Day 7 – Q 3.Examine the existing mechanism for resolution of financial and commercial disputes in India.
3. Examine the existing mechanism for resolution of financial and commercial disputes in India.
भारत में वित्तीय और वाणिज्यिक विवादों के समाधान के लिए मौजूदा तंत्र की जांच करें।
In this question, keywords are, “examine” and “Existing”. In this question we have to enlist the “existing” mechanism for resolution of financial and commercial disputes in India and then examine them whether they are sufficient/ efficient or not. It is better to end answer with way forward here.
India is one of the biggest ‘improvers’ in the 2019 Ease of doing Business study, with its rank shooting up from 100 to 77, among 190 countries. One of the most important factors for doing business is Financial and commercial dispute redressal mechanisms.
Financial and commercial Dispute Redressal mechanisms in India:
- There has been multiplicity of the laws and authorities for dispute redressal in India. The present government’s ambitions of Make in India started consolidation and simplifications of these laws and authorities. Some of them are as follows.
- Primary authority to deal with disputes is local civil court.
- Insolvency and Bankruptcy Code: This has provided for time bound resolution of cases. National Companies Law Tribunal (NCLT) and Debt Recovery Tribunal are the authorities to deal with companies and individuals respectively.
- Commercial Courts: Lok Sabha Passed the Commercial Courts, Commercial Division, Commercial Appellate Division in High Courts Bill, 2015, for faster resolution of pending cases with specialisation.
- For further improvements amendment bill is being considered in parliament.
- For Financial resolutions, The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act) allows banks and other financial institution to auction residential or commercial properties to recover loans.
- For international dispute redressals, Singapore International Arbitration Centre entered the Indian space through the Gujarat International Finance Tech-city (GIFT), Gujarat.
India’s performance in dispute redressal is still poor
- Though India’s ranking in overall Ease of Doing Business improved, its score on Contract enforcement, resolving insolvency and registering property are serious causes of concern.
- India fares poorly, at rank 163, on enforcing contracts. While enforcing a claim through the courts in Mumbai takes 1,445 days and costs 31% of claim value, OECD nations manage this feat in 582 days at a cost of 21%.
- This poor performance is owing to the lack of trained personnel to tackle the complex issues involved in disputes of a commercial nature in addition to the delays in resolution, costs involved, lack of state level Arbitration/ Mediation Centres, lack of adoption of Dispute Resolution Rules etc.
- This has affected investments to the country and the operation of various companies in India or foreign companies having business relations in India.
- To push India further up on the ladder of doing business with ease, there is urgent need to resolve the issues in dispute redressal mechanisms.
(Note: These charts are for your understanding, in answer you can simply quote score/rank)
- The Government of India recently provided a strong push for Commercial Dispute Resolution by amending the Arbitration and Conciliation Act, 1996, to promote institutional international arbitration centres, rationalise fee for arbitrators, conduct of Arbitral proceedings, etc.
- India is committed for speedy resolution of commercial disputes and to make India an international hub of Arbitration and a Centre of robust ADR mechanism catering to international and domestic arbitration, at par with international standards available.
- To achieve this goal, central government appointed a committee under the chairmanship of Justice B.N.Srikrishna with mandate to review the institutionalization of arbitration mechanism.
Best Answer: Mugiwara