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Report No. 162

3.14. Attempts of reforms relevant to our study made in the past in India.-

On parity with the theme of the Report of JUSTICE on the need to prevent grievance (quoted under para. 3.4, supra), the Law Commission has also recommended for framing litigation policy in this regard. 126th report on Government and Public Sector Undertaking-Litigation Policies and strategies of Law Commission recommends, inter alia, as follows:

"4.13. Assuming that litigation as a whole is unavoidable, an alternative method for resolution of dispute has to be found. An alternative method could be of a standing committee representing the employers, employees and the organisation to which every case can be taken wherever the dispute arises and the result of it must be binding. Today most of the countries are in search of non-court forums for resolution of disputes.

It is therefore necessary for such an organisation, which is devoting itself to expanding social justice benefits to the employees working in industries, to organise such a forum for resolution of disputes and which must as well as satisfy the employers. The organisation is triangular in character and all the affected interests must have confidence in a forum for resolution of disputes arising amongst them. The Law Commission would certainly devise such a forum for their consideration."

"5.19. It would, therefore, be idle parade of familiar knowledge to advance all those supporting reasons for setting up various Tribunals. However, let it not be forgotten that the approach paper relevant to the present report invited suggestions not for setting up different forum to the exclusion of courts for resolution of disputes involving public sector undertakings/ Government.

In fact, the search is for litigation policy and strategy to be followed by public sector undertakings and Government, with a view to, as far as possible, avoiding litigation or resort to courts and to devise a machinery to settle the disputes amongst contending parties. That cannot be ascertained with certainty by recommending tribunals involving litigation by or against public sector undertakings as well as Government."

"7.5. The Law Commission has come to note that the Government has resolved to set up a Directorate in the Cabinet Secretariat itself to strengthen the machinery for redressal of public grievances. Presumably, an official in the rank of a Secretary to the Government of India would head the Directorate. In the first instance, the new Directorate would deal with grievances relating to railways, posts and tele-communications and banking if the concerned Department has turned deaf ear to the complainant.

The details are yet to be worked out but the format appears to be of a three-tier set up: one in the Department itself, a monitoring cell and a Directorate at the level of Cabinet Secretary. The experiment may be evaluated when it is made fully operational. For the present, the Law Commission can only take note of the wholesome attempt in this behalf. What would be required would be a total and radical change in the attitude towards those coming forward with grievances.

Experience shows that generally one who can set right the grievance turns deaf ear to the complainant and he is not subject to any social audit. In the absence of social audit, the doctrine of accountability suffers and wide yawning chasm develops between the maker of the grievance and the one who has power to redress the same. While suggesting effective measures, this aspect will have to be kept in central focus."

"8.6. Therefore, the first thing that is required to be done is that the Government of India must issue a compulsory directive binding on public sector undertakings that in the event of a dispute between any one or more public sector undertakings or between two or more public sector undertakings on one hand and Government on the other, the parties shall refer the dispute to arbitration. It shall be presumed by a legal device, if the parties to a dispute are two or more public sector undertakings or public sector undertakings on one hand and Government on the other, excluding the tax authorities, that a valid arbitration agreement subsists.

8.7. In order to provide teeth and effectiveness to this suggestion, the Government of India should set up an arbitration panel composed of retired Supreme Court Judges and High Court Judges from which the parties can agree to the selection of one or more arbitrators and failing agreement, the appointment will be made by the Minister of Law from the panel.

There must be a fairly good number of panelists so that the work can be distributed amongst them. The fees to be paid to the panelists shall be fixed by executive order in advance and those who agree to accept the fees so prescribed may be empanelled. There is no dearth of retired Supreme Court and High Court Judges willing to put to constructive use their experience and expertise for the national good.

8.8 If necessary, an amendment to the Arbitration Act, 1940 should be made which would empower the court before which any public sector undertaking has initiated litigation without resorting to arbitration to compel the undertaking to go to arbitrAn and not merely stay the suit but dismiss the same.

8.9 The award of the arbitrator shall be final and unless the Minister of Law permits the challenge of the award on a valid and rational ground, the same shall not be challengeable before any court.

8.10 In the matter of tax disputes between public sector undertaking on one hand and taxing authorities on the other, ordinarily the dispute would arise before an Income-tax Officer or Inspecting Assistant Commissioner or a Commissioner of Income-tax or the lowest grade tax officer functioning under statutes levying indirect taxes. So far, the law should be allowed to take its own course.

