How much of the High Courts' pendency pertains to tax cases?

Legal reform debates and discussions need to be substantiated by a rigorous analysis that is supported by data. And the first step in that process is to ensure that related data and information is available for a meaningful analysis out. I look at tax litigation at the High Court as a case in point.

In 2003 a law was passed setting up the National Tax Tribunal (NTT) to replace the High Courts as an appellate body between the Income Tax Appellate Tribunals and the Supreme Court. Such tribunalisation is not rare – a number of tribunals set up under other laws exclude jurisdiction of other courts and allow appeals directly to the Supreme Court against their orders. The setting up of the NTT was challenged and was ultimately struck down by the Supreme Court as being unconstitutional – mainly on the grounds that the composition and appointment of the bench did not give it to the charactersitics of a court (Madras Bar Association vs Union of India).

While there are other interesting aspects of this judgement, in this post let us restrict ourselves to the data related aspects. Para 12 of the judgement reads thus:

“As regards arrears of tax related cases before High Courts is concerned, it was submitted, that the figures indicated by the Department were incorrect. In this behalf it was asserted, that the stance adopted at the behest of the Revenue, that there were about 80,000 cases pending in different courts, was untrue. It was the emphatic contention of the learned counsel for the petitioners, that as of October, 2003 (when the National Tax Tribunal Ordinance, was promulgated), the arrears were approximately 29,000. Of the total pendency, a substantial number was only before a few High Courts, including the High Court of Bombay and the High Court of Delhi. In the petition filed by the Madras Bar Association, it was asserted, that in the Madras High Court, the pending appeals under Section 260A of the Income Tax Act, were less than 2,000. It was also sought to be asserted, that the pendency of similar appeals in most southern States was even lesser. It was pointed out, that the pendency of such appeals in the High Court of Karnataka and the High Court of Kerala, was even lesser than 2,000.”

On reading this portion some questions that came to me were:

1)     How many tax related cases are pending at the High Courts currently?

2)     What percentage is it of the pendency at the High Courts?

3)     What proportion of the time of the High Courts are actually taken up for tax matters

The Daksh database currently has information relating to 10 of the 24 High Courts. Challenges in analysing data due to High Courts’ information system hurdles have been very well analysed here and here.  Within this framework I attempt to answer the questions with the help of information available in the Rule of Law database and compare with information already in the public domain.

1) How many tax cases are there?

The first port of call for this information is the Ministry of Finance’s annual reports. In its report for FY 2014-15 the numbers disclosed for Customs, Excise and Service Tax (page 133) cases are 15134. Income Tax Related cases are not disclosed in this years Annual Report but have been included in prior years reports. The number of income tax related cases for 2014 was 31844. That’s totally around 47000 cases.

From the Daksh database the number of tax related matters in the 10 High Courts that came up for hearing atleast once during the last 18 months comes to about 11000. A simple extrapolation of 11000 *  (24/10) gives us a 26500 cases. This extrapolation may not be appropriate as data with respect to Bombay High Court which reportedly has the maximum number of tax cases has not been considered. As the Daksh database coverage expands we will be able to validate the number of 47000 cases with greater accuracy. 

2) What percentage is it of the pendency at the High Courts?

The Supreme Court newsletter Court News puts the number of cases pending at the High Court as at March 2014 (page 7) to be 44.80 lacs. The total number of tax cases from the Finance Ministry’s Annual Report is around 47,000 as seen above. That means to say that tax matters make up just around 1% of the total workload of the High Courts!

This is also the proportion as per data from the Daksh database and looks to be reasonable.

A state-wise comparison of the same metric shows us that it is in the same range across the states:

Calcutta	1.83%
Delhi	2.30%
Gujarat	2.87%
Jharkhand	0.52%
Hyderabad	1.10%
Karnataka	0.97%
Kerala	0.65%

Note: Numbers above include VAT related matters

3)     What proportion of the time of the High Courts are actually taken up for tax matters

We really do not have enough information in the public domain currently to answer this question. In fact this metric is not available for the other types of cases – civil, criminal, writ petitions, etc.  A detailed time & motion study is required to be carried out for us to begin to understand how our judiciary functions.

