in the judgment award, not the original transaction. Hence, even when the underlying dispute is related to the provision of goods or services, the judgment award should be understood to represent a financial debt. This view has been endorsed by the Supreme Court of India and should be legislatively incorporated. The Court, in Kotak Mahindra Bank Limited v A Balakrishnan (2022 INSC 630), has noted that:

Taking into consideration the object and purpose of the IBC, the legislature could never have intended to keep a debt, which is crystallised in the form of a decree, outside the ambit of clause (8) of Section 5 [financial debt] of the IBC.

Classifying judgment creditors as financial creditors during the insolvency process would also ensure that they have an influential participatory role, commensurate with the significance of court-sanctioned monetary awards.

Allowing judgment creditors the power to initiate insolvency proceedings will generate strong monitoring and compliance effects in the pre-insolvency world. Other financial creditors of the debtor will factor current and potential adverse judgment claims into their credit decisions. This, in turn, will generate strong incentives to avoid adverse judgments and to comply with judgment claims when they arise. Conversely, businesses would be compelled to take a proactive stance in settling disputes, knowing the ramifications are not just reputational but could also threaten their solvency and control over the enterprise. It will signal to the market that judgments are not just moral proclamations but actionable financial commitments.

An illustration

To better understand how this will play out, let us consider an arbitration proceeding between X Co and Y Co concerning a contract violation, where the arbitrator awards Rs. 2,00,00,000 to Y. X will likely challenge such the award under Section 34 of the Arbitration and Conciliation Act 1996 (Arbitration Act). Since the grounds for challenge under Section 34 are procedural, courts generally uphold arbitral awards.

Traditionally, Y would have been forced to then rely on the procedure set out under the CPC. However, as mentioned, enforcement under the CPC is notorious for delays. The award would remain stuck in court procedures, and Y may face a cash crunch. The money they rightfully won, tied up in legal battles, would not be accessible for business needs, growth, or reinvestment. At the same time, X would remain operational, benefiting from the liquidity that it has withheld (Gulati and Roy 2020).

However, things may be different if Y is allowed to initiate an insolvency resolution proceeding. Although X may prefer an appeal under Section 37 of the Arbitration Act, the confirmation of the award under Section 34 will convert it into a claim under the IBC (a right to payment reduced to judgment). The initiation of the insolvency proceeding will immediately shift the dynamics. Under IBC, X’s promoters could be displaced, and there may be a potential change in the company’s ownership. Thus, it will attempt to clear the dues and settle its dispute with Y. In essence, the IBC will be the much-needed lifeline for Y, ensuring it doesn’t remain stuck in the quagmire of the CPC and can promptly access its rightful claim.

Concerns

One potential concern regarding the proposal might be the risk of overburdening the insolvency resolution process and, consequently, the NCLT. While the IBC recognises that time is of the essence, it is already struggling with capacity challenges and mounting delays. Overloading this system could create an environment reminiscent of the current civil court enforcement mechanism, fraught with delays and backlogs. This would counteract the benefits and efficiencies the proposed change aims to introduce.

However, this concern does not acknowledge the strong deterrents to frivolous insolvency proceedings built into the IBC. Judgment debtors will need to comply with the minimum default value requirement of Rs. 1,00,00,000. Further, the filing of the insolvency application is understood to aid negotiations between the filing creditor and debtor, often resulting in a settlement between parties outside the purview of the NCLT. As per the Insolvency and Bankruptcy Board of India, 28% of the insolvency resolution matters are settled or withdrawn. These figures do not account for the negotiations in the shadow due to the mere threat of an insolvency application being filed. Thus, the actual strain on the NCLT might be lower than anticipated. 

Similarly, there may be concerns about whether insolvency proceedings can take away the judgment creditor’s right to prefer an appeal against the underlying judgment. These concerns can be alleviated by deferring to good design principles. One way of doing this is to only allow judgment creditors to initiate insolvency proceedings when the judgment debtor has exhausted all statutory remedies (e.g., an appeal under Section 37 of the Arbitration Act by X in our example). As an alternative, it may be recognised that even under the IBC, there is a 14-day period within which an admission application is to be decided. The judgment debtor may file a statutorily permitted appeal against the underlying judgment within this period. In practice, the time between filing an insolvency application and its admission is far more than 14 days. This gives the judgment debtor ample opportunity to prefer statutorily permitted appeals. In such cases, the judgment claim will be viewed as disputed until the appeal is decided, resulting in non-admission of insolvency proceedings. The path to be taken between the two alternatives is a procedural policy decision independent of the merits of the core proposal of allowing judgment creditors to initiate insolvency proceedings.

