tag:blogger.com,1999:blog-196492742024-03-18T13:19:17.735+05:30The Leap BlogLaw | Economics | PolicyAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger2075125tag:blogger.com,1999:blog-19649274.post-58242123035076815062024-02-27T23:48:00.001+05:302024-02-28T11:57:18.088+05:30Author: Charmi Mehta<div>
Charmi Mehta is a Researcher at XKDR Forum, Mumbai.
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On this blog:
<ul>
<li> <a href="https://blog.theleapjournal.org/2024/02/the-electricity-chokepoint-in-tamil.html#gsc.tab=0"><i>The electricity chokepoint in Tamil Nadu public finance</i></a>, 26 February 2024.</li>
<li> <a href="https://blog.theleapjournal.org/2024/01/offshore-wind-in-tamil-nadu-from.html#gsc.tab=0"><i>Offshore wind in Tamil Nadu: from potential to reality</i></a>, 13 January 2024.</li>
<li> <a href="https://blog.theleapjournal.org/2024/01/the-difficulties-of-asset-monetisation.html#gsc.tab=0"><i>The difficulties of asset monetisation in the transmission sector</i></a>, 9 January 2024.</li>
<li> <a href="https://blog.theleapjournal.org/2022/07/identifying-roadblocks-in-highway.html#gsc.tab=0"><i>Identifying roadblocks in highway contracting: lessons from NHAI litigation</i></a>, 13 July 2022.</li>
<li><a href="https://blog.theleapjournal.org/2022/03/how-competitive-is-bidding-in.html#gsc.tab=0"><i>How competitive is bidding in infrastructure public procurement? A study of road and water projects in five Indian states</i></a>, 29 March 2022.</li>
<li> <a href="https://blog.theleapjournal.org/2021/11/lessons-from-covid-19-vaccine.html#gsc.tab=0"><i>Lessons from the COVID-19 vaccine procurement of 2021</i></a>, 15 November 2021.</li>
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</div>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-18902061367870806652024-02-26T13:04:00.008+05:302024-02-27T23:52:15.847+05:30The electricity chokepoint in Tamil Nadu public finance<p> <a href="https://blog.theleapjournal.org/2024/02/author-charmi-mehta.html#gsc.tab=0">Charmi Mehta</a>, <a href="https://blog.theleapjournal.org/2016/03/author-radhika-pandey.html">Radhika Pandey</a>, <a href="https://blog.theleapjournal.org/2014/10/author-renuka-sane.html">Renuka Sane</a> and Ajay Shah </p>
<p> Each state in India can be visualised as an entity in itself. Vast magnitudes of finance will be needed to put the states on an energy transition pathway. While this pathway will be different for every state, the electricity sector is likely to be the recipient of much of these funds. The <i> investibility </i> of the electricity sector is thus an important field of study. </p>
<p>Many states in India face fiscal distress and many states in India have difficulties in the electricity system. In a new paper, <a href="https://www.xkdr.org/paper/the-electricity-chokepoint-in-tamil-nadu-public-finance"><i>'The electricity chokepoint in Tamil Nadu public finance'</i></a>, we bring the two streams of knowledge together for the state of Tamil Nadu, and offer fresh insights for fiscal policy and for electricity policy.</p>
<p> The formal toolkit of a `debt sustainability analysis' (DSA) is brought to the standard Tamil Nadu fiscal data. This involves a first stage of comparing a group of fiscal indicators against normative benchmarks, and a second stage of forecasting the debt/GSDP ratio and the interest payments to revenue receipts ratio (IP/RR ratio) for five years; till FY 2028. These results, which we term the `baseline DSA' translate the mainstream intuition towards Tamil Nadu's fiscal difficulties into tangible numbers and forecasts.</p>
<p>A consolidated financial picture is drawn by integrating the two electricity sector utilities -- TANGEDCO and TANTRANSCO -- fused into the Government of Tamil Nadu debt stock. This yields a modified DSA that we term a `Corrected DSA'. This is done to acknowledge the implicit guarantee that state governments hold towards the debt of state-owned entities. This modified picture is thus a truer depiction of the fiscal problems of the state.</p>
<p>The fact that large debt servicing expenditures were successfully achieved for the last decade has helped create a confidence that the fiscal strategy of Tamil Nadu is deplorable but feasible. Of essence in the fiscal outlook of every highly indebted entity is the problem of sustainability. There are three concerns: </p>
<ol>
<li> Sustained large scale borrowing, from the financial system, may potentially face difficulties through the risk appetite of lenders, changes in regulations, systemic crises in the financial system, etc.</li>
<li> The most important assumptions that shape the results of this paper are the nominal interest rate ($r$), estimated at 7%, and nominal GSDP growth rate ($g$), estimated at 9%. This has a $r-g$ of -2: it is a very positive environment from the viewpoint of fundamental fiscal dynamics. In the future, if $r-g$ becomes less benign, the debt dynamics could change significantly.</li>
<li> The conventional notion of fiscal stress is phrased in terms of bond default. In India, fiscal distress is known to manifest itself as unplanned budget cuts (that disrupt the working of the government), defaults on payments to private firms, and even the deferrals salaries or pensions. We look back upon three instances when state governments faced high fiscal stress in 2001, and find that the present projections for Tamil Nadu for FY 2028 are partially similar to these values.</li>
</ol>
<p><i>The fiscal knowledge of this paper has implications for electricity policy.</i> The electricity system requires two large blocks of investment. A big block of capital is required to rebuild the grid for the post-carbon world. And, a big block of capital is required for the investment in renewables and storage that are required to sustain economic growth in the post-carbon world. Of particular importance is the economic upside from exploiting that remarkable natural resource which is found off the coast of Tamil Nadu in the form of offshore wind generation. These investments will not arise in the environment of chronic fiscal stress in the electricity system. </p>
<p><i>The electricity knowledge of this paper has implications for fiscal policy.</i> Through simulations where electricity subsidies remain constant or they are completely eliminated, we find that the electricity system is material in solving the fiscal problem. Thus, we extract the electricity subsidy problem from the sector, and place upfront its impact on the public finance parameters and the development trajectory of the state. A complete electricity sector reform versus business-as-usual translates into an FY 2028 outcome for the debt/GSDP ratio of 32.47% vs. 43.53%, and an IP/RR ratio outcome of 19.71% vs. 26.12%. These are large differences. They encourage us to prioritise electricity sector reform as a part of the medium-term fiscal strategy.</p>
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<p>Charmi Mehta and Ajay Shah are researchers at XKDR Forum. Radhika Pandey is a researcher at NIPFP. Renuka Sane is a researcher at Trustbridge.</p>xhttp://www.blogger.com/profile/14462096253602478048noreply@blogger.com1tag:blogger.com,1999:blog-19649274.post-74509171185184483702024-02-24T13:09:00.001+05:302024-02-27T23:23:47.852+05:30The consequences of criminalising cheque bouncing<p>by <a href="https://blog.theleapjournal.org/2011/02/author-shubho-roy.html">Shubho Roy</a> and Ajay Shah</p>
<p>Many countries (e.g. New Zealand, Poland, Germany, Norway) have discontinued paper cheques. In other countries (e.g. the U.K., the U.S.), the use of cheques is declining. But in India, the use of paper cheques in India has stabilised in terms of value and number over the last five years. This is despite the extent to which digital and instantaneous payments are now feasible. Why might this be the case?</p>
<p>Prior to 1988, cheques were primarily used as a tool of payment. In that age, there were delays in clearing. Paper cheques had to be transported to the bank branch where the cheque issuer had an account. In that branch, the issuer's signature would be verified against a sample. If the signatures matched, the balance would be cleared (assuming the issuer had adequate funds). This process took seven working days, even when the issuer and recipient had banks in the same city. If the parties were in different cities, the process would take 15 working days, on average.</p>
<p>Today, a cheque issuer can send a secure document showing that the issuer's bank account has adequate funds to honour the cheque. However, in 1988, there was no such system, and the cheque recipient faced the risk that the issuer was writing a cheque that her account could not honour. </p>
<p>Some technical mistakes can always happen, where a person fails to anticipate the date on which funds are required and there are unpredictable delays in the money moving in and out of the account. Alongside this, many unscrupulous people knowingly wrote bad cheques. This made sellers mistrust cheques and prefer cash. While cash as a payment mechanism has the virtues of instantaneity and privacy, it comes with difficulties on physical security.</p>
<h3>The 1988 change of the law</h3>
<p>In this setting, the Parliament criminalised the bouncing of cheques in 1988. Now, the cheque writer could be sent to jail if the cheque did not clear. The law also stated that every cheque is <i>presumed</i> to be written to clear a debt. This change helped the recipient of cheques because the recipients did not have to prove any underlying transaction. The recipient only had to demonstrate that the cheque was not honoured.</p>
<p>In 2016, the Supreme Court ratified the practice of using cheques as collateral in the case of <i>Sampelly Satyanarayana Rao v Indian Renewable Energy Development Agency Limited</i>. Sampelly Satyanarana Rao (Mr. Rao) had written post-dated cheques as security for a loan from the Indian Renewable Energy Development Agency (IREDA). Mr. Rao did not take the loan personally but wrote the cheques as a director in the company that borrowed the money. The borrower company failed to pay the instalments when they became due. In response, IREDA (the creditor) initiated criminal proceedings against Mr. Rao under the 1988 law. Mr. Rao defended the claim by stating that the cheques were written before the creditor (IRDEA) disbursed the loan amount. IREDA pointed out that the cheques were deposited after the borrower (the company) had failed to pay the instalments, and therefore, the penal provisions of the 1988 Act applied. The Supreme Court agreed with the creditor and allowed for the criminal prosecution of Mr. Rao. This judgement provides legal certainty to the use of post-dated cheques as security. This date, i.e. 2016, is an important milestone in the journey, over and beyond the amendment of the N. I. Act in 1988.</p>
<h3>The role of cheques in India today</h3>
<p>The threat of imprisonment restored some faith in cheques. Anecdotally, it seems to have worked well in the initial years after the amendment. Cheques became more acceptable in commercial transactions and helped reduce frictions in economic activity. Many a cheque recipient was willing to take the risk of delivering goods without waiting one or two weeks for a cheque to clear.</p>
<p>These considerations do not exist in the present landscape. Instantaneous payment systems are ubiquitous in India, ranging from small value payments to the largest amounts possible. Any problem of trust between buyers and sellers can be readily solved by resorting to NEFT or RTGS. By this reasoning, the number of cheques written in India should have declined sharply. It has not.</p>
<h3>People responded to incentives</h3>
<p>Alongide this, the rest of the Indian legal system which enforces contracts works poorly. Ordinarily, a loan dispute would be resolved as a contract dispute through civil law, and, in some cases, bankruptcy law may be involved in situations where the debtor is insolvent. In 2020, in enforcing contracts, India ranked 163 out of 190 countries, while its overall rank was 63 (a difference of 100 ranks). India's rank in resolving insolvency was 52. Hence, creditors are unconfident about ordinary credit enforcement mechanisms.</p>
<p>One strand of credit enforcement systems is seizing assets that are pledged as collateral. This tends to work poorly in India. While the SARFAESI Act of 2002 is reasonably effective in getting collateral into the hands of the lender, many assets are hard to sell. Many land titles have encumbrances, and the land market works poorly, which hinders the recovery rate.</p>
<p>These weaknesses of the ordinary (civil) credit enforcement systems made criminal proceedings under S.138 attractive to creditors. Under S.138, a debtor faces up to two years of imprisonment if the debtor is convicted. In reality, the creditor does not even have to wait for the end of the litigation to get the debtor imprisoned. The debtor can be arrested at the beginning of the litigation so that the debtor can be produced before the court. In some cases, the debtor can also be imprisoned for the duration of trial under S.138. In contrast, a civil case proceeds without the debtor, if the debtor chooses not to appear. Most people will pay up to avoid being imprisoned, which gives heart to creditors.</p>
<p>When faced with legal difficulties around land title, it is better for the creditor to threaten imprisonment, and have the borrower solve the problem of selling the land, instead of seizing collateral and then facing legal difficulties in liquidating them.</p>
<p>As a consequence, after the new law was established in 1988, creditors started using cheques as a security. Creditors frequently demand that the debtor provide post-dated cheques for loan amounts. These cheques are payable deep into the future -- sometimes extending to multiple years. In such cases, both parties are aware that the cheque drawer does not have the money in the bank account at the point in time when the cheque was signed. Creditors sometimes demand a separate cheque for each instalment of loan repayment. Consequently, a debtor for a five-year loan may write 60 post-dated cheques. On a similar note, landlords sometimes asked for post-dated cheques for the payment of rent at multiple time points in the future.</p>