Summary

As we have seen above tax related cases are not substantial in number at the High Court level. How was this area of litigation chosen for ‘reform’ ahead of other areas? Even granted that the number of cases alone do not drive prioritisation and that the value of tax under dispute should be considered, such a number should not be viewed in isolation. It needs to be compared with amount under litigation and social impact of cases piling up in other areas.

The capacity of the State to dispense justice is a limited resource. Any attempt to re-distributing this scarce resource should require a complete cost-benefit analysis for the society.

Towards a Report on the State of the Judiciary in India - Part II

In the initial stages of our work, we decided to work towards a comprehensive report on the state of the judiciary in India. For this we invited a range of lawyers, academics and experts in public policy for a consultation. This consultation took place in the DAKSH office on 11 July, 2015, between 10:00 a.m. and 3:30 p.m. This is the second of a two part blog post, containing a detailed summary of discussions of the consultation.

Prior to the consultation the participants were given a blueprint of the State of the Judiciary Report as envisaged by DAKSH. The report was divided into three sections: the first dealing with judicial administration and working, the second focusing on DAKSH’s data and how it would help us better understand the judiciary, and the third concentrating on access to justice in India. We asked the participants a set of questions that were grouped to correspond to these three chapters. In this post you will find a recap of the discussions revolving around the second and third set of questions.

Discussion:

2. Comparative Perspectives on Courts 

a) Why are some courts more efficient than others? 

b) Why is the frequency of hearings for some types of cases higher than for others? 

c) Why is there a great frequency of adjournments?

d) Why are judges (and lawyers) so accommodating towards repeated requests for adjournments? 

Arun Sri Kumar remarked that we need to be clear that the question ‘some courts more efficient than others?’. He felt that efficiency of courts is based on their jurisdiction, geographical location, the local laws, and the populations they serve. 

As the concept of judicial efficiency is nebulous, a number of participants felt that it could be better understood by comparing High Courts with other judicial institutions. The basic idea proposed was to compare statistics on average pendency and disposals rates, which are key indicators of efficiency. Ramapriya Gopalakrishnan suggested we choose specific courts such as fast-track courts or company tribunals while Alok Prasanna recommended we consider National Lok Adalats. Prof. V. Vijaykumar felt it would be worth looking into available statistics on alternate dispute resolution methods and out-of-court settlements, as these are also indicative of the confidence of the citizen in the courts.  Alok Prasanna also shared his idea for a budget-based analysis of judicial efficiency which would examine whether there is an alignment between the budget of each court and the number of cases filed before it and disposed by it. 

R. Sri Kumar emphasised that the efficiency of the judicial system is greatly hampered by corruption. He spoke of discrimination between the rich and for the poor when justice is involved, and how economic has often speeded up the judicial process. He felt that it was crucial for judicial discretion to be eliminated for some kinds of cases, such as criminal, where everyone’s need is the same. He suggested that some parameters, for what could constitute an ‘emergency case’ and would get precedence, be drawn up. 

Ashwin Mahesh picked from where R. Sri Kumar left off on the removal of discretion. He stressed that the ‘VIP’-ing of the system has to be eradicated and the principle of ‘first in, first out’ must be followed. If there are many cases of a certain type then they should all be decided in the order in which they are filed, without any jumping of the queue, like the recent Salman Khan and Jayalalithaa cases did.

There was also some discussion on the contribution of lawyers towards efficiency. Alok Prasanna theorised that a look at lawyers’ names in the database would show that a very small pool of lawyers is actually doing a majority of the work. This could result in them being pressed for time, which may be why they constantly seek adjournments. 

Deepika Murali also spoke on the point of lawyers bringing efficiency to the system. She suggested costs be imposed on lawyers who ask for multiple adjournments. On the point of multiple adjournments Prof. V. Vijaykumar explained about the system in place in some lower courts, where if more than three adjournments are sought in a case, that case gets highlighted and ‘locked’, and can only be reopened by a supervising High Court judge. He thought it was a good method to implement in the High Courts as well. 

There were several analyses suggested in order to review causes for pendency. Deepika Murali said that we should consider cases which are classified as interim orders or in which the main prayer is an interim order.  R. Sri Kumar proposed that we identify and analyse cases where judgment is reserved, but not passed, so as to review judicial delay. A possible analysis recommended by Prof. V. Vijaykumar was to examine if the same parties are filing multiple cases against each other by reviewing whether petitioner and respondent names match in different cases. 