Conclusion

The efficacy of a legal system not only lies in the issuance of judgments and their timely enforcement. For India, where enforcing monetary judgments remains a daunting challenge, it is pivotal to usher in mechanisms that effectively bridge this gap. Allowing creditors to initiate insolvency resolution applications presents a powerful tool that can drastically transform the landscape of judgment enforcement.

Not only will this proposal push judgment debtors to be more compliant, but it will also signify a broader shift in the perception of judgments. Such reforms, emphasising actionable financial commitments, will help restore public faith in the judiciary, boost investment, and stimulate economic growth. By embracing this change, India can pave the way for a more robust and efficient legal system, thus fostering a climate of trust, accountability, and development.

References

Doing Business: 2020, The World Bank, 2020.

Judging the judiciary: Understanding public confidence in Latin American courts, Ryan Salzman and Adam Ramsey, 2013, Latin American Politics and Society, Volume 55, Issue 1, pp 73-95.

India’s low interest rate regime in litigation, Karan Gulati and Shubho Roy, 11 March 2020, Leap Blog.

Institutional Factors of Credit Allocation: Examining the Role of Judicial Capacity and Bankruptcy Reforms, Manaswini Rao, 2020, JusticeHub.

The Impact of the Judiciary on Economic Activity: Evidence from India, Matthieu Chemin, 2007, Cahier de recherche / Working Paper.

World Development Report 2004: Making Services Work for Poor People, The World Bank, 2003.

The authors are a research fellow and the research director at the TrustBridge Rule of Law Foundation. We are thankful to Madhav Goel and Renuka Sane for their insightful comments. Views are personal.

Announcements

Position for researchers in the field of Legal Systems Reform

At present, we are looking for candidates for the profile of Research Associate (Legal) and Research Associate (Quant.) to participate in an ongoing research program in the field of legal system reform.

Our work in this field includes:

• Evaluating contract enforcement by courts in India: a litigant`s lens (Manivannan, Thomas, Shah, 2021).
• Helping litigants make informed choices in resolving debt disputes (Manivannan, Thomas, Shah, 2023).
• How to Modernise the Working of Courts and Tribunals in India, (Shah, Datta, et.al, 2019).
• Indian Legal System Reform Seminar (2023).

More information can be found on: https://xkdr.org/field/legal-system

As a research associate, you will work on project deliverables under the supervision of a project lead. You will be expected to conduct field research in courts, implement defined research tasks, work on written documents, reports and articles and interface with external collaborators and stakeholders.

The requirements for the role of a research associate (Legal) are:

• An undergraduate degree in Law such as B.A.L.L.B (Hons.)/ B.B.A.L.L.B. (Hons.) or graduate degree in Law such as L.L.B.
• Minimum one complete year of work experience, preferably in a research intensive organisation.
• Familiarity with procedural laws and practice rules in litigation and ability to understand court documents.

The requirements for the role of research associate (Quant.) are:

• An academic background in the fields of Data Science, Economics, Engineering, Management and/ or Public Policy.
• Minimum one complete year of work experience, preferably in a research intensive organisation.

Candidates must possess high quality research skills, basic Excel skills, coding skills and a functional understanding of any one programming language. In keeping with the current work environment at the organisation, a working knowledge of LaTeX and Linux are preferred.

You must be comfortable with working in an interdisciplinary research environment consisting of people from varying backgrounds such as economics, law, public policy and data science. You should be curious and passionate about research and willing to work on outputs independently as well as in teams.

The remuneration offered will be commensurate with your skill and experience and will be comparable with what is found in other research institutions. Interested candidates must email their resume to careers@xkdr.org with the subject line: Application for "Research Position, Legal System Reform"

Announcements

Conference: Investments for a Sustainable Tamil Nadu: Reforms and Strategies for the Power Sector

Organised by XKDR Forum and TrustBridge.