<p>Modern economies do not have a debtors prison: the choice of filing for bankruptcy is always there, in which case the creditor gets a low recovery rate. On one hand, in India, there is no legal framework for personal bankruptcy. When threatened with jail time, the borrower may reach into her web of relationships, and borrow from the community. This increases the resources available to the lender.</p>
<h3>Weighing the pros and cons</h3>
<p>The introduction of S.138 has thus exerted many complex impacts upon the working of the economy.</p>
<dl>
<dt>An increased level of violence in society</dt><dd>More people go jail, and more threats of incarceration are bandied about. This is a less civilised society.</dd>
<dt>Increased interest in lending</dt><dd>When lenders are given greater certainty about recoveries, they are likely to be more willing to lend to persons that might otherwise be excluded from the credit market.</dd>
<dt>Diminished interest in borrowing</dt><dd>When borrowers are shown the possibility of jail time, they will be more cautious and avoid borrowing. That has its own welfare consequences.</dd>
<dt>Conditions for state failure</dt><dd>The prospect of jail time is a `high stakes' situation where the policing system gets to make decisions which have a high impact upon the life of a citizen. This increases the incentives for corruption.</dd>
<dt>Hindering the emergence of a modern economy</dt><dd>All advanced economies have moved away from debtor's prison, and evolved civil mechanisms around borrowing, collateral and bankruptcy. These pathways reduce the extent of violence in society and increases user confidence in borrowing.</dd>
<dt>The threat versus the cash</dt><dd>Jail time is indeed a potent threat and creates strong incentives for the borrower to obtain cash, either by borrowing from someone else or by liquidating opaque assets. But once a person goes to jail, all future payments to the lender are stopped. With more civil processes of collatoral and bankruptcy, there is the strategy of keeping the delinquent active in economic life, and obtaining a stream of cashflows to the lender.</dd>
<dt>Incentives for policy makers</dt><dd>Lenders that got comfortable with the use of S.138 were less inclined to persuade policy makers of the need for the institutional apparatus of the credit market.</dd>
</dl>
<h3>Conclusion</h3>
<p>The introduction of S.138 into the N.I. Act in 1988 was a response to a problem of the time. Some other countries, like Taiwan, had also criminalised cheque bouncing. However, most countries have walked back since then because credit systems have improved and the use of cheques have declined. In those countries, cheques are not used as collateral for loans.</p>
<p>There is a strong argument for repealing this section. The consequences of such a repeal will, however, also be far reaching, particularly in the context where the institutional apparatus for contract enforcement remain weak. It is interesting to look at the list, presented above, of the consequences of criminalising cheque bouncing. We can then ask: Which of these would flip around and arise, in reverse, when cheque bouncing is de-criminalised.</p>
<p>Shubho Roy and Ajay Shah are researchers at XKDR Forum.</p>
xhttp://www.blogger.com/profile/14462096253602478048noreply@blogger.com1tag:blogger.com,1999:blog-19649274.post-49339928417156553702024-02-23T13:59:00.000+05:302024-02-23T13:59:50.471+05:30Announcements<h2> <b>Upcoming Conference: Electricity Reforms in the Economic Strategy of Tamil Nadu </b> </h2>
<p><a href ="https://xkdr.org/">XKDR Forum</a> and <a href ="https://trustbridge.in/">TrustBridge Rule of Law Foundation</a>, are hosting a conference on 'Electricity Reforms in the Economic Strategy of Tamil Nadu', on 29 February 2024, in Chennai.</p>
<p>Tamil Nadu is one of the most important states in India from the perspective of energy transition. It was one of the first states in India to have achieved almost universal electrification and was also at the forefront of the transition to renewables - both wind and solar - in the country. The session hosts a discussion on a roadmap for reforms in the electricity sector, bringing together the team's year-long research towards identifying problems and strategies for the state's energy transition and economic growth.</p>
<h3> Program Design:</h3>
<p>11:00 - 11:45: Electricity Reforms in the Economic Strategy of Tamil Nadu</p>
<p>Presenter: Ajay Shah, XKDR Forum </p><br>
<p>11:45 - 13:00: Open Discussion</p>
<p>Moderator: Akshay Jaitly, Trilegal and TrustBridge Rule of Law Foundation</p><br>
<p>13:00 onwards: Lunch </p><br>
<p><b>Date:</b> 29 February 2024 (Thursday)<br>
<b>Time:</b> 11:00 am - 1:00 pm<br>
<b>Location:</b> Taj Coromandel, Chennai.</p>
<br>
<p>The event is in-person and you can register <a href="https://xkdr.org/event/electricity-reforms-in-the-economic-strategy-of-tamil-nadu">here</a>!</p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-86581282434272581922024-01-15T08:38:00.006+05:302024-03-07T13:41:33.184+05:30Solarisation in agriculture in Tamil Nadu<p>by <a
href="https://blog.theleapjournal.org/2014/10/author-susan-thomas.html">Susan Thomas</a>, <a href="https://blog.theleapjournal.org/2014/10/author-renuka-sane.html">Renuka Sane</a>, Ajay Shah.</p><p>Highly subsidised electricity for farmers is an important problem faced in the working of the electricity sector. With falling prices of solar panels, there is the possibility of government subsidising solar panels established by farmers.</p><p>This could potentially induce welfare gains in several directions.</p><ol style="text-align: left;"><li>The fiscal burden imposed by the subsidy could decline.</li><li>The pricing distortion in electricity (where commercial / industrial / domestic buyers are overcharged) could decline.</li><li>Farmers could earn a revenue selling their surplus electricity to the grid.</li><li>Farmers could become more thoughtful in their extraction of ground water when they face an opportunity cost, in the sense that the electricity that is not used to pump water is a revenue generator for them. This would yield welfare gains by diminishing the `tragedy of the commons' in ground water.</li></ol><p>These possibilities turn on careful calculations. Whether some or all of these gains are obtained depends on insolation, the magnitude of water required, the energy cost of extracting the water, the cost of solar panels and the price paid by the grid. There will not be one answer within a state, and therefore there will not be one optimal policy within a state. (Similarly, the economic possibilities from such pathways will vary greatly across the breadth of the country). <br /></p><p>In a recent paper, <i><a href="https://xkdr.org/paper/solarisation-in-agriculture-in-tamil-nadu-a-first-principles-evaluation">Solarisation in agriculture in Tamil Nadu: A first principles evaluation</a></i>, we try to engage in this careful calculation for one district (Erode) in Tamil Nadu. We analyse a corner solution: one where the government pays for the full cost of the solar panel. </p><p>The results turn on the price at which the surplus energy, that comes from the farmer to the discom, is sold. If the discom is able to sell this energy at the (high) prices that are charged to the commercial and industrial ("C&I") customers, then the corner solution is financially efficient for the grid. At lower prices, the proposition is less attractive.<br /></p><p> One important parameter that influences the results -- the price of solar panels -- is likely to decline in the future. Hence, we simulate the scenario with lower costs. We find this expands the class of situations where solarisation in agriculture is useful. </p><p>This paper is about one district (Erode) in Tamil Nadu. The methods adopted are general and could be applied to other locations in India. The answers are likely to vary considerably depending on the precise setting. There is value in discovering how this varies across India. </p><p>This is a field with many intricacies in implementation. These include
the mechanism of selling surplus electricity, the choice of the tariff
paid to the farmer, the problems of (the lack of) metering of
electricity connections to farmers, the trustworthiness of the
government on timely payments to farmers, the financing mechanism for
the capital cost the puzzles of operations and maintenance at the level
of one farmer, and the path to a sound monitoring and evaluation of such
programs. These are much studied areas where considerable research has
taken place. These discussions will improve through using the carefully
constructed numerical estimates, on a per-district basis, all across the
country.</p>xhttp://www.blogger.com/profile/14462096253602478048noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-86382767929316447692024-01-13T22:08:00.014+05:302024-01-14T12:58:33.823+05:30Survey-based measurement of Indian courts<p>by <a href="https://blog.theleapjournal.org/2022/12/author-pavithra-manivannan.html">Pavithra Manivannan</a>, <a
href="https://blog.theleapjournal.org/2014/10/author-susan-thomas.html">Susan Thomas</a>, and <a href="https://blog.theleapjournal.org/2015/12/author-bhargavi-zaveri.html">Bhargavi Zaveri-Shah</a>.</p>
<p>Public institutions do not face a market test. Achieving state capacity is about establishing checks and balances. The traditional idea is to instrument the operations, and construct an operational MIS, which is released into the public domain. Through this, deficiencies of the working of the organisation are visible to researchers and the public. The other pathway is to ask the persons who interact with the state institution about what they feel, to elicit their perceptions. This is an important pathway to obtain evidence and thus create feedback loops. For instance, citizen surveys are commonly used to assess the quality and impact of public services such as health and education (UNDP 2021, Clifton et al, 2020, OECD-ADB 2019).</p>
<p>In the legal system, perception surveys of court users can generate useful knowledge about how well courts function in their delivery of justice (National Center for State Courts, 2005). Ongoing surveys of user experience of courts can help measure the performance of a component of the entire legal system, and in assessing the impact of interventions made for reforming the legal system.</p>
<p>Surveys of court users and the public on their perception of the judiciary have been prevalent in developed countries from the 1990s, and are gaining currency in India (eg., Dougherty et al, 2006; Rottman and Tyler, 2014; Staats et al, 2005; Daksh 2016). Such surveys seek to capture the perceptions of court users on qualitative metrics (Manivannan et al, 2022). Such metrics can be used to evaluate the functioning of a single court, or compare alternative courts.</p>
<p>On one hand, perceptions are not reality. On the other hand, the views of end-users of the justice system are particularly important because, ultimately, the justice system exists to serve end-users whose interests and preferences may differ from those of judges and lawyers. We can readily discern certain difficulties in survey-based measurement of perceptions:</p>
<ol>
<li> There are many different users of a court, who differ in their extent of knowledge. Litigants who see a court case as a disruption of their daily lives, may see things differently when compared with lawyers, for whom courts are part of their professional lives.</li>
<li> A person who loses a case is likely to be unhappy with his experience of the court and vice versa.</li>
<li> Different individuals might be working on non-comparable cases, and their subjective experience of the court is then not comparable.</li>
<li> It is not clear what is an objective benchmark of sound performance. A perfect court may be prohibitively expensive. Users of courts may have normalised a variety of difficulties; their `satisfaction' may only flow from learned helplessness.</li>
<li> It is important to narrowly measure a court or a group of courts, and make claims about the narrow unit of observation, as opposed to bigger claims about the Indian legal system.</li>
</ol>
<p>In 2023, we conducted two pilot surveys to evaluate their utility as feedback loops for courts.</p>
<p>One survey was administered to understand the functioning of five alternative forums that can be approached to adjudicate matters of debt disputes: the Bombay benches of the National Company Law Tribunal (NCLT), the Debt Recovery Tribunal (DRT), the Bombay High Court (Bom HC), the Metropolitan Magistrate (MM) courts (which adjudicates criminal proceedings for cheque bouncing cases), and the Alternative Dispute Resolution (ADR) process.</p>
<p>To help improve data quality, the survey was conducted on practitioners who had multiple instances of interacting with the five courts. By selecting practitioners that have had repeated instances of approaching these forums to resolve disputes, the survey results are less vulnerable to the 'loser' effect. To obtain comparability, we presented a hypothetical, canonical problem of debt dispute resolution to each survey respondent. We then asked them to rank the five forums on five dimensions of court performance, namely, efficiency, effectiveness, predictability, independence, cost and convenience, and calculated the average rank for each forum on each of these dimensions.</p>
<p>The second survey was conducted with litigants at the DRT, with the objective of understanding the functioning of this court. For this, we deployed a team of four, who visited the premises of the Bombay bench of the DRT. The team administered a survey questionnaire on individuals, in order to evaluate the performance of the DRT on the above mentioned five dimensions. The participants were asked to rate their experience at the DRT on a five-point scale.</p>
<h3>Method</h3>
<dl>