3. Access to Justice 

a) What are the expectations of citizens from the judicial system? 

b) What is a fair amount of time and efficiency that a litigant can expect from the legal system in terms of dispute resolution? 

c) What are the barriers to accessing the justice system? 

d) How can we access information on the demographic and socio-economic profiles of litigants? 

As a key part of the section on access to justice, a survey of litigants is proposed to be conducted. Our intent is to gather reliable quantitative information from litigants in the Indian judicial system on their profiles, demand and ease of access, and use of the judicial system. We want to understand the geographical, infrastructure- and process-related challenges that litigants face. While collating data, we hope to answer questions about whether citizens are able to use the judicial system to effectively resolve their problems or disputes and what factors affect their use. 

The main take back from the discussion surrounding the above-mentioned set of questions was whether to extend the access to justice survey to both litigants and citizens or keep it focused on litigants. Several attendees suggested that the survey include citizens who are not currently litigating. Arun Sri Kumar suggested a citizen satisfaction survey, and comparing potential litigants’ expectations with current litigants’ expectations.  

The final set of questions concluded with lunch and followed with a short open floor session where general questions were answered.  Post lunch, the consultation drew to a close with a quick thanks to DAKSH from R. Sri Kumar, on behalf of all the participants for the interesting and insightful discussion.  

With this we come to the end of the two part blog post detailing the discussion at our consultation. We look forward to hearing your comments and feedback. 

Towards a Report on the State of the Judiciary in India - Part I

In the initial stages of our work, we decided to work towards a comprehensive report on the state of the judiciary in India. For this we invited a range of lawyers, academics and experts in public policy for a consultation. This consultation took place in the DAKSH office on 11 July, 2015, between 10:00 a.m. and 3:30 p.m. This is the first of a two part blog post, containing a detailed summary of discussions of the consultation.

The following were the participants:

Alok Prasanna – Senior Research Fellow, Vidhi Centre for Legal Policy, New Delhi

Arun Sri Kumar – Partner, Keystone Partners, Bangalore

Ashwin Mahesh – Co-founder, Centre for Public Problem Solving, Bangalore

Bobby Kunhu – Human Rights Lawyer, Salem

Deepika Murali – Advocate, DM Law Chamber, Chennai

Naren Thappeta – Founder, Law Firm of Naren Thappeta, Bangalore

Ramapriya Gopalakrishnan – Advocate at Madras High Court, Chennai

R. Sri Kumar – Chairman, Indian Centre for Social Transformation, Bangalore

V. Vijaykumar – Professor of Law, National Law School of India University, Bangalore

The DAKSH team members present were Harish Narasappa, Kishore Mandyam, Kavya Murthy, Ramya Tirumalai, Shruti Vidyasagar, and Chandan Gowda.

Harish Narasappa started the session with a brief introduction of the Rule of Law Project and the idea of the State of the Judiciary Report. Kishore Mandyam made a presentation explaining the data that DAKSH has collected.[1]

Prior to the consultation the participants were given a blueprint of the State of the Judiciary Report as envisaged by DAKSH. The report was divided into three sections: the first dealing with judicial administration and working, the second focusing on DAKSH’s data and how it would help us better understand the judiciary, and the third concentrating on access to justice in India. We asked the participants a set of questions that were grouped to correspond to these three chapters. In this post you will find a recap of the discussions revolving around the first set of questions.

Discussion:

1. Judicial Administration

a) Who manages the judicial system?

b) What measures of accountability exist in judicial administration?

c) How can existing systems be improved?

d) What data points can we obtain for studying this?

The attendees made suggestions on how to improve accountability measures and what data points we could consider in this regard.  

On judicial administration, the first point the discussion touched upon was the constant leadership and portfolio changes that each High Court and High Court judge respectively were subjected to. Several participants felt these regular changes are a chief contributor to inefficiency. Alok Prasanna suggested that we review the average tenure of the chief justice of each High Court: this would allow us to examine whether continuous change in leadership of the court could be responsible for weak administrative systems, which are altered frequently as different systems are set in place by each chief justice.[2] He mentioned that there are committees of judges formed in each High Court to deal with data management, which release reports of their working. He recommended that we study these as a secondary source of data to understand the administrative workings of each High Court.