Given the vast magnitudes of investment required in the energy transition, and given the limitations of Indian public finance, the main path to energy transition investment lies in private investment. Only domestic and foreign private sectors have the scale of resourcing required to terminate contracts with coal-fired plants and build a new world of renewables and storage. This process faces limitations which are collectively bucketed as 'investability'. One of the most important states in India from the perspective of energy transition is Tamil Nadu. It was one of the first states in India to have achieved almost universal electrification and was also at the forefront of the transition to renewables — both wind and solar — in the country.

In this conference, we present a review of the electricity sector in Tamil Nadu - through a collection of facts and evidence about the sector and the state that can form the basis of policy proposals to improve investability for transition finance.

Program Agenda:

Panel 1 (2:00 - 3:00 PM): Electricity's Role in Tamil Nadu's Development Strategy

Presenter: Ajay Shah, XKDR Forum

Panelists: Vikram Kapur IAS (Govt of Tamil Nadu), S Narayan IAS (Retd; Government of India), and Karthik Muralidharan (CEGIS)

Panel 2 (3:00 - 4:00 PM): The Impact of KUSUM-C in Addressing the Political Economy of Distribution

Presenter: Renuka Sane, Trustbridge

Panelists: Anas Rahman (International Institute for Sustainable Development) and Martin Scherfler (Auroville Consulting)

Panel 3 (4:30 - 5:30 PM): Improving Regulation in the Power Sector

Presenter: Akshay Jaitly, Trustbridge

Panelists: Hansika Dhankhar (Shakti Sustainable Energy Foundation) and Ann Josey (Prayas Energy Group)

Date: 13th October 2023,
Time: 2:00 - 6:00 PM,
Venue: Dvara Trust (Kerala Meeting Room), 10th Floor-Phase 1, IIT-Madras Research Park, Kanagam Village, Tharamani, Chennai-600113.

The event is in-person and you can register here!

Fairness and legislation for virtual courts

by Mugdha Mohapatra and Ajay Shah.

The weaknesses of the judicial branch are a major problem impeding the Indian state. In the field of legal system reforms, there are substantive issues (such as judicial independence, and intellectual capabilities of judges), and there are process engineering issues (of making courts work as more efficient services production organisations). There has been considerable interest in using modern computer technology, in order to reduce defect rates and increase productivity of these process (Datta et al, 2019).

Computer technology can be applied in many dimensions of the working of courts. As an example, an important path to progress lies in improving scheduling within the day. Here, a layer of rules and computer technology could be layered on top of the existing physical hearings. Within the overall field of computer engineering as applied to the legal system, one important idea is the dream of 'virtual courts'.

In this article, we present a careful definition of the term 'virtual court' and associated words. We examine the foundations of fairness that should be present in the various elements of virtual courts. We describe how the present Indian legislative landscape achieves a certain level of fairness in physical courts. These provisions interfere with the adoption of virtual courts today, and the way forward for policy lies in finding the ways to solve these issues of fairness in a virtual court setting.

The question of virtual courts

Virtual courts are an idea that is much talked about. The Department of Justice has suggested that moving to virtual courts can have significant gains for both the litigant and the court administration, as it reduces the burden on litigants to appear in courts and makes courts processes easier. On September 14, 2023, the Cabinet approved Rs.7000 crores for Phase III of the e-Courts project. A key component of this mission is the establishment of virtual courts, for which, around Rs.500 crores have been allocated. The e-Committee of the Supreme Court, which oversees the implementation of the e-Courts project, visualises `virtual courts' as having cases being filed from anywhere, and where each stage of a case can be conducted online.

Some countries such as the United States, Singapore and Canada have successfully used technology for filing, submission of evidence, and video conferencing in courts. Based on these examples, it is suggested that virtual courts should be relied upon in India, in the adjudication of cheque bouncing cases and motor accident claims, as these constitute the bulk of pending cases in the subordinate courts of India (Parliamentary Standing Committee Report on the Functioning of Virtual Courts, 2020).

Several High Courts have attempted to set up virtual courts. But litigants and lawyers continue to appear in person for adjudication, and these courts are not truly virtual. Three hurdles hold back virtual courts in India today:

1. Laws and rules that are incompatible with the vision of completely virtual courts,
2. Limitations in technology that can meet the standards of authenticity required under the law, and
3. The lack of acceptance of virtual courts by litigants and court personnel today.