<dt>Survey design</dt><dd>We used a combination of qualitative (in-depth expert interviews and open-ended comments) and quantitative surveys (multiple choice and scaled questions). Qualitative surveys with experts provide more contextual insights, enable comprehensive analysis. They helped validate our founding conjecture, the idea that there was a class of disputes which could go to multiple different forums. However, these surveys were time-intensive and it was difficult to obtain the interest and involvement of experts.</dd>
<dt>Survey mode</dt><dd>We administered the survey in both online and offline formats. Surveying litigants on court premises was challenging in two ways. First, litigants do not always accompany their lawyers to courts, especially in disputes of larger sizes involving firms. Second, one forum may deal with multiple type of disputes (civil v. criminal; mergers v. insolvency). This poses difficulty in identifying a litigant with a desired case-type.</dd>
</dl>
<p>The questionnaire used for the surveys and the responses collected can be found <a href="https://www.xkdr.org/paper/evaluating-courts-from-a-litigants-perspective-a-project-report">here</a>. </p>
<h3>Results: The perceptions of practitioners</h3>
<p>The practitioner survey involved eliciting their choice of forum for the following hypothetical, canonical problem:</p>
<blockquote>
<i>Q is a large public listed company. It has availed of a working capital loan of Rs. 7 crores from N, a small sized NBFC, repayable within three years with simple interest @16% p.a. Q and N are 100% domestically owned. As collateral for the loan, Q has granted N a floating charge over some of its movable assets, for example, its machinery or its inventory. One year into the loan, Q defaults on its loan to N. The outstanding amount exceeds Rs.1 crore. Post-dated cheques issued by Q towards interest payment bounce due to insufficient funds. The collateral is not sufficient to cover the outstanding amount. You are advising N.</i></blockquote>
<p>The survey respondents were asked to make two assumptions, namely, that the limitation period is the same across all the courts; and that all courts have jurisdiction.</p>
<p>We collected responses from 18 respondents, of which 16 were lawyers and two were key managerial personnel at an asset reconstruction company and a debt restructuring advisory firm. Six of our respondents had between 20 to 30 years of experience in this area, eight of them had experience of less than 20 years, and two of them had more than 30 years experience in this field. They had significant experience with many of the venues of interest: 14 had experience with the NCLT and the Bom HC, 11 with the DRT and ADR process, and 5 with the MM Courts.</p>
<p>We aggregated the ranks assigned by the respondents to each of these forums on the parameters of independence, efficiency, effectiveness, predictability and access, and averaged them to arrive at an overall rank for each forum. The specific statements on which the respondents ranked the forums and their ranks are presented in Table 1. The forums are arranged in increasing order of the average rankings on each parameter. The NCLT was ranked the highest on the parameter of Efficiency, followed by ADR, the Bom HC, the DRT and the Metropolitan Magistrate. On the other hand, the Bom HC was ranked as the most preferred forum of choice on the parameter of independence.</p>
<center>
<table cellpadding="5" style='font-size: 75%'>
<caption><b>Table 1:</b> Preference ordering of five debt enforcement forums</caption>
<tr>
<th width="15%"> Metric </th>
<th> Survey Statement</th>
<th colspan="5"> Ranking </th>
</tr>
<tr>
<th></th>
<th> </th>
<th> 1 </th>
<th> 2 </th>
<th> 3 </th>
<th> 4 </th>
<th> 5 </th>
</tr>
<tr>
<td> <b> Efficiency</b></td>
<td>Most likely to
dispose of my matter in a timely manner</td>
<td style="text-align:center";> NCLT
</td> <td style="text-align:center";> ADR </td>
<td style="text-align:center";>Bom HC </td>
<td style="text-align:center";>DRT</td>
<td style="text-align:center";> MM Courts
</td> </tr>
<tr> <td><b>Effectiveness</b></td>
<td>Easiest to recover the amount awarded in the judgement decree. </td>
<td style="text-align:center";> NCLT </td>
<td style="text-align:center";> Bom HC </td>
<td style="text-align:center";> DRT, ADR </td>
<td style="text-align:center";> MM Courts</td></tr>
<tr><td><b>Predictability </b></td>
<td>(i) Expected sequence of stages in my matter was clear. </td>
<td style="text-align:center";> NCLT </td>
<td style="text-align:center";> ADR </td>
<td style="text-align:center";> Bom HC </td>
<td style="text-align:center";> DRT </td>
<td style="text-align:center";> MM Courts </td>
</tr>
<tr>
<td></td>
<td>(ii) Hearings are most likely to be held as scheduled.</td>
<td style="text-align:center";> ADR </td>
<td style="text-align:center";> NCLT </td>
<td style="text-align:center";> Bom HC </td>
<td style="text-align:center";> MM Courts </td>
<td style="text-align:center";> DRT </td> </tr>
<tr>
<td><b>Independence </b></td>
<td> Decisions are most likely made based on the merits of the
case.</td>
<td style="text-align:center";> Bom HC </td>
<td style="text-align:center";> ADR </td>
<td style="text-align:center";> NCLT </td>
<td style="text-align:center";> MM Courts </td>
<td style="text-align:center";> DRT </td>
</tr>
<tr> <td><b>Access</b></td>
<td> (i) Can afford to take my case to this forum. </td>
<td style="text-align:center";> MM Courts </td>
<td style="text-align:center";> DRT </td>
<td style="text-align:center";> NCLT </td>
<td style="text-align:center";> Bom HC </td>
<td style="text-align:center";> ADR </td>
</tr>
<tr><td> </td>
<td> (ii) Ease of navigation; staff
helpfulness; website; ease of filing process</td>
<td style="text-align:center";> ADR </td>
<td style="text-align:center";> Bom HC </td>
<td style="text-align:center";> NCLT </td>
<td style="text-align:center";> DRT </td>
<td style="text-align:center";> MM Courts </td> </tr> </table> </center>
<p>Table 1 contains new insights on a specific court on each attribute. For example, while the Bom HC and the ADR process are perceived to be most unbiased, they are perceived as more expensive to access. ADR is perceived to be most predictable, but less effective on actually getting the relief. The NCLT, on the other hand, is perceived to be more efficient and effective, when compared to the other forums, but less likely to also be unbiased. The DRT and the Metropolitan Magistrate courts are perceived unfavourably on all aspects, except affordability.</p>
<h3>Results: The perceptions of litigants</h3>
<p>The in-person survey conducted at the DRT observed 55 persons, who were presently a party to a dispute at the DRT. Among these, 24 were debtors, 19 were creditors, and 12 belonged to the residual category, such as court/privately appointed receivers and auction awardees. Of these, 30.6% were at early stages (admission), 28.6% were at advanced stages (such as post-admission or pending last hearing), and 22.4% were awaiting a final hearing or pronouncement of judgement.</p>
<p>Litigants at the DRT had more positive perceptions than practitioners. Litigants ranked the DRT the highest on predictability of the hearing: most litigants agreed that when a hearing for their case is scheduled at the DRT, it will be held on the scheduled date. About 67-69% of litigants perceived the DRT to be an affordable and unbiased forum to resolve their dispute. More creditors ranked it higher (85-89%) on these two metrics than debtors (58-62%). However, 52% of litigants did not think that the DRT resolves cases in a timely manner. </p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh122gYFk1d7xtQLCAQP1oUaAsvMqaIjoRgNEJYvjB4L1Hzrk4F5puagjMEOVpe61B-zM6GkIf2mwg6YTKyv541wY0ABJ7LO_D-vW1cUu79wAZNx3mTu-0XGujGtYIyjFjPXlQO5ufLXZvlDjq7l37m7LEJgcpPI6u3dvi5fY6Z8Rhtogk6-Q/s787/on-siteSurvey.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="493" data-original-width="787" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh122gYFk1d7xtQLCAQP1oUaAsvMqaIjoRgNEJYvjB4L1Hzrk4F5puagjMEOVpe61B-zM6GkIf2mwg6YTKyv541wY0ABJ7LO_D-vW1cUu79wAZNx3mTu-0XGujGtYIyjFjPXlQO5ufLXZvlDjq7l37m7LEJgcpPI6u3dvi5fY6Z8Rhtogk6-Q/s600/on-siteSurvey.png"/></a></div></p>
<h3>Discussion</h3>
<p>Good performance by the judicial branch in a country is essential. As with all aspects of public policy, this requires the loop of evidence, identification of difficulties, creative policy proposals, policy reforms, and measurement of the gains. In the legal system, generally, evidence and measurement involves quantitative measures. In this article, we have shown a case study where survey-based evidence was useful. This constitutes a useful additional pathway to measurement of the legal system.</p>
<p>Litigants are the ultimate end-users of courts, so their views matter greatly, but their information set may be limited. Legal practitioners have better information through repeated interactions and potentially observation of multiple venues, but their views may not capture the views of the litigants themselves. In the future, it would be useful to go further, by way of surveying the general public, measuring the view of persons who have <i>not</i> experienced litigation at a given location.</p>
<h3>References</h3>
<p> Shaun Bowler, Joseph L. Staats, and Jonathan T. Hiskey (2005). <a href="https://www.cambridge.org/core/journals/latin-american-politics-and-society/article/abs/measuring-judicial-performance-in-latin-america/DBBC7142A2938364DAD572E58712249D?utm_campaign=shareaholic&utm_medium=copy_link&utm_source=bookmark"><i>Measuring Judicial Performance in Latin America</i></a>, Latin American Politics and Society. </p>
<p> Judith Cliftona, Marcos Fernandez-Gutierrez and Michael Howlett (2020). <a href="https://ec.europa.eu/programmes/erasmus-plus/project-result-content/0f0fadf0-b9d2-4f7c-aa7e-f6a72e7e46ae/jeprassessing_public_services_surveys_2020.pdf"><i>Assessing public services from the citizen perspective: What can we learn from surveys?</i></a>, Journal of Economic Policy Reform.</p>
<p> Daksh (2016). <a href="https://dakshindia.org/wp-content/uploads/2016/05/Daksh-access-to-justice-survey.pdf"><i>Access to Justice Survey</i></a>, A DAKSH report.</p>
<p> David B. Rottman and Tom R. Tyler (2014). <a href="https://opo.iisj.net/index.php/osls/article/download/343/490/2806"><i>Thinking about judges and judicial performance: Perspective of the Public and Court users</i></a>, Onati Socio-legal Series.</p>
<p> Devendra Damle and Tushar Anand (2020). <a href="https://www.nipfp.org.in/media/medialibrary/2020/07/WP_314__2020.pdf"><i>Problems with the e-Courts data</i></a>, NIPFP Working Paper Series 314.</p>
<p> George W. Dougherty, Stephanie A. Lindquist and Mark D. Bradbury (2006). <a href=""><i>Evaluating Performance in State Judicial Institutions: Trust and Confidence in the Georgia Judiciary</i></a>, State and Local Government Review. </p>
<p> Institute of Social Studies and Analysis (2021). <a href="file:///Users/pavithram/Downloads/undp-georgia-frld-citizen-satisfaction-survey-2021-eng_0.pdf"><i>Satisfaction with Public Services in Georgia</i></a>, United Nations Development Programme. </p>
<p> National Center for State Courts (2005). <a href=""><i>CourTools: Trial Court Performance Measures</i></a>.</p>
<p> Pavithra Manivannan, Susan Thomas and Bhargavi Zaveri-Shah
(2022). <a href="https://www.xkdr.org/paper/evaluating-contract-enforcement-by-courts-in-india-a-litigants-lens"><i>Evaluating contract enforcement by courts in India: a litigant's lens</i></a>, XKDR Working Paper No. 16.</p>
<p> Pavithra Manivannan, Susan Thomas and Bhargavi Zaveri-Shah (2023). <a href="https://blog.theleapjournal.org/2023/06/helping-litigants-make-informed-choices.html"><i>Helping litigants make informed choices in resolving debt disputes</i></a>, The Leap Blog.</p
<p> OECD-ADB (2019). <a
href="https://www.oecd.org/gov/government-at-a-glance-southeast-asia-2018-9789264305915-en.htm"><i>Government at a Glance Southeast Asia, Serving Citizens: Citizen satisfaction with public services and institutions</i></a>, OECD Publishing, Paris.</p>
<br>
<p>Pavithra Manivannan and Susan Thomas are researchers at XKDR Forum, Mumbai. Bhargavi Zaveri-Shah is a doctoral candidate at the National University of Singapore. We thank Surya Prakash B.S., Renuka Sane, and Anjali Sharma for their suggestions on the design of the surveys. We acknowledge the very diligent assistance by Nell Crasto and Balveer Godara, students at Kirit P. Mehta School of Law, NMIMS Mumbai, on conducting the litigant survey. We are grateful to all the survey respondents for their generous participation, and thank Mahesh Krishnamurthy, K.P. Krishnan, Sachin Malhan, Harish Narsappa, Rashika Narain, Geetika Palta, Siddarth Raman, Ajay Shah, and Arun Thiruvengadam for their comments and suggestions on this work.</p>
Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-5543098767836143372024-01-13T17:24:00.013+05:302024-02-27T23:54:16.544+05:30Offshore wind in Tamil Nadu: from potential to reality <p> by Akshay Jaitly, <a href="https://blog.theleapjournal.org/2024/02/author-charmi-mehta.html#gsc.tab=0">Charmi Mehta</a>, <a href="https://blog.theleapjournal.org/2014/10/author-renuka-sane.html">Renuka Sane</a> and Ajay Shah. </p>
<h3> Foundations </h3>
<p> The world of renewables is comprised primarily of solar and wind. Of these, solar electricity suffers from the limitation of dwindling away in the evening, at precisely the time at which electricity demand rises. This makes wind particularly important. There is a good deal of onshore wind generation in India. What is different and potentially superior about offshore wind? </p>
<ol>
<li> Wind speeds tend to be higher offshore than on land. A wind turbine operating at a wind speed of 24 kph can generate twice as much energy as a turbine operating at a wind speed of 19 kph (<a href="https://www.americangeosciences.org/critical-issues/faq/what-are-advantages-and-disadvantages-offshore-wind-farms#:~:text=Small%20increases%20in%20wind%20speed,be%20steadier%20than%20on%20land.">American Geosciences Institute, 2023</a>). </li>
<li> The wind offshore tends to be more consistent, with higher power capture for a greater number of hours per day.</li>
<li> Onshore wind requires land resources. Offshore wind is built in the open sea where land rights are cheaper, and it is easier to go to bigger blades.</li>