Ramapriya Gopalakrishnan concurred with Alok Prasanna on his point about constant movement and reshuffling in the High Courts. She mentioned that analysing portfolio allocation of High Court judges as per the weekly causelist would be useful, since it affects judicial output and efficiency, especially if there is constant change in portfolios or a judge is allocated a portfolio he/she is not familiar with. She said the duration of portfolios, number of subjects each judge deals with, and number of judges dealing with multiple portfolios at once were data points worth examining in detail.

A second key point that emerged from the conversation on judicial administration was the need to acknowledge the distinction between judicial powers and administrative powers of the judiciary. Arun Sri Kumar said that administrative processes need to be removed from judicial control, and it should be made clear that doing this does not impinge on judicial independence. On data points we could use, he suggested that we review the work of lower court judges and the number of ‘mind hours’[3] judges in each court spend on administrative tasks. The data collected could be used to suggest the creation of a purely administrative role, which would in turn significantly increase capacity and efficiency. Alok Prasanna mentioned the courts and tribunal services in the United Kingdom as a good example of separation of administrative and judicial functions, to which we could refer while suggesting reform.

Naren Thappeta opined that the judiciary should be viewed as a service organisation, as this would increase its transparency, accountability, and accessibility to the ordinary citizen.[4] He said that the judiciary should be asked to, and should, put out all the information that any other service organisation would. Prof. V. Vijaykumar however disagreed with Naren Thappeta on this point, as he felt that that the judiciary would refuse to view itself as a service organisation.

Ashwin Mahesh suggested that we need to examine the role of lawyers in the management of the judicial system. He felt that merely looking towards the judiciary was insufficient, as a large part of delay could be attributed to lawyers’ behaviour (for example, seeking several unnecessary adjournments). He also stressed on the advocacy element, and felt that making a prioritised list of administrative issues that need to be sorted out would be a good start.

Bobby Kunhu proposed that we examine the budget and demand for grants by each High Court. Also, in relation with the theme of accountability and transparency, he felt that the post-retirement appointments of Supreme Court judges were worth looking into.

Ramapriya Gopalakrishnan raised the issue of filling vacancies in the lower courts. The statistics on vacancies are available in Supreme Court news bulletins and would illustrate if the system is severely understaffed and thus inefficient. Arun Sri Kumar offered an interesting perspective on representation of vacancies: suggesting that we represent vacancies as lost judicial days and hours. The judicial hours worked could be calculated on the basis of the number of benches sitting.

Ramapriya Gopalakrishnan also opined that monthly reports submitted by lower courts to the High Courts, which contain details of disposal rates, would be a good resource to collect, so that DAKSH data could be verified.

The role of citizens and litigants in the judicial system was also discussed. The group said that the better informed citizens are of judicial process, the more effectively they would use the system. The participants came up with some ideas for tools and studies that could be put together to improve citizen understanding. Ashwin Mahesh recommended that DAKSH create a map of the courts and tribunals based on their jurisdiction. This would be a tool that citizens could use to identify the most suitable forum for their disputes, thus avoiding filing cases in courts or tribunals without requisite jurisdiction. Prof. V. Vijaykumar highlighted the need to create a set of criteria for admission of cases and point out to the judiciary the need to impose adequate costs for failure to conform. Application of both in tandem would result in immediate disposal of frivolous cases. A study of orders would strengthen this point: the number of cases dismissed on these grounds would illustrate to the judiciary the need to tighten the rope on frivolous cases. R. Sri Kumar suggested that we make a list/table of the absolute minimum data that each High Court needs to make available.

Prof. V. Vijaykumar suggested that we speak to state judicial academies about presenting our database and findings to judges, since they were unlikely to have seen this kind of information, and it would give them insights on how to change their processes.

This brings us to the end of the conversation revolving around the first set of questions.We will be back with the second part of the summary of discussions next week. 

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[1] Additional details are available on our website.
[2] This point was reiterated by Arun Sri Kumar.
[3] ‘Mind hours’ for a court can be computed by calculating the number of judges in a particular court and multiplying it by the average number of hours that they sit per day and the number of days the judges sit in court in a year.
[4] This point was reiterated by Ashwin Mahesh.