In India, virtual courts can not arise in a legal vacuum. An extensive set of laws define aspects of the operation of courts. It is important to identify the provisions in the present Indian legal framework that frustrate the ready rollout of virtual courts.

These restrictions are not anachronisms. These laws and rules have been put in place to achieve important elements of fairness: to ensure that parties are sufficiently aware of proceedings through summons, that electronic evidence is authentic and immutable, witnesses are not coached or coerced and the rights of an accused person are not denied. Violations of these safeguards can disadvantage litigants, and create an uneven playing field for parties. The present arrangements have arisen from over a century of thinking, by some of the best minds that aspired to establish the rule of law within a liberal democracy. The path to virtual courts lies in deeply understanding how fairness arises (or flounders) in a court procedure, and gradually evolving the laws and rules for virtual courts in a way that achieves fairness.

1. Terminology

Several terms are used to describe the use of technology in courts in sometimes confusing ways. Drawing on the E-Courts Phase III Vision Document and documents from the Department of Justice, we assemble a set of terms and definitions for this field.

Online Hearings

The practice of conducting court business through video conferencing, where both/one of the parties appear online. Online hearings were relied upon heavily during the COVID-19 pandemic, without any further digitisation of court processes.

Digital Court

This is a court that uses a digital platform to carry out many processes that are currently being done in a physical form. These courts have dispensed with mandatory physical hearings, and requiring parties to provide physical copies of affidavits and applications. These courts are integrated with filing systems and payment systems, that are online (E-Courts Vision Document-Phase III, p.10). In practice, this has meant a courtroom where court records (such as signed documents and physical evidence) are collected, and stored in a physical format. These are then digitised and shared with the judge and all parties. These courts have the ability to conduct hearings and record evidence online, but often choose to conduct physical proceedings. They also continue to require physical summons to be provided to parties, and physical evidence to be submitted to the court. This has been implemented in the Digital Negotiable Instruments Act Courts of Delhi.

Paperless Courts

All activities in a paperless court are conducted through a digital platform. These include preparation of the list of cases to be heard for the day, dictation and storage of orders, and providing information on case status, through a dashboard. These courts may conduct hearings physically. Physical files and evidence are digitised to prepare an e-file for the judge. A paperless court transitions the internal functioning of courts from relying upon physical records to digital records. While a digital court focuses on making the interaction of the litigant, lawyers and judge digital, a paperless court only changes the inner working of the court.

Virtual Courts

In a virtual court, parties will not have to come to court for any proceedings or processes. Everything from the filing of a case to the delivery of summons, submission of evidence and recording of statements can be done online. These courts are different from the mere use of video conferencing technology in courts, as they seek to fundamentally reimagine the procedure of adjudication.

There are frequently cited examples for progress that has been made in technological developments in courts, such as in Digital Courts in Delhi and Kerala. These are developments that fit within the definitions of digital courts and online hearings, and are not fully virtual courts.

2. Laws of procedure and where it matters in the stages of a case

Procedural justice exists as a foundation of substantive justice. The principles that courts are required to follow are clearly laid down in the Civil Procedure Code (CPC), the Criminal Procedure Code (CrPC) and the Indian Evidence Act.

The recognised object of the CPC is to ensure that all parties appearing before the court are treated equitably, and settle their disputes within a clear framework of rules. In criminal cases, procedural justice is even more important as it ensures that an accused cannot be denied his personal liberty based on the decision of the court without being given a chance to defend himself. The basic safeguards that these laws provide are: (1) Make every attempt to inform a party of proceedings against them before taking any adverse action; (2) Ensure evidence is authentic and immutable; and (3) Ensure a party has all the information necessary to defend themselves. These safeguards are placed by procedural law at various stages in the life-cycle of a case. Table 1 presents the general stages of a case, and how sections of these procedural laws place are reflected as these safeguards, at each stage of the case.