<li>Offshore wind does not impose noise pollution upon the human population.</li>
</ol>
<p> These benefits, of course, come with a problem, that construction of windmills in the high seas is more difficult when compared with building on land. Windmills are best placed at locations with high wind. Figure 1 shows that Tamil Nadu is a hot spot for offshore wind in India. It is interesting to notice that Sri Lanka is also a hotspot for offshore wind (Figure 2).</p>
<p>Figure 1: Wind speeds off the Indian coast</p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjM5KCn8Ba2aAUX4FkU7NuUJoYA7LhaG2DKfmTnQzaK9Jqi2ajILcMd9hFzTaF9ZaDx257lOHUohGHDf24kfAtq2TWNTJoXntd06RgT3a0zWU_d11bapm3PqzJ9WtEtIxlEMzmADyF_XD_cCBOH95KiLbTlN36BubO_jdZQD94-7Hogt9NImw/s1782/tn_offshore1.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="1169" data-original-width="1782" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjM5KCn8Ba2aAUX4FkU7NuUJoYA7LhaG2DKfmTnQzaK9Jqi2ajILcMd9hFzTaF9ZaDx257lOHUohGHDf24kfAtq2TWNTJoXntd06RgT3a0zWU_d11bapm3PqzJ9WtEtIxlEMzmADyF_XD_cCBOH95KiLbTlN36BubO_jdZQD94-7Hogt9NImw/s600/tn_offshore1.png"/></a></div></p>
<p>Source: India Wind Potential Atlas (NIWE, 2019).</p>
<p>Figure 2: Wind speeds off Sri Lanka.</p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2XlSN6Si-O9t3tXtdfwt_v9iJ6f1DxiCazhprJHEgY_5C1NA5Hl0-3Falr2zZP-DQESKyWvsg8GMhUVxfylSvmjxJP7XEngzxQk6D7nRygjy7K5jyKozQ-8yhLAotX75vWZq_OnHCgWTikGQGpScsPpLP9UNTkFpeLE4Ephr7J-Esk1M38w/s1515/tn_offshore2.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" height="600" data-original-height="1515" data-original-width="1392" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2XlSN6Si-O9t3tXtdfwt_v9iJ6f1DxiCazhprJHEgY_5C1NA5Hl0-3Falr2zZP-DQESKyWvsg8GMhUVxfylSvmjxJP7XEngzxQk6D7nRygjy7K5jyKozQ-8yhLAotX75vWZq_OnHCgWTikGQGpScsPpLP9UNTkFpeLE4Ephr7J-Esk1M38w/s600/tn_offshore2.png"/></a></div></p>
<p>Source: Technical Assessment by World Bank, IFC and ESMAP (2020).</p>
<p> There is an analogy between offshore wind in Sri Lanka, and hydel resources in Nepal and Bhutan. Given the correct arrangement of foreign policy <a href="https://indianexpress.com/article/opinion/columns/arvind-subramanian-writes-centre-tamil-nadu-government-must-join-hands-to-reap-the-wealth-in-the-wind-off-tn-coast-8513354/">(Subramanian, 2023)</a>, the Indian private sector can possibly play a leadership role in building electricity generation in Sri Lanka, as has been the case with Bhutan.</p>
<p> Putting these facts together, there is an important natural resource in Tamil Nadu, and its vicinity, through which vast renewable electricity generation can become possible, given the correct configuration of policies and state institutions that create conditions of investibility. We can dare to hope that very large offshore wind generation can take place off the coast of Tamil Nadu, which would attract energy-intensive firms to operate in the region, and enabling sale of electricity into locations far from Tamil Nadu.</p>
<h3> Public economics for offshore wind </h3>
<p> We can imagine an uncoordinated rush by the private sector to venture out into the seas and put up wind turbines. They would jostle with each other to build on the best sites. Each wind turbine would have to face the problem of transmitting energy to the mainland. There are three areas where policy makers can be useful: </p>
<ol>
<p><li> Ownership of the sea-bed and property rights: In a world without clarity on property rights, the private sector would experience conflicts when building wind turbines. There is a negative externality as multiple construction projects which are physically near each other impose a certain amount of chaos upon each other, and the presence of a windmill diminishes the energy production of nearby windmills.The sea-bed should be treated as a scarce natural resource, akin to the electromagnetic spectrum. There is a role for the state in establishing property rights, and auctioning off ownership of the sea-bed to private persons. The coercive power of the state would be used to create property rights for private persons, following which private persons would trade in blocks of sea-bed (akin to transactions in privately owned land or on the electromagnetic spectrum), and the government would enforce against encroachment. The negative externality problem during construction can be addressed by modified property rights which decongest each construction site for the construction period, by expanding the notion of property rights associated with each geographical location, to exclude other persons for the period of construction.</li></p>
<p><li> Economics of transmission: Each wind turbine would have to face the problem of transmitting energy to the mainland. Every generation company would benefit from more convenient access to high capacity transmission lines. There is a natural monopoly problem in the transmission infrastructure - it is likely that a single transmission company will emerge within each geographical area. There is merit in using state power to coerce this firm on open-access rules (so it cannot deny transportation to any private person) and on price regulation.</li></p>
<p><li> Data as a public good: The government can add value by spending taxpayer money to construct a dataset on wind speed and releasing this into the public domain. This activity involves no use of coercive power, other than the coercion that undergirds taxation. The government would merely release data on a website as a public good, and in no way preclude private persons from expending resources to create data on their own. For the government released data to be credible, it would have to be collected by trusted agencies, experienced in offshore wind data collection; the role for the government should be one of only contracting-out the construction of the data. </li></p>
</ol>
<p> While electricity in India is largely a state subject, the sea-bed falls under the union government jurisdiction through Article 297 of the Indian Constitution through which the Parliament has enacted the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976. Thus we can envision a two-part policy story for offshore wind, where the union government auctions off blocks of sea-bed, and the state government deals with everything connected with electricity. Once the energy reaches landing stations at the shore, it is just ordinary electricity and fits into the mainstream electricity market exactly as with onshore wind turbines.</p>
<h3> How the Indian journey has unfolded </h3>
<p> The union government has decided that offshore wind production will commence in Gujarat and Tamil Nadu. A union government agency named the National Institute of Wind Energy (NIWE) plays an important role in this field including that of being the designated counterparty for contracts. It plays a expansive role, akin to an offshore wind central planner. Transmission will be run by a union government PSU, the Power Grid Corporation of India Limited (PGCIL). No role is envisaged for state governments.</p>
<p> In 2018, NIWE published its first tender for an offshore wind block auction off the Gujarat coast. However, it did not receive bids and consequently had to be called off after multiple extensions (<a href="https://www.indiaspend.com/explainers/explained-why-indias-offshore-wind-energy-potential-remains-untapped-789380">Deshpande, 2021</a>). Since 2022, the Union Government has released (i) a national <a href="https://cdnbbsr.s3waas.gov.in/s3716e1b8c6cd17b771da77391355749f3/uploads/2023/01/20231030434921961.pdf">Strategy Paper</a> for the Establishment of Offshore Wind Energy Projects and (ii) a draft tender for Sea bed leasing for offshore wind energy projects which pertains to locations off the coast of Tamil Nadu. These releases help improve policy predictability. </p>
<h3> The proposed contracting model </h3>
<p> Project costs in offshore wind are high, particularly in contrast to developing renewable energy plants onshore. Costs also vary as per the depth of waters and distance from shore. Operating offshore wind turbines involves higher maintenance requirements (<a href="https://www.tandfonline.com/doi/abs/10.1080/01446193.2012.687830">Koch, 2012</a>). First movers face higher costs on account of uncertainty and the inevitable mistakes.</p>
<p> NIWE has proposed three alternative contracting models in its strategy paper. Model A is for projects where surveys and assessments have been completed, and the site is ready for development. Model B is model A without viability gap funding ("VGF?). Model C is a fully bundled model with end-to-end responsibility placed upon the project developer, including site identification. The tender released (for the sea bed off the coast of Tamil Nadu) follows model A (<a href="https://cdnbbsr.s3waas.gov.in/s3716e1b8c6cd17b771da77391355749f3/uploads/2023/01/20231030434921961.pdf">NIWE, 2023</a>). Table 1 summarises this proposed contract design. </p>
<table border=1 align = "center" cell padding = "15">
<caption> Table 1: Risk-responsibility allocation across proposed offshore wind contracting models</caption>
<thead>
<tr>
<th> Factors </th>
<th>Risks/responsibility</th>
<th>Model A</th>
</tr>
</thead>
<tbody>
<tr>
<td>Government support </td>
<td>Bridging financing gaps </td>
<td>VGF (Union; unallocated)</td>
</tr>
<tr>
<td> </td>
<td>Transmission charges</td>
<td>Waived</td>
</tr>
<tr>
<td>Strategic and commercial risks</td>
<td>Identifying sites for offshore wind farms</td>
<td>Gov (Union)</td>
</tr>
<tr>
<td> </td>
<td>Site assessment surveys</td>
<td>Gov (Union)</td>
</tr>
<tr>
<td> Local factors </td>
<td>Transmission infrastructure</td>
<td>Gov (PGCIL)</td>
</tr>
<tr>
<td> </td>
<td>Evacuation of power</td>
<td>Gov (PGCIL) </td>
</tr>
<tr>
<td> </td>
<td>Licenses </td>
<td>Private</td>
</tr>
<tr>
<td> </td>
<td>Power offtake guarantees</td>
<td>None</td>
</tr>
</tbody>
</table>
<p>Site characteristics have a substantial impact upon the prospective return on equity. The MNRE/NIWE supplies its assessment of each site. A careful examination of the data released by MNRE/NIWE is required. Potential developers may invest significant time and resources in constructing private sector data if there are limitations in the government-released data.</p>
<p> The selected bidder must set up the turbines offshore and connect each turbine to the offshore agglomeration facility (which will be constructed and managed by PGCIL). While the model mentions accessing VGF from the union government, the mechanism is not adequately spelled out. Is this policy strategy conducive to investibility?</p>
<p><i> i. Site selection and exclusivity:</i></p>
<p> Site selection is best done by potential wind farm developers. Developers face the consequences of, and are best placed to take decisions on sites when faced with a certain amount of data. They will commission the creation of additional data optimally. Under Model A, sites have been selected by NIWE. We expect that serious developers will construct their own datasets and may chafe at the locations pinned down by NIWE.</p>
<p> The next issue is that of exclusivity. Developers like to have a certain exclusive period, where no other construction takes place, in order to reduce the complexities of coordination across multiple construction projects. The exclusivity period for the sea-bed is set to five years, with a maximum extension of one year. The average time taken to set up a mid-size offshore wind farm, globally, is four years. In India, this is likely to attain a higher value (<a href="http://www.cspm.gov.in/english/publication.html#">MOSPI, 2023</a>).</p>
<p> Auctioning the exclusivity period itself can be a way to decide what a 'sufficient' period should be. In countries where confidence in offshore projects has been high, auctions are witnessing site tenures being awarded based on an auction in which the highest bidder wins the site (<a href="https://ore.exeter.ac.uk/repository/bitstream/handle/10871/129537/AURES_II_case_study_seabed_auctions.pdf?sequence=1">Exeter, 2022</a>). For example, the Round 4 auction for sites (held in 2021) in England and Wales saw the highest bidder paying Euro 1bn upwards in option fees, payable annually (for ten years) for exclusive sea-bed rights on an 8 GW of offshore wind.</p>
<p><i>ii. The problem of transmission: </i></p>
<p> In offshore wind contracts in Northern Europe, the evacuation infrastructure for the electricity is generally created by the developer (and in some cases such as in the UK, later carved out and sold to a third party) or contracted out (separate from the offshore windfarm contract) to a private transmission service provider. Under Model A, this function has been assigned fully to the state-owned transmission company - PGCIL. PGCIL has no prior experience in developing transmission for offshore wind and it carries the burden of being a public sector organisation.</p>
<p>Whether managed by PGCIL or some other firm, regulation is required so that future developers are provided access to non-discriminatory evacuation infrastructure and services, perhaps using common carrier principles. While one block / site is up for auction today, numerous offshore plants will come up in the future in close vicinity. There may be shortages or exorbitant pricing of transmission, particularly in the absence of non-discriminatory access.</p>
<p>In addition to the risks from power evacuation, risks from unscheduled downtimes can induce losses, and contract terms will determine who bears this risk. For example, in Germany, the costs of curtailments/incapacities were transferred to the consumer. In contrast, costs remained with the project owner in China despite their lack of control over the risk (<a href="https://www.sciencedirect.com/science/article/abs/pii/S1364032116001337">Gatzert, 2016</a>). The government's decision to manage the complete evacuation responsibility may prove problematic in the event that higher transmission losses or shutouts imposes important risks upon the developer. If the preference is for power evacuation to be managed by PGCIL, contractual provisions on liquidated damages must adequately cover for downtimes that are not caused by the fault of the developer and other transmission losses.</p>
