Report No. 128
Cost of Litigation
Chapter 1
Introduction
1.1. Of the numerous ills with which judicial system as in vogue in this country is suffering, the one which has, attracted the attention of all those concerned with courts and interested in its functioning is high cost of litigation in Indian courts. So, when the Government of India decided to set up a Judicial Reforms Commission and later on assigned that task to the present Law Commission, one of the terms of reference was:
"8. The cost of litigation with a view to lessening the burden on the litigants".
That litigation has become a luxury for the rich is a self-evident proposition. It is a trite saying that if the cost-benefit ratio is applied to court litigation, more often the cost far outweighs the benefit flowing from the litigation. If a survey is made of those who have causes to be taken to the court for redressal of grievances but the prohibitive cost of litigation thwarted them from undertaking that exercise, the outcome of the survey would be revealing. Occasionally, litigation is undertaken not with a view to vindicate the wrong or injustice suffered but as an egocentric activity to heap as much harm on the other side as possible.
In this situation, cost of litigation acquires a secondary position. But excluding this class of cases, cost of litigation is an important factor in evaluating the approach of the litigant while deciding to initiate the litigation. The problem has also to be viewed from the point of view of the defendant who is dragged to the court as to what burden of costs will be heaped upon him in defending his right. Cost of litigation has multiple dimensions: (1) cost to the State in setting up and maintaining justice system; (2) cost to the litigant; and (3) cost to the society. In this report, Law Commission is primarily concerned with cost of litigation with a view to lessening the burden on the litigants.
1.2. The burden on the Exchequer for setting up and maintaining adequate and efficient justice system has been examined by the Law Commission.1 The cost borne by the society for providing effective and efficient justice system requires analysis and in-depth examination. That is outside the purview of this report. The entire emphasis in this report is on the cost of litigation borne by the litigants.
1. LCI, 127th Report on Resource Allocation for infrastructural services in Judicial Administration - (A Continuum of the Report on Manpower Planning in Judiciary: A Blueprint).
1.3. What are the road-blocks in access to justice? They are numerous and diverse. One of the impediments in access to justice has been identified as the economic barrier which, in simple terms, means high cost of litigation. It has become so counter-productive that numerous litigants, it is apprehended, may for want of wherewithal, suffer injustice, giving up the idea to approach the court because of the prohibitive costs. This is not an idle fantasy. Even in an affluent country like America, 'it is the millions of disputes and millions of disputants effectively excluded because of the process that are major causalities. Litigation in the formal courts is an expensive proposition both for taxpayers and for litigants.1
The high cost of litigation through the courts may irritate many litigants. But for some it constitutes a total bar. No matters how meritorious the claim or how worthy the defence, a low income person (as well as many in the middle class) will he unable to litigate most cases'.2 There is a movement afoot in America for reform that will reduce the cost of litigation. The search for reform has exposed the fact that a number of disputes remain unresolved which is not conducive to the health and well being of a society. The reform movement aims at rendering justice more accessible by making it less expensive.
1. M. Cappelletti (Ed.) Access to Justice, Vol. I, Book 2, p. 915.
2. Id., p. 916.
1.4. It is agreed on all hands that Indian situation is worse compared to American situation because India is a developing country with large population living below poverty line. To alleviate poverty, numerous programmes have been undertaken by the State. These programmes create rights. The awareness of these rights has percolated down to the beneficiaries. But the existence of right or its awareness hardly brings any relief. It is the enforcement of the right to enjoy the benefit flowing from the right which is important. The moment you come to enforcement, the courts come in, and with it the costs. The inability to bear the costs makes any attempt at enforcing the right not worth its while. The programme and the rights created therein remain a teasing illusion.
1.5. This disturbing phenomena of rising cost of litigation attracted the attention of the Parliament. While Constitution mandated that the State shall secure and protect, as effectively as it may, a social order in which justice shall inform all the institutions of national life, there was no effective provision in the Constitution for translating this promise into reality. Article 39A was introduced in the Constitution in the year 1976.