Table 1: Safeguards at each stage of the case

No.	Stages of a case	Safeguard	Relevant Provision
1.	Filing of a Case	Parties should submit complete documents. All documents must be compliant with the specified format.	S. 26 and Order II, Order VI of the CPC, Chapter XVII and Chapter XV of the CrPC.
2.	Summons and Warrants	Every attempt should be made to inform parties regarding the proceedings against them. All modes of issuing summons should be exhausted before adverse proceedings or warrants are used.	Order V of the CPC, Chapter VI of the CrPC.
3.	Submission of Responses	Parties should be given an opportunity to respond to the claims made or charges against them.	Order VIII CPC, Chapter XVI and Chapter XVIII CrPC
4.	Submission of Evidence	Evidence should be authentic and immutable.	Chapter IV and V of the Indian Evidence Act.
5.	Recording of Statements and Cross-Examination	Identity of the person giving a statement must be proven. Statements must not be recorded under coercion and duress or coaching. Statements must be recorded under oath.	Order XVI of CPC, Chapter XXIII of CrPC.
6.	Arguments and Judgement	Every party should have an opportunity to present their argument. Parties should be aware of the outcome and opportunity of appeal	Order XX of the CPC and Chapter XXVII of the CrPC

Recently, there have been some changes to these existing procedural laws, but they have been changes in the name of the law, rather than in the substance of the law, when viewed from the perspective of implementing virtual courts.

3. Methodology

The analysis in this article takes two broad approaches: (a) An examination of the existing procedural laws (CPC and CrPC) and how they apply to virtual courts, based on both case laws and secondary literature. (b) A study of the rules of practice, policy documents and implementation guidelines for court digitisation in order to identify how technology has been deployed in courts.

We conducted a legal examination of the CPC, CrPC and Indian Evidence Act, from the perspective of the different stages of a case (listed in Table 1). Table 2 presents all the stages of a case which cannot be done online, without violating the safeguards identified in Table 1.

Table 2: Stages of a case and admissibility of online mode

No.	Stages of a case	Can be done entirely online under CPC	Can be done entirely online under CrPC
1.	Filing of a Case	Yes	Yes
2.	Summons and Warrants	No (Order V, CPC)	No (Order VI,CrPC)
3.	Submission of Responses	Yes	Yes
4.	Submission of Evidence	No (S. 64 and S. 65(B) Indian Evidence Act, 1872)	No (S. 64 and S. 65(B) Indian Evidence Act, 1872)
5.	Recording of Statements and Cross-Examination	No	No
6.	Arguments and Judgement	Yes	Yes

Three stages -- Summons, Submission of evidence, and Recording of statements and cross-examination -- cannot be done entirely online. We now describe the presence of safeguards in these laws in the following Sections.

4. Legislative foundations and Digital Delivery of Summons

The physical form of delivery of summons is the only way of delivering summons under the CPC and CrPC. Chapter VI of the Bharatiya Nagarik Suraksha Sanhita, 2023 bill recognises electronic and digital modes of summons as valid in criminal cases. Here, if the court is satisfied that an electronic summons has been delivered, it can deem that the summons is duly served.

Electronic/ digital summons are a mode of delivery in addition to physical summons. But the requirement to deliver a physical summons has not been dispensed with. In order to consider SMS/ Whatsapp/ email as sufficient forms of summons delivery for all matters as a norm, Order V of the CPC, and Chapter VI of the CrPC, requires to be amended.

The aim of the summons processes is to ensure that the defendant is aware of proceedings pending against him, and the required date of appearance. Furthermore, the defendant must also have sufficient time to respond to the summons and find a lawyer. In both civil and criminal cases, registered post and physical delivery of summons is the only form of delivery of summons accepted in the CPC and CrPC. Under Order V of the CPC and Chapter VI of the CrPC, physical delivery may also be done by affixing summons in a public place, publishing summons in a newspaper or handing the summons to an adult male member of the family of the person being summoned.

For instance, in the case of Sushil Kumar Sabharwal v. Gurpreet Singh, the court held that a defendant cannot be set ex-parte (setting a party ex-parte allows the court to proceed with the case in the absence of the defendant), unless sufficient service of summons can be proven and adequate time has been allowed. Not doing so would be tantamount to a failure of justice, for no fault of the defendant.

In a civil case, as per Order IX Rule 6 of the CPC, the court must be satisfied that summons have been duly served, in order to set a party ex-parte. In a criminal case, no proceedings can take place in the absence of the accused or his pleader, and a warrant for arrest must be issued. Courts ensure that summons have been delivered adequately, and only if they find there is non-compliance with summons, do they issue a warrant.