<p><i>iii. Regulatory burdens</i></p>
<p>Unlike transmission and distribution, power generation has no market failure problem. It is hence important to envisage a contract design that harnesses private sector expertise, without added layers of government involvement. At present, establishing an offshore wind farm will require a set of seventeen different clearances and licences from a host of ministries, including the prerequisite of block approval from the Ministry of Defence. Seven of the seventeen clearances are necessary even before one can make a bid, and the rest are post-award. The sector also includes a specific licensing regime that extends to how new offshore assets connect and interact with the grid. This requirement for multiple permissions detract from the vision of property rights in the hands of a private person. </p>
<p>Further, approvals and no-objection certificates may be required from State Governments for transmission and evacuation infrastructure-related provisioning and any other clearances as may be legally required to establish and operate offshore power plants - as in the case of oil and gas pipelines (<a href="https://niwe.res.in/assets/Docu/Circular draft tender document.pdf">NIWE, 2022a</a>, <a href="https://coe-osw.org/strategy-paper-for-establishment-of-offshore-wind-energy-projects/">NIWE, 2022b</a>).</p>
<p>It might be useful to consider if some project-related (as opposed to bidder related) approvals can be obtained ahead of time and made part of the bid package. This will reduce risk for bidders and may lead to more attractive bids.</p>
<p>Lastly, as with any nascent industry, policy and regulatory frameworks are likely to evolve and change over time - and existing concessionaires should be contractually protected from this through adequate 'change in law' and 'change of scope' provisions.</p>
<p>Under the present policy strategy, offshore wind generation requires the firm to have a high level of government engagement, and exposure to policy risk. This problem may encourage foreign firms to find local partners and enhance the required rate of return, i.e. hamper investibility.</p>
<p> iv.<i> The role of the union government: </i></p>
<p>The present policy strategy suggests a offshore wind industry that is run out of the union government. This vision will sit uneasily with the primary role of the state government in electricity regulation and the electricity business once the energy hits the shore. Since vessel availability and transport infrastructure are critical to offshore wind farm development and often contribute to delays, cost overruns ((<a href="https://www.tandfonline.com/doi/abs/10.1080/01446193.2012.687830">Koch, 2012</a>), and litigation, the State's port infrastructure can be adapted to facilitate project management. Proximity of the Thoothukudi port to the proposed site is an advantage, and logistics facilities such as (i) storage areas for component assembly and manufacturing, and (ii) berth infrastructure can be developed to support upcoming offshore wind plants (<a href="https://www.aurovilleconsulting.com/unlocking-offshore-wind-in-tamil-nadu/">Auroville Consulting, 2022</a>). Such thinking is downplayed in a union-dominated policy process.</p>
<h3> Assessing the outlook </h3>
<p>Our analysis suggests that there is a considerable gap between the natural resource potential for offshore wind in South Asia and its tangible translation into RE capacity. The sea-bed lease tender was released in September 2023 with a deadline of 28 November 2023. In our knowledge, no bids have emerged.</p>
<p> Electricity is a concurrent list subject under the Indian Constitution, with both the union government and the state government having the right to make law over aspects of the sector. Sea-bed jurisdiction appears to clearly lie with the union. It would make sense to rely on the state government to a greater extent. </p>
<p> There are significant manufacturing and transportation challenges associated with the bulky parts of offshore wind facilities. Both Tamil Nadu and Gujarat are strong in manufacturing, and are natural sites where a private industry could develop that will undertake this manufacturing, and play a role in offshore wind sites hundreds of kilometres away.</p>
<p> The arguments presented earlier in this article show that thinking from first principles, the role of the state in this field is (a) Establishing property rights with auctions of chunks of sea-bed, including a special kind of exclusivity during construction; (b) Ensuring open access and price regulation for the natural monopoly of transmission; (c) Possibly adding value by constructing and releasing a robust dataset with wind speed. There is merit in evolving the policy strategy towards these three pillars.</p>
<h3> References </h3>
<p> American Geosciences Institute. 2023. <a href="https://www.americangeosciences.org/critical-issues/faq/what-are-advantages-and-disadvantages-offshore-wind-farms#:~:text=Small%20increases%20in%20wind%20speed,be%20steadier%20than%20on%20land.">What are the advantages and disadvantages of offshore wind farms?</a>, National Academy of Sciences. </p>
<p> Deshpande, T. 2021. <a href="https://www.indiaspend.com/explainers/explained-why-indias-offshore-wind-energy-potential-remains-untapped-789380">Why India's Offshore Wind Energy Potential Remains Untapped</a>, IndiaSpend. 26 November 2021.</p>
<p> NIWE. 2023. <a href="https://cdnbbsr.s3waas.gov.in/s3716e1b8c6cd17b771da77391355749f3/uploads/2023/01/20231030434921961.pdf">Strategy for Establishment of Offshore Wind Energy Projects</a>, Ministry of New and Renewable Energy, Government of India. September 2023. </p>
<p> Koch, C. 2012. <a href="https://www.tandfonline.com/doi/abs/10.1080/01446193.2012.687830">Contested overruns and performance of offshore wind power plants</a>, Construction Management and Economics, 30:8, 609-622. </p>
<p> Infrastructure and Project Management Division, Ministry of Statistics and Programme Implementation. 2023. <a href = "http://www.cspm.gov.in/english/publication.html">Quarterly Report on Mega Projects</a>. </p>
<p> Laido et al. 2022. <a href ="https://ore.exeter.ac.uk/repository/bitstream/handle/10871/129537/AURES_II_case_study_seabed_auctions.pdf?sequence=1">Impacts of Competitive Seabed Allocation for Offshore Wind Energy</a>, University of Exeter. April 2022. </p>
<p> Gatzert et al. 2016. <a href="https://www.sciencedirect.com/science/article/abs/pii/S1364032116001337">Risks and risk management of renewable energy projects: The case of onshore and offshore wind parks,</a> Renewable and Sustainable Energy Reviews, Volume 60. July 2016. </p>
<p> Auroville Consulting. 2022. <a href="https://www.aurovilleconsulting.com/unlocking-offshore-wind-in-tamil-nadu/">Unlocking Offshore Wind in Tamil Nadu</a>. Sustainable Energy Transformation Series. </p>
<p>Subramanian, A. 2023. <a href="https://indianexpress.com/article/opinion/columns/arvind-subramanian-writes-centre-tamil-nadu-government-must-join-hands-to-reap-the-wealth-in-the-wind-off-tn-coast-8513354/">Answers in the offshore wind.</a>The Indian Express. 23 March 2023.</p>
<br>
<p> Akshay Jaitly and Renuka Sane are Co-founder and Research Director, respectively, at TrustBridge Rule of Law Foundation; Charmi Mehta and Ajay Shah are Research Associate and Co-founder, respectively, at XKDR Forum. </p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-18707564365005340762024-01-10T13:57:00.014+05:302024-01-10T20:45:02.061+05:30Evaluating capital market responses to cybersecurity incidents in Indian listed companies<p>by Sayan Dasgupta, <a href="https://blog.theleapjournal.org/2014/10/author-renuka-sane.html">Renuka Sane</a> and <a href="https://blog.theleapjournal.org/2023/04/author-karthik-suresh.html">Karthik Suresh</a>.</p>
<p>In a previous <a href="https://xkdr.org/paper/revising-the-information-technology-act-2000">report</a> on the Information Technology Act, 2000 we described the infirmities in the laws and institutions that govern cybersecurity threat detection and response in India. However, two questions persist. Firstly, what is the true scale of the cybersecurity problem among Indian firms? Secondly, what are the financial and reputational consequences of a cybersecurity breach at an Indian firm?</p>
<p>It is difficult to find answers to the first question in the public domain. But when it comes to the second question, we can gain some insights by looking at how investors respond to the news of cybersecurity incidents whenever such details are made public. In the United States, the results of these studies range from a slightly negative effect on stock prices following the announcement of an incident (e.g. Cavusoglu et al, 2004 estimated an average 2.1% loss in the first two days after disclosure) to no significant effects (e.g. Kannan et al, 2007). Amir et al (2018) however observed that there is a significant difference between the fall in stock prices for firms that disclosed the cybersecurity incident (0.7% decline in one month) vs. firms that withheld this information (3.6% decline in one month).</p>
<p>It is important and interesting to understand the current state of play. How many Indian listed companies made public disclosures of cybersecurity incidents? How did investors in these companies respond to this news <i>given</i> the limited information they had? We attempt to provide some insights into this question by conducting an event study of stock price movements that follow cybersecurity incidents in Indian listed companies. We found that there was a significant negative effect on stock prices given the prior system of disclosures.</p>
<h3>Why is it important to make disclosures of cybersecurity incidents?</h3>
<p>A cybersecurity incident can be a costly negative externality. In 2022, IBM surveyed 49 Indian companies and <a href="https://www.ibm.com/downloads/cas/3R8N1DZJ">estimated</a> the loss they suffered from a single data breach to be USD 2.32 million (INR 184.5 million). A firm suffers direct costs (e.g. costs of data recovery) as well as indirect costs (e.g. loss of trust and goodwill) due to a cybersecurity incident. These costs, along with the reluctance to divulge details about its vulnerabilities to competitors, mean that firms are not incentivized to share information on their cybersecurity incidents.</p>
<p>There are two reasons why firms should make disclosures about cybersecurity incidents. Firstly, consumers have a reasonable expectation of privacy. In India, the Supreme Court in the <a href="https://indiankanoon.org/doc/127517806/"><i>Puttaswamy</i></a> decision traced this expectation of privacy to one's right to life and personal liberty. On these grounds, data privacy legislations, such as <a href="https://gdpr-info.eu/art-34-gdpr/">Article 34</a> of the EU General Data Protection Regulation and Section 8 of the <a href="https://www.meity.gov.in/writereaddata/files/Digital%20Personal%20Data%20Protection%20Act%202023.pdf">Digital Personal Data Protection Act, 2023</a> require firms to disclose details of data breaches to their users. Secondly, securities laws are concerned with whether cybersecurity risks are "material information" that should be disclosed to investors. The concept originated in the United States --- the US Supreme Court in <i>TSC Industries v. Northway</i> held that a given piece of information is "material" if there is "<i>a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote</i>".</p>
<p>Specifically on materiality, the US Securities and Exchanges Commission (SEC) issued non-binding guidance in <a href="https://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm">2011</a> and <a href="https://www.sec.gov/rules/interp/2018/33-10459.pdf">2018</a> which provided the format in which a listed entity or market participant should report on cybersecurity risks. However, in March 2023, the SEC <a href="https://www.sec.gov/rules/proposed/2022/33-11038.pdf">proposed</a> a framework for compulsory disclosures of cybersecurity risk and preparedness. In India, SEBI's general disclosure requirements on materiality are found in Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations"). Sub-part B, no. 6 requires the listed entity to report "<i>disruption of operations of any one or more units or division ... due to natural calamity (earthquake, flood, fire etc.), force majeure or events such as strikes, lockouts etc.</i>" While it was not explicitly mentioned that cybersecurity risks are to be reported, many listed companies (<a href="https://archives.nseindia.com/corporate/TATAPOWER_14102022190039_SELetter.pdf">example</a>) made such disclosures anyway. In June 2023, specific reporting requirements for cybersecurity incidents were added to the LODR regulations which we describe in the discussion section.</p>
<h3>Data</h3>
<p>Our list of cybersecurity incidents comes from two datasets that provide firm-specific incident information. The first dataset --- the "CISSM Cyber Attacks Database" --- is based on the work of Harry and Gallagher (2018). It is hosted by the <a href="https://cissm.liquifiedapps.com/">University of Maryland</a> (UoM). It has a set of 285 incidents that took place in India between 2014 and 2023. Of these, 45 incidents took place in companies listed in India. This dataset includes detailed information on the type of data that was compromised, the method of attack, and the responses of the affected companies. This data was collected by <a href="https://cissm.umd.edu/sites/default/files/2023-03/Cyber%20Events%20Database%20Codebook.pdf">deploying</a> a customised script that queries a list of news websites for articles or news items on cybersecurity incidents which are collected, sorted and stored. Another script then categorizes these incidents into various types.</p>