Once the Commissioner decides the dispute, the aggrieved undertaking may approach the nodal Ministry under which it is functioning seeking permission whether the matter should be litigated further at all. If need be, an opinion from one of the panelists in the arbitration panel may be obtained and that should become binding. If, however, the recommendation of the Law Commission for setting up Tax Courts is accepted and implemented, the matter, may be litigated up to the Central Tax Court and must end there.

8.11 Dealing with the disputes between the public sector undertaking and its employees, every public sector undertaking must set up a Grievance Cell composed of management and workmen's representatives not exceeding three on either side and presided over by a retired Judge who has functioned as a Judge of the Supreme Court or High Court or Chairman of the Industrial Court/Tribunal. Every dispute involving individual employee must be brought, if need be by amending the standing orders or service rules, before the Grievance Cell.

The decision of the Grievance Cell shall be binding. If the dispute involves more than one employee but not all the employees of the undertaking, same procedure has to be followed. Even the disputes as to seniority, promotion and allied issues must be brought before this Cell. Promotion has long since ceased to be a management function. Therefore, the Grievance Cell would be competent to deal with the same. In the first instance, the promotion may be decided by the management but the dispute arising out of promotions granted or refused may be brought before the Grievance Cell.

The decisions of the Grievance Cell will be binding and if any one, despite this arrangement and effective implementation, takes the matter to the court, the court must decline to entertain the dispute."

"8.20. Turning to the complaints by the employees of the Government of India vis-a-vis the departmental bosses, the procedure indicated in para. 8.11 must be effectively followed. Effective Grievance Cell should be set up which must remain active and must be in a position to dispose of the problems raised by the staff, Where a point of legal formulation without a precedent is involved and if the Grievance Cell is unable to deal with that point effectively, the concerned Department and the employees involved in the dispute must agree to abide by the opinion of a member of the panel of arbitrators to whom a reference on a point of law be made and his opinion invited. The disputes must be disposed of in consonance with his opinion.

8.21 It is equally necessary in the larger national interest of reducing litigation and curbing litigative culture that a central body should be devised for having a continuous overview of the different bodies recommended herein. The role of this central body would be of a co-ordinating nature, of devising ways and means of reducing inter se litigations between Union and States, between States and States, between public sector undertakings inter se, between public sector undertakings and taxing authorities, and lastly between Government and public sector undertakings on one hand and citizens on the other.

This needs planning, strategy and effective implementation of policy decisions. It must be a body which can effectively curb the tendency to rush to the court or to rush to higher courts by preferring appeals. In fact, this body can effectively lay down ground rules which, when effectively followed, would make a direct dent on litigious tendencies. Such a body can be appropriately described a Federal Legal Cell composed of retired Judges, retired law officers, both Central and State, and senior executives who have worked in public sector undertakings.

The function and duties of the Federal Legal Cell can be extensively drawn up centering round policy and strategy planning with a view to reducing frequent resort to litigation. It can also work as a courier between the Executive and the Judiciary. The link till today is missing and is responsible for many ills which are otherwise curable. The Government of India should set up such Federal Legal Cells with appropriate terms of reference.

8.22. Therefore, like the Public Accounts Committee, there should be a Parliamentary Committee on Litigation with power to inquire into every litigation taken by or on behalf of the Government to question the correctness of the decision with a view to pointing out that care should be taken in future not to resort to such litigation.

Parliamentary Committee can every year seek detailed information on expenses incurred on litigation by Government, public sector undertakings, and Departments and instrumentalities of the Government, and take upon itself the inquisition of any particular litigation which was avoidable and yet resorted to. It can inquire whether appeals are merely being preferred for extraneous and irrelevant considerations. This will introduce sufficient accountability of the officers in whom the decision-making power for initiating and continuing litigation vests. The composition of the Committee must be a matter of concern of the Parliament itself."

3.15. In the 131st Report on the Role of Legal Profession in Administration of Justice, the Law Commission recommended, inter-alia, as follows.-

"3.15. Another tendency which has become very recently visible, especially where pleadings are drawn up for Mofussil Courts, is to raise all and sundry, frivolous and untenable points of facts and law....