In addition to registered post and physical delivery, summons may be delivered through email/ WhatsApp. The Supreme Court allowed online delivery of summons, owing to the physical difficulties faced during the pandemic, in Re Cognizance For Extension Of Limitation. Each High Court can prescribe additional modes of delivery of summons depending on case types by amending its rules of practice. Service of summons through email has been permitted in Delhi, in addition to physical summons, only for civil cases. The Punjab and Haryana High Court has permitted online service in revenue matters. However, in the case of Hardev Ram Dhaka v. Union of India, the Registrar of the Supreme Court noted that service through e-mail is not valid, as it is not provided for in the rules. Thus, the service of summons through these alternative, electronic forms, have not yet been accepted as the norm for delivery of summons.

Thus, a mere amendment to allow digital summons is not fair as, not ensuring adequate delivery of summons can disadvantage the defendant in a civil case and potentially deprive an accused of his liberty without a chance of being heard.

5. Legislative foundations and Submission of Evidence Online

An important feature of an entirely virtual court is the ability to submit evidence digitally. The Indian Evidence Act (1872) governs the submission and evaluation of evidence in both civil and criminal cases. Allowing parties to submit primary evidence entirely digitally is not possible under the Act. While an electronic record can be submitted digitally, it must be accompanied by a certificate under a separate section of the Act (S. 65B).

Under the Indian Evidence Act, evidence is classified into two types: primary evidence and secondary evidence. Under S. 62 of the Indian Evidence Act, primary evidence refers to an original document submitted to the court. Under S. 63, secondary evidence refers to copies of the original document. Lastly, S. 64 requires that documents must be proved by primary evidence, unless otherwise allowed. This is because of the principle of best evidence.

The principle of best evidence requires that a party cannot provide inferior evidence as long as there is better/ superior proof of it. For instance, in a criminal complaint against the offence of cheque bouncing, the complainant is required to submit a physical copy of the cheque.

A different procedure is required to be followed where an electronic record is required to be submitted as evidence. Under S. 65B, a document which is created, stored, copied on an electronic device, and is then shared, must be accompanied by a certificate, that provides the particulars of the device that it was created on, and a certificate signed by a person who is in charge of its management (S. 65B(4)). The purpose of this section is to ensure the authenticity and immutability of electronic output.

Most recently, in the case of Arjun Panditrao Khotkar vs Kailash Kushanrao Gorantyal, the court clarified that a S. 65B certificate was required to be presented where the digital device, on which the electronic record is first created, cannot be presented before the court. For instance, in a contractual dispute, a copy of the electronically created and signed contract, which is stored in the cloud, must be accompanied by a S. 65B certificate, by the person who is managing/ in charge of the server, as the server cannot be brought to court. Submission of WhatsApp chats, or records of UPI payments where information is stored in the cloud, must also be accompanied by a S. 65B certificate. At the moment, such certificates are physically generated, signed and filed.

The draft of the Bharatiya Sakshya Bill (2023), through S. 61 and S. 63, seeks to address this issue by also recognising electronic/ digital records as primary evidence. The bill continues to maintain a distinction between primary evidence and secondary evidence, and the principle of best evidence has not been done away with it.

The strict standards of authenticity and immutability provided in the Indian Evidence Act should not be changed as this can lead to inaccurate judgements, and cause higher courts to waste time on correcting errors.

6. Legislative foundations, and Recording of Witness Statements and Cross-Examination Online

While video conferencing can be used in both civil and criminal cases, for recording of evidence and cross-examination, these include ensuring the identity of the accused, ensuring that the witness is not being tutored or coerced, and appointing an officer to be present with the witness (State of Maharashtra vs. Dr. Praful B. Desai). The same safeguards have also been implemented through video-conferencing based on the `Model Video Conferencing Rules', prepared by the Supreme Court e-committee.

The desirability of online hearings has been debated extensively (Ferguson, 2022; Legg and Song, 2021). The risks with online hearings include challenges in assessing credibility, establishing emotional connections among courtroom participants, maintaining the solemnity of the legal processes, and transparency in the conduct of proceedings. As a result of these risks, the use of video conferencing depends on the type of case, and varies from case to case. Courts may also require parties to seek permission to use video conferencing. The use of video conferencing has also raised questions on the efficacy of using online modes to conduct trials, because of the possibility of reduced witness credibility, reduced information on non-verbal cues, the reduced importance of the courtroom in the mind of a litigant (Abrams, 2022; Salyzyn, 2012).