<p>The other dataset, called the Data Breach Investigations Report (DBIR), is hosted by <a href="https://github.com/vz-risk/VCDB">Verizon</a>. It has information on the type of breach (e.g., malware, hacking, social engineering), the target of the breach (e.g., government, enterprise, small business), the method of attack (e.g., phishing, spear phishing, watering hole attack) and the impact of the breach (e.g., data loss, financial loss, reputational damage). The DBIR dataset <a href="https://verisframework.org/index.html">accepts information</a> from a broad set of user-reported sources which are manually sorted by varying levels of confidence. The dataset has 83 incidents that took place in India between 2009 and 2017, of which 11 incidents took place in Indian-listed companies. 8 of the 11 incidents are already mentioned in the UoM database, so we are left with 3 unique entries in the DBIR. We manually categorized these three incidents based on the typology provided by Harry and Gallagher (2018).</p>
<p>The distribution of the different types of cybersecurity incidents is as follows:</p>
<table style='font-size: 80%'>
<tr>
<th>Type</th>
<th><a href="https://cissm.umd.edu/cyber-events-database">Description</a>
</th>
<th width="10%">No. of incidents</th>
</tr>
<tr>
<td>Data attack</td>
<td>This type of attack covers the manipulation, destruction, or encryption of data in the target
network.</td>
<td>7</td>
</tr>
<tr>
<td>Exploitation of application server</td>
<td>This type of attack uses a misconfiguration or vulnerability to gain access to data in a
server-side application (e.g. a database) or the server itself.</td>
<td>27</td>
</tr>
<tr>
<td>Exploitation of network infrastructure</td>
<td>This type of attack covers the theft of data through direct access to network infrastructure such as
routers, switches and modems.</td>
<td>1</td>
</tr>
<tr>
<td>Denial of service</td>
<td>This type of attack is meant to degrade or deny access to other parts of the firm's network.</td>
<td>3</td>
</tr>
<tr>
<td>Message manipulation</td>
<td>This type of attack covers interferences with the target's ability to accurately communicate
information to its customers.</td>
<td>3</td>
</tr>
<tr>
<td>Combination of methods</td>
<td></td>
<td>5</td>
</tr>
<tr>
<td>Undetermined</td>
<td></td>
<td>2</td>
</tr>
<tr>
<td>Total</td>
<td></td>
<td>48</td>
</tr>
</table>
<p>In total, our dataset has 40 unique companies and 48 incidents that took place between June 2013 and March 2023.</p>
<p>For stock prices, we retrieved the NSE daily closing prices for all the affected companies from CMIE Prowess for the period between 1 March 2013 to 31 July 2023.</p>
<h3>Methodology</h3>
<p>The event study methodology (ESM) is commonly used to measure stock price reactions to certain events (Fama et al, 969). We use the ESM to analyze the stock price consequences of cybersecurity incidents. Price reactions are represented by abnormal returns, which are stock returns adjusted for the normal daily stock price and market. We use the <i> eventstudies</i> package developed by Anand et al (2014) for our analysis.</p>
<p>This methodology involves the following steps:</p>
<ol>
<li>Identifying the event date: The event dates are the dates on which each of the cybersecurity incidents were made public i.e. the date of the news article.</li>
<li>Calculating the abnormal returns: The abnormal returns for the affected companies are calculated on the event date and 45 days before and after the event. Abnormal returns are the difference between the actual returns of the affected companies and the expected returns of the market. The expected returns are calculated using <a href="https://github.com/xKDR/eventstudies/blob/master/man/marketModel.Rd">the market model</a>.</li>
<li>Statistical tests: They help us determine whether the abnormal returns are statistically significant. The abnormal returns are used to test whether the cybersecurity incidents had a significant impact on the stock prices of the affected companies. The statistical tests are conducted using a variety of methods such as the t-test and the Wilcoxon signed-rank test.</li>
<li>Analyzing the results: The results of the event study are analyzed to determine (i) the magnitude of the impact of cybersecurity incidents on stock prices, (ii) the factors that influence the impact of cybersecurity incidents on stock prices, and (iii) the implications of the results for investors, companies, and regulators.</li>
</ol>
<h3>Results</h3>
<p><b>Event study results covering all incidents</b></p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFe9PsFHhKXttRA9wdPfWsdF_pWILP3UzhEa8MeSYM8EEoH1s1IF2cRP1sdsuWguS9g79KHau50ICQdJkmt7oxdSRK6KUStTHjHpiyvsHQoMSXZHCMKcQUcX13H9s1nx-LZ1Y-xATw6YYgULrfBE6_maxN2ueTQTeWRIQWS8ewO91Okjcmdg/s480/cyber_es_mm.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="480" data-original-width="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFe9PsFHhKXttRA9wdPfWsdF_pWILP3UzhEa8MeSYM8EEoH1s1IF2cRP1sdsuWguS9g79KHau50ICQdJkmt7oxdSRK6KUStTHjHpiyvsHQoMSXZHCMKcQUcX13H9s1nx-LZ1Y-xATw6YYgULrfBE6_maxN2ueTQTeWRIQWS8ewO91Okjcmdg/s600/cyber_es_mm.png"/></a></div></p>
<p>Fig 1: Event study results for all 48 incidents.</p>
<p>We observe a significant decrease in the cumulative abnormal return (CAR) after the event date. The average decrease in the first month after the event was 3.48%. At its lowest, the CAR was -8.06%. However, with a widening 95% confidence interval, there is some uncertainty about the true effect of the cybersecurity incident on the stock prices of the companies. The sample size is low and the information available regarding the nature and magnitude of the incident is limited.</p>
<p><b>Event study covering incidents of the type "exploitation of application server"</b></p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiR0uvQd_SW42lpuAPWtCXzGznENkoVuQJxxKmowOL8X7OO1tQjFQWpBNWitZKd0OBaYxe5PkJuC2hHNnyqsfOJmaqpFiEQ5xH6qhxeLe-2dbSgcynO2zZEYwojJm1Nabx_TPcAKmLCwYWP1bhEPs1mCCafOyEXT8L6-rczdLsEvar_6o11MA/s480/cyber_es_mm_attack_type.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="480" data-original-width="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiR0uvQd_SW42lpuAPWtCXzGznENkoVuQJxxKmowOL8X7OO1tQjFQWpBNWitZKd0OBaYxe5PkJuC2hHNnyqsfOJmaqpFiEQ5xH6qhxeLe-2dbSgcynO2zZEYwojJm1Nabx_TPcAKmLCwYWP1bhEPs1mCCafOyEXT8L6-rczdLsEvar_6o11MA/s600/cyber_es_mm_attack_type.png"/></a></div></p>
<p>Fig 2: Event study results for 27 incidents which were of the type "exploitation of application server".</p>
<p>The majority of the cybersecurity incidents were of the type "exploitation of application server". We conducted another event study on this set of incidents. However, we do not see significant results. In the first month after the event, the CAR increased by an average of 9.79%.</p>
<h3>Limitations</h3>
<p>Our list of 48 incidents is certainly not exhaustive. Many cybersecurity incidents may not have been reported. Given that the majority of our data comes from news sources, some disclosures may have been made long past the incident date.</p>
<h3>Discussion</h3>
<p>We began by asking about the financial and reputational consequences of a cybersecurity breach in a listed Indian firm. The trends in our analysis show that investors do tend to react negatively to the news of a cybersecurity incident.</p>
<p>As time progresses, we may be able to find more conclusive answers to both questions. This is thanks to some recent changes in the disclosure regime which will give us the true picture of cybersecurity incidents at Indian listed companies. In November 2022, SEBI in its <a href="https://www.sebi.gov.in/reports-and-statistics/reports/nov-2022/review-of-disclosure-requirements-for-material-events-or-information-under-sebi-listing-obligations-and-disclosure-requirements-regulations-2015_64962.html">consultation paper</a> proposed amendments to these regulations. The consultation paper notes that cybersecurity incidents "may impact the operations and/or performance of the listed entity" but also recognizes that the "immediate disclosure of such events may not be desired since the entity may be vulnerable to further attacks". SEBI therefore proposed that the disclosures be made on a quarterly basis in the corporate governance report where the listed entity mentions the root cause of the incident as well as the remedial measures that they undertook. In June 2023, these proposals were adopted <a href="https://www.sebi.gov.in/legal/regulations/jun-2023/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-second-amendment-regulations-2023_72609.html">by amending</a> Regulation 27(2) of the LODR regulations. Given the recent amendments to the SEBI LODR regulations, the quality of information on cybersecurity incidents could become richer. This could inform further studies which could deploy more sophisticated methodologies that control for other factors that could affect stock prices and remove the variation caused by them before performing the event study.</p>
<h3>References</h3>
<p>Chirag Anand, Vimal Balasubramaniam, Vikram Bahure and Ajay Shah, <a href="https://CRAN.R-project.org/package=eventstudies">eventstudies: an R package for conducting event studies and a platform for methodological research on event studies</a>, NIPFP Macro/Finance group, 2014.</p>
<p>Hassan Cavusoglu, B. K. Mishra, and S. Raghunathan, <a href="https://personal.utdallas.edu/~huseyin/paper/market.pdf">The Effect of Internet Security Breach Announcements on Market Value: Capital Market Reactions for Breached Firms and Internet Security Developers</a>, <i>International Journal of Electronic Commerce</i>, Vol. 9 (2004), no. 104, pp. 70--104.</p>
<p>Karthik Kannan, Jackie Rees and Sanjay Sridhar, <a href="http://www.jstor.org/stable/27751241">Market Reactions to Information Security Breach Announcements: An Empirical Analysis</a>, <i>International Journal of Electronic Commerce</i>, Vol. 12 (2007), no. 1, pp. 69--91.</p>
<p>Eli Amir, Shai Levi and Tsafrir Livne, <a href="https://ssrn.com/abstract=3136193">Do Firms Underreport Information on Cyber-Attacks? Evidence from Capital Markets</a>, <i>Review of Accounting Studies</i>, Vol. 23 (2018), issue 3, no. 11, pp. 1177-1206.</p>
<p>Charles Harry and Nancy Gallagher, <a href="https://cissm.umd.edu/sites/default/files/2019-07/Cyber-Taxonomy-101918.pdf">Classifying cyber events: a proposed taxonomy</a>, <i>Journal of Information Warfare</i>, Vol. 17 (Summer 2018), no. 3, pp. 17-31.</p>
<p>Eugene F. Fama, Lawrence Fisher, Michael C. Jensen and Richard Roll, <a href="https://doi.org/10.2307/2525569">The Adjustment of Stock Prices to New Information</a>, <i>International Economic Review</i>, Vol. 10, no. 1, pp. 1--21.</p>
<br>
<p>Sayan Dasgupta and Karthik Suresh are researchers at XKDR Forum. Renuka Sane is a researcher at TrustBridge. We thank Ajay Shah, Geetika Palta and Siddhant Bharti for their useful comments.</p>
Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com3tag:blogger.com,1999:blog-19649274.post-7513237395853983512024-01-09T13:55:00.022+05:302024-02-27T23:55:58.410+05:30The difficulties of asset monetisation in the transmission sector<p> by Akshay Jaitly, <a href="https://blog.theleapjournal.org/2024/02/author-charmi-mehta.html#gsc.tab=0">Charmi Mehta</a>, Rishika R, and Ajay Shah. </p>
<h3> Introduction </h3>
<p>About 95% of nationwide transmission assets in India are presently owned by the government company, Power Grid Corporation of India Limited (PGCIL). A transformation of electricity transmission systems is required to achieve decarbonisation, reflecting the distributed geography of renewables generation in India, and the eventual de-commissioning of present coal-based power generation. Several estimates suggest a total required investment, for electricity transmission, of over INR 2 trillion over the next five years.</p>
<p>Given the public finance and managerial constraints in the Indian state, private investment is critical to achieve the required investments. Land, compliances and clearances impede pure private greenfield transmission projects, so one method there is for the government to do development and then monetise the assets. Existing assets are relatively straightforward to operate and risk-free, with a steady stream of user charges, where private sector participation is then readily achieved.</p>
<p>While attempts at attracting private investment in this field have taken place from 2006, the outcomes so far have been poor. One response to this was in October 2022, where the Ministry of Power issued <a href="https://powermin.gov.in/sites/default/files/Guiding_Principles_for_Monetization_of_Transmission_Assets_in_the_Public_Sector_through_Acquire_Operate_Maintain.pdf">guiding principles</a> for states to <a href="https://www.livemint.com/industry/energy/power-firms-finalize-models-for-asset-monetisation-plan-11643570859182.html">monetise 14% of transmission assets</a> that are currently owned and operated by state-owned transmission utilities. This involved a new contracting mechanism: the "Acquire, Operate, Maintain and Transfer (AOMT) model".</p>
<p>This is the temporary transfer of asset ownership (i.e. not a sale) to private firms in exchange of an upfront payment. Firms are expected obtain cash from the operations (user charges) of the asset, depending on the model deployed for monetisation. Asset monetisation has twin benefits for governments - first, it provides short-term liquidity to the public sector entity in the form of upfront payment for the asset(s); and second, it allows the government to delegate the operations and maintenance (O&M) to the private sector, enabling public sector entities to harness private sector capabilities and reduce their scope.</p>
<h3>How previous asset monetisation models worked</h3>
<p>Asset monetisation has been used as a contracting model for O&M since 2018 when the National Highways Authority of India (NHAI) began using the toll-operate-transfer (TOT) model, which draws on ideas from <a href="https://assets.kpmg.com/content/dam/kpmg/sg/pdf/2020/07/Global-infrastructure-asset-recycling-and-infra-capital.pdf">Australia, North America and Europe</a>. Besides this, InvITs have been used in the transmission sector. There is significant knowledge and experience around InvITs and TOT contracts in India: they constitute the baseline against which the new AOMT can be understood. Table 1 provides a comparison of the three models on key features. </p>
<center>
<p>Table 1: A comparison of key features across contracting models - InvITs, TOT and AOMT.
