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Legal Services
too old to be hired somewhere else. Bharat Forge appealed all the way to the Supreme Court,
where it was finally granted the right to fire Natake—in 2005.
Conviction rates for criminal cases are notoriously low. At the same time, however, a majority
of those accused spend more time in jail than their sentences might ordinarily be had they been
convicted, because cases take so long to come to trial and they are unable to afford bail or a
lawyer to obtain bail on their behalf.
The two principal reasons that cases take so long are that: (1) the courts are short of judges
(13 per 1 million population, compared to 107 in the U.S., 73 in Canada and 51 in Britain); and
(2) appeals are allowed for any case and most cases tend to be appealed by the losing party, often
instigated by attorneys seeking additional fees.
Courts remain antiquated, with hand-kept records and poor filing systems that make documents
difficult to locate. Judges often give oral summaries to court reporters in the absence of mechanized
reporting. Evidence can only be given and collected in court, and no time restrictions are
imposed. Parties frequently fail to appear in court, and when they do, extensions and adjournments
are commonly requested and granted.
Business Grinds to a Halt
The length of time taken to adjudicate cases, particularly civil cases, has also inhibited the formation
of precedent and a solid body of case law elaborating on the original statutes. Thus, most
business activity remains covered under the 781 sections of the 1956 Companies Act, with little
in the way of modernization through subsequent precedent and interpretation, although major
amendments were adopted in 1988, 1998, 2000, and 2002. Comprehensive efforts to modernize
the law in 1993, 1997, and 2003 failed. A new effort is underway.
A government initiative included in the 2002 Companies Act amendments—to establish a
National Companies Law Tribunal (NCLT) and an accompanying appellate tribunal that would
address complex commercial cases separately and more quickly—was successfully challenged in
the Madras High Court by the Madras Bar Association and has been pending before the
Supreme Court since 2004.
Cases such as M&A applications before the High Court—as well as reviews of public sector company
restructuring or liquidation by the Company Law Board (CLB), the Board for Industrial and
Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction
(AAIFR) under the 1985 Sick Industrial Companies Act (SICA)—have become more
numerous, with 480 M&A deals up for approval in 2006, and 339 in the first half of 2007.
Meanwhile, new post-1991 situations—insolvency and restructuring of public sector firms, anticompetitive
practices, intellectual property protection, etc.—have been addressed through new
laws, adding to the overall complexity of the system. Listed companies face dual reporting and
compliance requirements, under the Companies Act and SEBI regulations.
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