3.16. For a positive check, while deciding the cost quantum to be awarded one way or the other, the presiding judge must also certify whether untenable and frivolous defences were raised, necessitating framing of the issues on which parties were at variance and the time spent in recording decisions on them. If the presiding Judge is satisfied that such frivolous and totally untenable defences with regard to facts and law were raised, the same must enter the verdict and quantify the costs to be awarded."

3.16. The Law Commission in its 79th report on Delay and Arrears in High Courts and other Appellate Courts recommended, inter-alia, as follows:-

"16.17. Grouping of writ petitions.-While dealing with civil appeals we have pointed out the necessity of grouping of appeals involving the same question of law. This is all the more important and necessary in the case of writ petitions. Very often, a number of writ petitions are filed in respect of the orders of administrative tribunals, involving not only the same point of law, but also the same or similar facts. The grouping of all such petitions by the Registry will very much help in the quick and satisfactory disposal of these cases."

"17.12. Conflicting views unavoidable.-It is, no doubt, true that the disposal of references by the various High Courts sometimes results in different and conflicting views. This is in the very nature of things and cannot be helped. It, however, needs to be mentioned that as stated elsewhere, the Appellate Tribunal is empowered to make a reference direct to the Supreme Court of a question of law, if the Tribunal is of the opinion that, on account of a conflict in the decisions of High Courts in respect of any particular question of law, it is expedient that a reference should be made direct to the Supreme Court.

17.13. Substitution of Appeal for Reference.-A view has also been expressed that the present procedure of the Appellate Tribunal making a reference to the High Court should be done away with, and, instead of that, an appeal should lie to the High Court against the order of the Tribunal on a question of law or a substantial question of law. The position, as already noted is that an appeal lies from the Income-tax Authority concerned to the Appellate Tribunal on a question of fact as well as law.

The finding of the Appellate Tribunal on a question of fact is final. In case, however, the assessee or the department feels aggrieved with regard to the finding of the Appellate Tribunal on a question of law, it can file an application to the Appellate Tribunal under section 256(1) of the Income-tax Act, 1961, within the prescribed time, for a reference to the High Court on the question of law arising out of the order of the Tribunal. If the Appellate Tribunal finds, after issuing notice to the opposite party, that a question of law arises out of its order, it draws up a statement of case and refers to the High Court the formulated question of law.

If the Appellate Tribunal declines to make a reference to the High Court, it is open to the aggrieved person to apply to the High Court under sub-section (2) of section 256 of the Income-tax Act for an order directing the Appellate Tribunal to make a reference to the High Court regarding the question of law about which the Tribunal had declined to accede to the prayer of the applicant. The High Court in such application can, after-hearing both the parties, make an order if the circumstances of the case so warrant, directing the Appellate Tribunal to refer the question of law to the High Court. In pursuance of the order of the High Court the Appellate Tribunal draws up a statement of case and refers the formulated question to the High Court.

17.14 Advantage of appeal.-The advantage of doing away with the reference, and substituting in its place a right of appeal, is that the time spent before the Appellate Tribunal in proceedings for referring the question of law to the High Court would be saved. It would also obviate the necessity of filing applications under sub-section (2) of section 256 of the Income-tax Act in those cases in which the Appellate Tribunal has declined to make a reference about a question of law to the High Court."

"17.18 Direct reference to Supreme Court by the Appellate Tribunal.-It may also be mentioned that if on an application made under section 256, the Appellate Tribunal is of the opinion that on account of a conflict in the decisions of the High Courts in respect of any particular question of law, it is expedient that a reference should be made direct to the Supreme Court, the Appellate Tribunal may draw up a statement of the case and refer it through its President direct to the Supreme Court.

17.19 No further comments.-Since the matter about the substitution of appeal in place of reference against the order of the Tribunal has already been dealt with by the High Court Arrears Committee and the Law Commission in its 58th Report, sent in 1974, we do not propose to say anything further in the matter."

The Fifteenth Law Commission does not wish to pursue the idea of providing for appeal in the place of reference, at this juncture.

3.17. In order to attain uniformity in decisions of higher courts, the Law Commission in its 136 report on Conflicts in High Court Decisions on Central Laws - How to foreclose and how to Resolve, recommended, inter-alia, as follows:-



Review of functioning of Central Administrative Tribunal - Customs, Excise and Gold (Control) Appellate Tribunal and Income-Tax Appellate Tribunal Back




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