</center>
<table border=1 align = "center" cell padding = "15" style='font-size: 74%'>
<tr>
<th> </th>
<th>InvITs</th>
<th>Toll Operate Transfer </th>
<th>AOMT</th>
</tr>
<tr>
<td width="18%">Description</td>
<td>Transfer of assets to listed registered trusts regulated by Securities Exchange Board of India which issues units to multiple investors. Comparable to equity for a limited time period. </td>
<td>Temporary transfer of asset ownership for an upfront payment from the private party who is granted this concession. The private party is also granted rights to collect user charges, and other charges to finance the O&M of the asset. </td>
<td>Temporary transfer of ownership of assets for upfront payment from the private party, in turn allowing them to operate and maintain the asset, and generate revenue from it.</td>
</tr>
<tr>
<td> Regulation of investment vehicle </td>
<td>Trust to be registered by SEBI; existing licences applicable</td>
<td>SPV/ investor entity regulated by contract terms </td>
<td>Transmission licence transfer/re-registration to be approved by State electricity regulator</td>
</tr>
<tr>
<td>Regulation of user charges</td>
<td>Approved by electricity regulator and governed by Transmission Service Agreement</td>
<td> As per National Highway Toll Determination Rules</td>
<td> Approved by electricity regulator and governed by Transmission Service Agreement</td>
</tr>
<tr>
<td>Mode of returns</td>
<td>Returns from dividends, interest and capital gains on units</td>
<td>Toll charges</td>
<td>Transmission charges (varied across states)</td>
</tr>
<tr>
<td> O&M</td>
<td>Public</td>
<td>Private</td>
<td>Private</td>
</tr>
<tr>
<td>Ownership</td>
<td>Pooled; investors</td>
<td>Single or consortium</td>
<td>Single or consortium</td>
</tr>
</table>
<p><i>The Toll-Operate-Transfer model in Indian Highways</i></p>
<p>In 2018, the NHAI bundled approximately 500 km of highways for the first auction, and potential investors were to bid the upfront payment they would make for the bundle. In return, investors receive the right to operate the highway and collect tolls generated from it during the concession period. This model provides the awarded party autonomy on operations and revenue generation, eliminating the involvement of the public authority in O&M.</p>
<p>The NHAI has so far attempted to monetise ten bundles (rounds) of assets with varied rates of success. The lack of bids, <a href="https://www.financialexpress.com/business/infrastructure-nhai-cancels-two-projects-on-low-bids-2475527/">undervalued bids</a>, and low price recovery led to auctions being stalled, bids annulled and fresh auctions being called, several times. Most recently, <a href="https://infra.economictimes.indiatimes.com/news/roads-highways/nhai-annuls-highest-bid-of-sekura-roads-for-tot-bundle-10-as-it-was-below-reserve-price/94566122">the 9th and 10th TOT bundles</a> up for auction were halted as they did not meet the reserve price set by NHAI. Despite using a familiar model, the implementation has not yielded positive outcomes. Large value <a href="https://blog.theleapjournal.org/2022/07/identifying-roadblocks-in-highway.html#gsc.tab=0">disputes in highway contracting</a>, low standards of public disclosure and the inability to make accurate revenue growth projections are some of the reasons for its substandard outcomes. </p>
<p><i>The InvIT model in the transmission sector</i></p>
<p>In 2020, the PGCIL became the <a href="https://www.business-standard.com/article/economy-policy/ccea-allows-power-grid-corp-to-monetise-its-assets-through-invits-120090801928_1.html">first publicly owned company</a> to set up its own investment trust (InvIT). The PGCIL InvIT holds transmission assets worth INR 7500 crores and it opened for subscription in early 2021. Within two days of the offer, <a href="https://economictimes.indiatimes.com/markets/ipos/fpos/powergrid-invit-ipo-subscribed-18-so-far-on-day-2/articleshow/82323679.cms?from=mdr">59% of the units were subscribed</a>. When the session was closed, PGCIL benefited from a <a href="https://www.business-standard.com/article/markets/powergrid-infrastructure-investment-trust-ends-debut-trade-at-3-premium-121051500014_1.html">3% premium</a> over the issue price and the initial public offer was subscribed 4.83 times. During this period, investor perception was also positive with analysts <a href="https://www.moneycontrol.com/news/business/ipo/powergrid-invit-ipo-opens-should-you-subscribe-6828411.html">predicting</a> that the InvIT would yield steady long-term returns. PGCIL eventually auctioned <a href="https://www.business-standard.com/article/markets/power-grid-corporation-raises-rs-2-736-crore-through-invit-ofs-121051401063_1.html">27.41 crore units</a>, earning INR 2,736.02 crore in May 2021. However, concerns with the lack of transparent price discovery and taxation norms on long-term capital investments have prompted PGCIL to <a href="https://www.livemint.com/industry/energy/pgcil-drops-second-invit-tranche-plan-11674062800103.html">rethink</a> its InvIT plans. Additionally, the retention of O&M as a function of the public sector entity may create a hesitation to investment by private entities.</p>
<p>Neither of the two distinct asset monetisation models that India has experimented with achieved the outcomes it set out to achieve. On one hand, InvIT provides a diversification of risk but O&M remains with the government. On the other hand, TOT provides autonomy over O&M but ownership is not diversified. This serves as a case study for the design of new models for asset monetisation, and whether it can address the concerns of previous models used. </p>
<p>There is no reason why an InvIT structure cannot be augmented to also include the contracting out of O&M functions to a private entity. This will bring in private sector efficiency and allay the fears of investors. There are two ways in which the InvIT could be presently undertaking O&M: (i) it is possible that PGCIL is charging the InvIT a fee and doing the O&M, or (ii) O&M staff may have been transferred with the assets and the InvIT is doing its own O&M. Either way the function is retained with the government, making it a potential point of concern for investors. To eliminate this friction, a third model is preferable, where O&M functions of an InvIT are contracted out. This could have been a plausible design option since InvITs have been around for a while, instead of opting for a fully different model. </p>
<h3>Concerns about the AOMT</h3>
<p>The importance of private investment in transmission is well taken. The question lies in the pathway to a solution. We recognise the immense complexities of getting up to a well-functioning institutional mechanism. We also recognise that different sectors may warrant different approaches to doing the same things. There are two main concerns with the AOMT model:
<ol>
<li> The contract design is not suited to state government assets due to problems of state-level electricity governance; the overall lack of control on streams and decisions of revenue (user charges) is a factor that models should solve for; and </li>
<li> The unfamiliarity with the model among state governments (and asset monetisation generally). There are two existing mechanisms for doing this, with precedents and understanding within infrastructure, finance and government establishments: InvIT and TOT. These represent natural pathways to take for electricity transmission assets. </li>
</ol>
<p>It has been over one year since the introduction of the model and it has seen no uptake from states so far. States have expressed concerns with the design and feasibility of the model. When the Ministry of Power proposed AOMT, there was a need for a first principles argument and public consultation, about why a third strategy was proposed. They needed to show the difficulties that would arise through the three existing pathways, and how the modifications chosen under the AOMT model addressed these difficulties.</p>
<h3>References</h3>
<p>Ministry of Power, <a href="https://powermin.gov.in/sites/default/files/Guiding_Principles_for_Monetization_of_Transmission_Assets_in_the_Public_Sector_through_Acquire_Operate_Maintain.pdf">Guiding principles for Asset Monetisation in the Transmission sector for state governments</a>, October 2022.</p>
<p>Utpal Bhaskar, <a href="https://www.livemint.com/industry/energy/power-firms-finalize-models-for-asset-monetisation-plan-11643570859182.html">Power firms finalize models for asset monetisation plan</a>, Livemint, 2022.</p>
<p>KPMG, <a href="https://assets.kpmg.com/content/dam/kpmg/sg/pdf/2020/07/Global-infrastructure-asset-recycling-and-infra-capital.pdf">Global Infrastructure Asset Recycling and Infrastructure Capital</a>, June 2020.</p>
<p>Charmi Mehta and Bhargavi Zaveri, <a href="https://www.business-standard.com/article/opinion/monetisation-lessons-from-nhai-121031001703_1.html">Monetisation lessons from NHAI</a>, The Business Standard, March 2021.</p>
<p>Surya Sarathi Ray, <a href="https://www.financialexpress.com/business/infrastructure-nhai-cancels-two-projects-on-low-bids-2475527/">NHAI cancels two projects on low bids</a>, Financial Express, March 2022.</p>
<p>P Manoj, <a href="https://infra.economictimes.indiatimes.com/news/roads-highways/nhai-annuls-highest-bid-of-sekura-roads-for-tot-bundle-10-as-it-was-below-reserve-price/94566122">NHAI annuls highest bid of Sekura Roads for ToT Bundle 10 as it was below reserve price</a>, The Economic Times, Sept 2022.</p>
<p>Charmi Mehta and Susan Thomas, <a href="https://blog.theleapjournal.org/2022/07/identifying-roadblocks-in-highway.html#gsc.tab=0">Identifying roadblocks in highway contracting: lessons from NHAI litigation</a>, The LEAP Blog, July 2022.</p>
<p>Shreya Jai, <a href="https://www.business-standard.com/article/economy-policy/ccea-allows-power-grid-corp-to-monetise-its-assets-through-invits-120090801928_1.html">PowerGrid's asset monetisation via InvITs gets Cabinet go-ahead</a>, Business Standard, Sept 2020.</p>
<p>Sundar Sethuraman, <a href="https://www.business-standard.com/article/markets/powergrid-infrastructure-investment-trust-ends-debut-trade-at-3-premium-121051500014_1.html">PowerGrid Infrastructure Investment Trust ends debut trade at 3% premium</a>, Business Standard, May 2021.</p>
<p>Sunil Shankar Matkar, <a href="https://www.moneycontrol.com/news/business/ipo/powergrid-invit-ipo-opens-should-you-subscribe-6828411.html">PowerGrid InvIT IPO opens: Should you subscribe?</a>, MoneyControl, April 2021.</p>
<p>Utpal Bhaskar, <a href="https://www.livemint.com/industry/energy/pgcil-drops-second-invit-tranche-plan-11674062800103.html">PGCIL drops second InvIT tranche plan</a>, LiveMint, Jan 2023.</p>
<br>
<p> Akshay Jaitly is co-founder of Trustbridge Rule of Law Foundation and Trilegal, Charmi Mehta is a researcher with XKDR Forum, Rishika R is a researcher with Trustbridge Rule of Law Foundation, and Ajay Shah is co-founder of XKDR Forum. </p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-44143160767835961302023-12-06T13:44:00.010+05:302023-12-06T21:10:55.419+05:30How substantial are non-substantive hearings in Indian courts: some estimates from Bombay<p>by <a href="https://blog.theleapjournal.org/2022/12/author-pavithra-manivannan.html">Pavithra Manivannan</a>, <a href="https://blog.theleapjournal.org/2023/04/author-karthik-suresh.html">Karthik Suresh</a>, <a href="https://blog.theleapjournal.org/2014/10/author-susan-thomas.html">Susan Thomas</a>, and <a href="https://blog.theleapjournal.org/2015/12/author-bhargavi-zaveri.html">Bhargavi Zaveri-Shah</a>.</p>
<h3>The problem</h3>
<p>If we think about court as a services production organisation, then the number of staff, technology and other resources would be <i>inputs</i> to deliver well-defined <i>outcomes</i> of litigants' cases being decided satisfactorily. In between these inputs and outcome are <i>hearings</i> as the <i>output</i> of courts. Hearings are where the matter of the dispute is presented in front of a judge. When hearings are <i>substantive</i>, progress is made in resolving the dispute.</p>
<p>Not all hearings are substantive. Some non-substantive hearings are inevitable, involving procedural matters such as the filing of documents. When a hearing is non-substantive because the matter is rescheduled to a later date, this imposes a burden of time and cost upon litigants and the court.</p>
<p>Such unexpected non-substantive hearings are an important problem in the Indian legal system. The Civil Procedure Code (1909) prescribes a limit of three adjournments per case, but reality often diverges from this stated limit. In 2021, the e-committee of the Supreme Court has proposed <a href="https://dashboard.doj.gov.in/eodb/reform.html">an alert for judges to be informed about breaches in this 3-adjournment rule</a> within its case management system. There is thus a recognition of the presence of this problem.</p>
<p>What is not, at present, known is a quantitative sense of the improtance of the problem. In this article, we estimate the magnitude of non-substantive hearings for one group of situations. The working of the Indian legal system varies widely by venue and case type. In order to measure the phenomenon of non-substantive hearings, we pick one relatively homogeneous class of disputes --- debt dispute resolution --- which are heard at three courts in Bombay. They are the National Company Law Tribunal (NCLT), the Debt Recovery Tribunal (DRT), and the Bombay High Court (Bombay HC). For these three venues, we seek to estimate four quantities: </p>