It provided that the State shall secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities. In introducing this Article Parliament showed its awareness that by numerous statutes, rights, privileges and concessions have been conferred on the economically and socially disadvantaged sections of the society but they themselves are not in a position by their own effort to enforce these rights or enjoy the privileges and concessions.
And till that is done, it cannot be said that the legal system promotes justice because justice system is an integral part of the legal system of the country. No one who has a right must be denied the benefit of it. There must be a forum for enforcement and vindication of this right. Access to forum must be unimpeded either by geographical, physical or economic barriers. The justice system must be easily accessible to each and every one from whatever strata of society he comes. Economic or any other disability should not become a barrier to access to justice. Economic incapacity for enforcing rights must be remedied. It can be done in two ways: (i) considerably reduce the cost of litigation; and (ii) extend help by legal aid scheme wherever it is possible.
1.6. In the days of laissez faire it was assumed that if the State establishes courts, the State has performed its duty. The procedure for civil litigation reflected the essentially individualistic philosophy of rights then prevailing. A right of access judicial protection meant essentially the aggrieved individual's formal right to litigate or defend a claim. Inability to resort to court to enforce the right was not taken to be the concern of the State. The State rejoined passive with respect to such problems as ability to initiate action or to defend the action adequately. Such an approach is inconsistent with the philosophy of a welfare State.
Therefore, Article 39A provided for setting up free legal aid schemes to at least deal with one component of the cost of litigation, namely, lawyer's fees. But there are numerous components of cost of litigation and each will have to be adequately and scientifically examined to demarcate areas where there is enough leeway for reducing the cost of litigation. The approach has to be in contrast with the 19th century approach. Relieving 'legal poverty' - the incapacity of many people to make full use of the law and its institutions was not the concern of the State, Justice, like other commodities in the laissez faire system, was available only to those who could afford its cost. Formal, not effective justice - formal, not effective equality-was all that was sought. This approach has to be eschewed.
1.7. A constitutional democracy founded on rule of law must provide a body for resolution of the disputes arising in the society. The disputes may be individual in character or the disputes may arise out of conflict of interests between groups. In either situation, there must be an easily accessible forum for resolution of disputes. Simmering perpetual disputes would retard the development and growth of the society. Expeditious resolution of disputes by an easily accessible forum would certainly tend to help development and growth of the society.
The courts are institutions for formal resolution of disputes amongst individuals and groups. This forum, in order to be effective, useful, efficient and action-oriented, must be easily accessible to the lowest amongst the lowliest without the worry of finding wherewithal for access to justice. And the forum must be able to expeditiously resolve the disputes so that the disputes do not continue to simmer in the society and the disputants may invest their time in more productive and creative effort rather than in fighting fruitless litigation.
Therefore, a justice system worth its name must be easily accessible, least formal, non-expensive and ready to resolve the disputes in a reasonably short time in its search for judicial reforms, the Law Commission has dealt with providing forum which can expeditiously dispose of cases within a reasonable time. The present report deals with removal of economic barriers in access to the forum.
1.8. Incidentally, the report also deals with a reference received from the Department of Justice in the Ministry of Law and Justice. It appears that the Conference of Law Ministers of States and Union territories held in June 1982 at New Delhi set up a Committee to go into the question of rationalisation of court fee. This Committee prepared a report on rationalisation of court fee. This report was placed as an annexure to the agenda item on 'abolition of court fee' in the joint Conference of Chief Justices, Chief Ministers and Law Ministers held at New Delhi on 31st August and 1st September, 1985. It is stated that due to paucity of time, the subject was not discussed in the Conference.
As stated earlier amongst the terms of reference drawn up or a Commission which was to be set up to study and recommend reforms in the justice system, one of the terms was 'the cost of litigation with a view to lessening the burden on the litigants'. Later on Government of India decided to assign the task of studying reforms in judicial administration and to make recommendations thereon to the present Law Commission. Consequently, it was decided by the Minister of Law and Justice, Government of India, to refer the report of the Committee of Law Ministers on 'Rationalisation of Court fee' to the Law Commission for its study and recommendations. This report would also dispose of the reference as set out in D.O. No. 25 /4/80/Jus of Additional Secretary, Ministry of Law and Justice, dated 28/29 April, 1986.
