Courting the rankings 

Courting the rankings 

Context:

  • Reports of India moving into the top 100 in the World Bank’s Ease of Doing Business global ranking is credible.
  • But there is a component that still has a dismal ranking and it is the one about “enforcing contracts”.

The issue:

  • In the World Bank report India’s ranking in the ‘enforcement of contract’ component is 164.
  • The report says that it takes an average of 1,445 days (or nearly four years) to enforce a contract in India.
  • In this, the distance to frontier (DTF) ranking score is 40.76.
  • The all-told cost to a litigant to recover amounts legitimately is 31% of the value of the claim.
  • This is a shocking state of affairs.

“Ease of doing business” index:

  • A nation’s ranking in the “ease of doing business” index is based on the average of 10 sub-indices which are: starting a business; dealing with construction permits; getting electricity connections; registering property; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency.

Commercial Courts, Commercial Division and Commercial Appellate Division:

  • In 2015 the Parliament passed the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act.
  • The purpose behind the Act is to provide a forum with upgraded infrastructure to resolve a certain class of disputes, classified as “commercial disputes” in the Act, in a time-bound and effective manner.
  • The legislation also requires establishment of appropriate infrastructure and manpower training on a constant basis.
  • The Act essentially paves the way for the setting up of commercial courts at the district level and a commercial division in High Courts that have original jurisdiction along with a commercial appellate division in the High Courts to hear appeals arising under the Act.
  • By mandating that High Courts must show levels of disposal of such claims on their website, the Act also ensures transparency.

Five aspects of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act:

  • Firstly, while the Act contemplates the “appointment” of commercial court judges in districts, in most States the government there has merely vested the presiding district judge with powers to act as a commercial court.
  • Secondly, whenever presiding officers are appointed to commercial courts, it must be ensured that they have experience in dealing with commercial disputes, as Section 3 of the Act ordains.
  • Third, in terms of Section 19 of the Act, the respective State governments must, in consultation with the High Courts, establish necessary infrastructural facilities to run these courts.
  • Fourthly, in terms of Section 20 , the State government is to establish facilities providing for the training of judges who may be appointed to these courts.
  • Finally, and possibly most importantly, in terms of Section 17, statistical data regarding the functioning of these courts are to be displayed on the website of the respective High Courts.
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