The rigour of these requirements have led to the deployment of non-IT-based alternatives to ease the ability to record witness statements and conduct cross-examinations. For instance, in Delhi, witnesses are not required to go to a courtroom, but to a 'Court Point'. A Court Point is the courtroom, or where the court is physically convened, or where proceedings are conducted in accordance with court directions. These 'court points' are, in fact, extensions of the physical court, and require the physical presence of the litigant, where oath is administered in the presence of a coordinator. The verification of identity is carried out based on government issued identity cards, or an affidavit by a specified authority. Similar rules exist in several other states, such as Odisha and Telangana (P.R. and Mishra, 2021).

7. The way forward for virtual courts

During the pandemic, courts in India relied upon online hearings, where the court staff and registry continued to prepare physical files to sent to the judge. These were not `virtual courts' in the sense of the terminology of this article. The delivery of summons through physical forms was affected, and courts allowed digital summons. But they did not issue any adverse orders against non-compliance with summons. The submission of evidence was through physical forms. Legal scholars highlighted how online hearings during the pandemic led to the loss of certain protections of accused persons, reduced the amount of information on litigants, and the testimony that is available to a judge (Kirby, 2021).

The analysis of legal provisions in procedural laws shows that, at present, it is not possible to construct a fully virtual court owing to the present text of the Civil Procedure Code, the Criminal Procedure Code and the Indian Evidence Act. The safeguards embedded in these laws are over a 100 years old, and are motivated by fundamental concepts of fairness, rule of law and liberal democracy. These include ensuring parties are aware of the proceedings, that evidence is authentic and reliable, that witnesses are not coached or coerced, and that the right of an accused to observe proceedings against him are not compromised. As the cases cited above show, these principles have been reiterated over and over, and are binding upon all judges in India.

What, then, is the path to virtual courts? The need of the hour is not a fragile legal strategy to get things done, nor is it in a quick amendment bill. The need of the hour is sophisticated research. We must delve deeper into what Kelkar and Shah, 2022, term the `invisible infrastructure' that shapes the working of courts in India. These are the unnoticed underlying systems, frameworks, norms, and processes that enable interventions to succeed. There is a need for cautious examination of the law and technological solutions, in order to avoid unintended consequences. A research literature is now required around the following important questions. Will virtual courts be beneficial for litigants? What are the technological solutions that can be used to maintain the legal safeguards highlighted above? How should Courts be trained to use such technical solutions? How can procedural principles of fair play in courts be balanced with the rules that enable virtual courts?

References

P. Datta, M. Hans, M. Mishra, I. Patnaik, P. Regy, S. Roy, S. Sapatnekar, A. Shah, A. P. Singh and S. Sundaresan, How to Modernise the Working of Courts and Tribunals in India, NIPFP Working paper series (2019).

A. Ferguson, Courts without Court , Vanderbilt Law Review (2022).

A. Salyzyn, New Lens: Reframing the Conversation about the Use of Video Conferencing in Civil Trials in Ontario , Osgoode Hall Law Journal (2012).

Supreme Court E-Committee, E-Courts- Phase III Vision Document , 2023.

M. Kirby, Covid-19 & Law in India & Australia- Lessons from the Pandemic for the Costs and Delays of Legal Process, National Law School of India Review (2021).

M. Legg and A. Song, The Courts, the Remote Hearing and the Pandemic: From Action to Reflection, UNSW Law Journal (2021).

Parliamentary Standing Committee Report on the functioning of virtual courts, (2020).

Sandhya P.R. and A. Mishra, Video Conferencing, E- Filing, and Live Streaming in the High Court, (2021).

Z. Abrams, Can justice be served online?, American Psychological Association (2022).

Mugdha Mohapatra is a Research Associate at XKDR Forum. Discussions with Ayushi Singhal, Aayush Tainwala, Aayush Kedia, Anjali Sharma, Karthik Suresh, Pavithra Manivannan, Siddarth Raman, Shubho Roy, Susan Thomas, and two anonymous reviewers have helped shape and improve this article.