Report No. 126

Annexure I

(See para. 4.2)

Chairman,
Law Commission,
Government of India,
Shastri Bhawan,
New Delhi.
December 14, 1987.

To,

.....................................

Subject: Formulation of the norms by the public sector undertakings in the matter of settlement of disputes; Term No. 7 of proposed Judicial Reforms Commission assigned to the Law Commission of India.

Sir,

The Government of India deeply distressed by the malaise in the judicial system of this country decided to set up a Judicial Reforms Commission around the years 1985-86. Later on it was resolved to assign the task to the present Law Commission. To pin-point the issues which must engage the attention of the proposed Judicial Reforms Commission, the Government of India had drawn up detailed terms of reference in this behalf. The entire work was assigned to the Law Commission of India. Term No. 7 of the work taken over by the Law Commission reads as under:-

"7. The desirability of formulation of the norms which the Government and the public sector undertakings should follow in the settlement of disputes including a review of the present system for conduct of litigation on behalf of the Government and such undertakings".

The aforequoted term has its genesis in terms No. 1 and 2 which deal with the multi-pronged drive for reducing the volume of work in the courts generally and Supreme Court and High Courts in particular.

As you are aware that the dockets of the High Courts and Supreme Court are crowded largely by litigation related to public sector undertakings. It is therefore pertinent for the Law Commission before formulating the norms, to get detailed information on the situation as at present it exists. This letter raises queries of an urgent nature with a view to equipping the Law Commission of relevant material which would enter the formulation of norms.

Amongst public sector undertakings: (1) Life Insurance Corporation of India, (2) Employees State Insurance Corporation, (3) Commissioner for Enforcing and Implementing Employees Provident Funds Act, (4) General Insurance Corporation, (5) Steel Authority of India Ltd., (6) Oil and Natural Gas Commission, (7) Bharat Petroleum, and (8) Hindustan Petroleum, to name a few are leading Corporations.

Even among those set out above. LIC, GIC, ESI and PF have direct contact with large masses of citizens of this country for the reason that they are State monopolies. These are the bodies therefore, which should model public sector undertakings. Avoiding litigation is a primary norm of being an ideal public sector corporation. The trend it has to be reversed and the Law Commission is going to strive in that direction.

The Law Commission needs therefore your active and participatory corporation without which the Law Commission would be handicapped in formulating its norm though it would in no case escape its responsibility of doing it. The Law Commission needs information of a basic nature which can be supplied by you and you alone.

As you are aware the Law Commission has a tenure existence. It has a time bound programme. It cannot wait indefinitely. It must pursue its task expeditiously and relentlessly. Therefore before setting out the queries, this is a personal request to you to give top priority to this letter and to send the information by 17th January, 1988 by the latest.

The information that the Law Commission needs is an your records and therefore can be immediately and easily furnished.

Whenever the statute under which the body is created like LIC, it has power to repudiate the contract unilaterally. That is the starting point of litigation because the moment the claim is repudiated, the other party is forced to go to the courts for vindication of its rights. This is equally true of ESI Corporation, Commissioners for the Provident Fund, General Insurance Corporation and more or less all public sector undertakings.

Please therefore let us have information on queries set out hereunder:-

(a) Give the number of claims which were repudiated yearwise from 1980 onwards.

(b) On the repudiation being communicated, the number of suits filed by the party year to year.

(c) The stake involved in each case.

(d) The decision of the first or the court of original jurisdiction in each suit.

(e) If the decision was adverse to the corporation, in how many matters appeals were preferred.

(f) In how many matters second appeals were preferred.

(g) How many matters were taken to the Supreme Court of India.

(h) The total cost of litigation should be stated in relation to the state involved.

(i) The yearwise expenditure on establishment for legal advice maintained by the corporation including the number of personnel manning the corporation. Please state the percentage legal expense bears to total expenses of the Corporation, (j) Please state the number of cases in which the opinion of the legal department was overruled with a view to pursuing litigation. Also state the number of matters withdrawn when court showed its displeasure.

(k) Any other information correlated to any of the queries raised hereinabove. Your co-operation and urgent response will be highly appreciated.

Yours faithfully,

Sd./-
(D.A. Desai)