 "How the cookie crumbles")
About 60 per cent of cases pending in the courts involve the government and several appeals by the revenue authorities are outdated and frivolous. There has been a late realisation about this problem and circulars have been issued, like the one by the Central Board of Direct Taxes in December, fixing threshold limits for filing appeals (Rs 10 lakh for tribunals). The Central Board of Excise and Customs is also culling its files.
A look at recent judgments delivered by the Supreme Court would show that a large number of appeals has/have arisen from assessment years 20 years old. The assessee might have died or the companies are with the official liquidator.
In one recent case, Shabina Abraham vs Commissioner of Central Excise, a show cause notice was sent in 1987 for duty and penalty. The trader in rubber died in 1989. However, the authorities pursued their demand against the widow and four daughters. The appeals found their way up to the apex court, which ruled recently that assessment against a dead person is impermissible and the Kerala high court ruling against the widow "flies in the face of first principles."
In another case, the show cause notice was issued in 1998 and by the time the litigation reached the Supreme Court, the company (Brimco Plastic') was in the hands of the official liquidator. The appeal of the commissioner of Central Excise was lying for eight years in the Supreme Court itself and it was dismissed in a two-page order recently with the remark that the "obvious conclusion on reading of Section 4 of the Central Excise Act" was that the demand was illegal. Then why so many years to reach that final conclusion?- one might wonder.
A ship carrying diving equipment entered the Sikka port and left for Abu Dhabi in 1998, leaving a cargo of litigation in India, up to the Supreme Court. The bundle of assumed issues was lying in the Supreme Court for eight years until now, when it declared in a short order that the show cause notice to the shipping company was "uncalled for" (Commissioner of Customs vs Arcadia Shipping Ltd). These two cases and their likes only served the purpose of adding the litigation bill of the parties, taking advantage of the dysfunctional court.
It is often the case that while the appeals are moving up the judicial ladder, starting from the sectoral tribunal, the law itself might have changed and Finance Acts might have tweaked the provisions concerned. In the case of Purolator India Ltd vs CCE, the valuation prior to 1973 amendment and yet another amendment in the year 2000 had some impact on the case. Though litigation started with a show cause notice in 2002, the Supreme Court has not answered the questions fully. Lawyers for both parties asked for an 'open-ended' remand to the tribunal. The term is a tricky one coined by the legal profession, so the court itself explained that "open-ended means one, namely, that both parties should be free to argue afresh on all points." Another generation of judges are bound to see the case coming back to the court, brought by 4G lawyers.
Even if the corporate litigants lose faith in the system and try the alternative disputes resolution mechanisms like mediation, conciliation and arbitration, the situation still would wet their eyes. The Reliance case for appointment of arbitrator in the KG Basin dispute is still mired in myriad issues for the past three years in the Supreme Court. The arbitrators have changed amid controversies, ONGC has objected to arbitration itself and the amendment to the Arbitration and Conciliation Act has altered the role of the Chief Justice of India. The 'open-ended' adjournments continue.
Business family settlements, which fail, try the arbitration route and get stuck in Dickensian deadlocks, like the case of Rajni Sanghi vs Western Indian State Motors Ltd. The family patriarch died in 1961, and the heirs were engaged in a bitter legal battle. Arbitration started in 1984 and three high courts were involved even after that. It was only three months ago that the Supreme Court hopefully put an end to the disputes, with a caveat -if any party failed to comply with the arrangements, "the aggrieved party will be free to initiate appropriate proceedings".
The situation has become so bad that for years lawyers have been seeking only an interim order from courts like a stay or status quo. Trade mark and patent suits are typical examples. Ads and designs on products change so fast that the victims run to the court for an injunction, and before it obtains an order the hit-and-run company has already achieved the target. Courts can follow the tracks and interpret law leisurely after years. The final judgment will carry only archival value, to be quoted in more cases or included in law school text books.