<ol>
<li> What is the fraction of substantive hearings in these courts?</li>
<li> Out of the hearings in a case, how many are substantive?</li>
<li> How much time elapses till a first substantive hearing?</li>
<li> How likely is the first hearing to be a substantive hearing?</li>
</ol>
<h3>Definitions and estimates</h3>
<p>An understanding of the number and likelihood of such hearings is important to set litigant expectations about the time and costs spent when seeking redress from the court. Regy and Roy (2015) use the term 'failed hearing' in their work on understanding what causes delays at the Delhi Debt Recovery Tribunal (DRT). They classify failed hearings as those hearings that satisfy three criteria: the hearing resulted in an adjournment without any judicial business, the adjournment was avoidable and the adjournment was not penalised. Khaitan et al. (2017) record hearings as 'inefficient' in their study on court efficiency, where the definition of an efficient court is based on whether the court meets set deadlines or not. In their work on cases from the Delhi High Court, they record hearings as 'inefficient' when there is a failure, either because of the court ('insufficient time to hear the case', 'absent judge') or because of either party ('counsel sought time', 'Absent counsel', 'Delay condoned', 'Restoration'). These papers present us with the earliest estimates of non-substantive hearings. Regy and Roy (2017) record 58% of hearings at the DRT as failed hearings. Khaitan et al (2017) record 48% of hearings at the Delhi HC as inefficient. Both suggest that attempts to reduce adjournments could reduce court delays by up to 50-60%, based on these estimates.</p>
<p>The Ministry of Law, Justice and Company Affairs, in the context of <a href="https://legalaffairs.gov.in/sites/default/files/OMNO26-1_0.pdf">fees payable to government counsel</a>, refer to 'Effective hearings' and 'Substantial work'. Effective hearings are where either one or both parties are heard by the court, while 'non-effective' hearings are where 'the case is mentioned and adjourned or only directions are given or only judgement is delivered by the court'. The same memorandum refers to substantial work as 'when the case has been admitted by the Court after hearing of preliminary objections or filing of the affidavits/counter-affidavits etc. by the Counsel'. These definitions guide a distinction between adjournments and non-substantive hearings.</p>
<p>In this article, we broaden the notion of differentiating non-substantive hearings beyond adjournments. Only hearings where there is application of judicial mind to the resolution of the dispute, are classified as 'substantive'. Thus hearings that involve disposals, withdrawal, admission, reporting settlement, are classified as substantive hearings. Adjournments are classified within non-substantive hearings. A reading of the order for an adjourned hearing may simply have a next date given for a hearing. These may be adjournments on account of paucity of time, time sought by parties, non-appearance of parties, wrongly listed or technical glitches. We also classify hearings as non-substantive when orders in which the court gives directions to file pleadings or take on record pleadings. Hearings that involve matters of procedure, without a substantial impact on the resolution of the dispute itself, are taken as non-substantive for a litigant. </p>
<h3>The dataset</h3>
<p>We hand-constructed a novel dataset, where for a sample of cases, we built the existing case life-cycle by collating all the hearings for a given case. We then read and classified each hearing in the case life-cycle as a substantive or a non-substantive hearing using the approach listed in the previous section. Since each judge records what transpired at the hearing in her own style, parsing and classifying every order necessarily involved a subjective judgement about whether it is a substantive hearing, or not. Therefore, once we had classified orders, we then subjected the classification to a double-blind peer review.</p>
<p>We built this dataset for cases of debt dispute resolution, using orders collected from the websites of the High Court (HC), DRT and NCLT in Bombay. The analysis was done for a random sample of 200 matters from each of the three courts. In these samples, we selected 100 disposed cases and 100 pending cases for each court. <!-- A reason to examine both types of cases is because previous studies have reported a larger number of adjournments for pending cases (Khaitan et al, 2017). --> The hearing dates ran between 2018 and 2022.</p>
<p>One difference in how orders are uploaded on the Bombay HC versus the two tribunals is important to take note of: each court follows a different timeline for uploading case life-cycle data. On the Bombay HC website, the case appears from the date of filing. For the tribunal courts, the case appear on their respective websites only from the <i>first hearing date</i>, irrespective of the filing date of the case. Since the sample of cases from each court was drawn at random, there could be cases in the Bombay HC without a hearing, while this is not possible with cases in the sample from the tribunal courts. Further, this makes a strict comparison of hearing characteristics at the Bombay HC and the tribunal courts difficult. These differences impose constraints on how various measures are calculated for each court, in order to enable a balanced comparison across the courts.</p>
<h3><b>Findings</b>: What is the fraction of substantive hearings in the three courts?</h3>
<p><b>Table 1: Fraction of substantive hearings to total hearings in three debt dispute resolution courts </b></p>
<table cellpadding="5">
<tr>
<th width="12%"> Court </th>
<th colspan="3">Hearings in full sample</th>
<th colspan="4">Hearings in disposed cases</th>
</tr>
<tr>
<td> </td>
<td width="10%">Total</td>
<td>Substantive</td>
<td>Fraction</td>
<td> </td>
<td>Total</td>
<td>Substantive</td>
<td>Fraction</td>
</tr>
<tr>
<td> Bombay HC<sup><b>*</b></sup> </td>
<td style="text-align:center;"> 399 </td>
<td style="text-align:center;"> 192 </td>
<td style="text-align:center;">0.34<sup><b>*</b></sup></td>
<td> </td>
<td style="text-align:center;"> 208 </td>
<td style="text-align:center;"> 139 </td>
<td style="text-align:center;">0.48<sup><b>*</b></sup></td>
</tr>
<tr>
<td> DRT </td>
<td style="text-align:center;"> 575 </td>
<td style="text-align:center;"> 229 </td>
<td style="text-align:center;">0.40 </td>
<td> </td>
<td style="text-align:center;"> 267 </td>
<td style="text-align:center;"> 116 </td>
<td style="text-align:center;">0.43 </td>
</tr>
<tr class="border-bottom">
<td> NCLT </td>
<td style="text-align:center;"> 1135 </td>
<td style="text-align:center;"> 258 </td>
<td style="text-align:center;"><b>0.23</b> </td>
<td> </td>
<td style="text-align:center;"> 365 </td>
<td style="text-align:center;"> 145 </td>
<td style="text-align:center;"><b>0.40</b> </td>
</tr>
</table>
<p><sup><b>*</b>57 cases at the Bombay HC had zero hearings. The fractions reported for the Bombay HC have been adjusted to account for this.</sup></p>
<p>Table 1 shows the total number of hearings, the number of substantive hearings and the ratio of substantive to total hearings in the three courts. The number of non-substantive hearings can be calculated as (Total hearings - Substantive hearings). This table shows that the NCLT generates the lowest ratio of substantive hearings among the three courts, while the Bombay HC outputs the highest ratio.</p>
<p>Table 1 also shows the data on the ratio of substantive hearings for disposed cases in the three courts. This indicates two features: first, the court generates a higher fraction of substantive hearings in the case of disposed cases. This means that there is a higher number of substantive hearings among hearings for cases that have been disposed. But, there are still fewer substantive hearings than non-substantive hearings. Less than than 50% of all hearings for disposed cases are substantive hearings. This observation holds for all three courts. This suggests that process improvements that simplify administrative hearings or reduce the incidence of adjournments will have a significant improvement in the experience of the litigant in these courts.</p>
<p>The above finding relates to the outputs generated by the courts as a whole, in relation to each other. The litigant focus will be more on what we observe about hearings per case. We examine these questions next.</p>
<h3><b>Findings</b>: What is the fraction of substantive hearings <i>per case</i> in the three courts?</h3>
<p>Table 2 shows the summary statistics of <i>hearings per case</i> in the sample. The values presented include the minimum, median, maximum and average number of hearings per case.</p>
<p><b>Table 2: Number of hearings <i>per case</i> for three debt dispute resolution courts</b></p>
<table cellpadding="5">
<tr>
<th width="20%"> Court </th>
<th colspan="3">Hearings </th>
<th colspan="3">Substantive hearings </th>
</tr>
<tr>
<td></td>
<td width="15%">Median </td>
<td>Average</td>
<td> </td>
<td>Median </td>
<td>Average</td>
</tr>
<tr>
<td> Bombay HC </td>
<td style="text-align:center;"> 1 </td>
<td style="text-align:center;"> 1.21<sup><b>*</b></sup></td>
<td> </td>
<td style="text-align:center;"> 1 </td>
<td style="text-align:center;"> 0.43<sup><b>*</b></sup></td>
</tr>
<tr>
<td> DRT </td>
<td style="text-align:center;"> 3 </td>
<td style="text-align:center;"> 2.88 </td>
<td> </td>
<td style="text-align:center;"> 1 </td>
<td style="text-align:center;"> 0.82<sup><b>*</b></sup></td>
</tr>
<tr>
<td> NCLT </td>
<td style="text-align:center;"> 5 </td>
<td style="text-align:center;"> <b>5.68</b> </td>
<td> </td>
<td style="text-align:center;"> 1</td>
<td style="text-align:center;"> <b>0.91</b><sup><b>*</b></sup></td>
</tr>
</table>
<p><sup><b>*</b>Each court has a different number of cases for which substantive hearings could be observed. The counts are 79 cases in the Bombay HC, 57 cases in the DRT and 60 cases in the NCLT with no substantive hearings</sup></p>
<p>Table 2 shows two values for each court: the average number of hearings per case, and the average number of substantive hearings per case. We see that the Bombay HC has the lowest average number of hearings per case (<b>1.21</b>). The NCLT has the largest number of hearings per case (<b>5.68</b>). This indicates that NCLT has more than 3 times the hearings per case compared to the Bombay HC. It holds more than 2 times the average number of hearings at the DRT which has <b>2.88</b> hearings per case, on average.</p>
<p>When comparing the values of the average number of hearings per case to the average number of substantive hearings per case, Table 2 shows that all courts have <i>less than 1 substantive hearing per case</i>, on average. The NCLT has the highest average number of substantive hearings per case (<b>0.91</b>) but it is less than one. The average number of substantive hearings per case for the DRT is almost the same as the NCLT, despite the number of hearings per case being double at the NCLT. This suggests that for every 6 hearings at the NCLT, one is likely to be substantive, while for every 3 hearings at the DRT, one is likely to be substantive. If the number of hearings can be used as a proxy for the cost of filing a case in court, then NCLT is likely to be the lowest benefit to cost for the litigant.</p>
<p>But, the hearing or substantive hearing per case is often <b>not</b> the sole objective for a litigant who approaches court for the resolution of debt. What is also important is the time within which the substantive hearing can be reached. For this, we next examine what is the expected time to the first substantive hearing.</p>
<h3><b>Finding</b>: Time to first substantive hearing</h3>
<p>When the case gets a first substantive hearing is an important milestone for a litigant. It is likely to be a hearing in which substantive oral arguments will be made on questions such as the admission of the matter before the court, questions of interim relief that will operate pending the final disposal of the matter, the impleadment of new parties to the matter, the time schedule for the filing of replies and counter-replies, and so on. Setting an expectation on when such a hearing is likely to be conducted after the case is filed, is therefore an important input to preparing for the case.</p>
<p>We use a survival analysis approach to estimate the time to a first substantive hearing after the filing date (Manivannan et al, 2023). Figure 1 shows two survivor functions for each court. The survivor function can be represented as a curve on a graph, which shows the chances of <i>not</i> getting a first hearing / substantive hearing (on the y-axis) against time from filing the case in court (on the x-axis). When the case is first filed, the chance of not getting a substantive hearing is 1 or 100%. I.e., at the outset, all cases experience no hearing / substantive hearing. As time progresses, this number starts to become lower than 1. The `faster' the curve drops from 1, the higher the chances that the case had a first hearing / substantive hearing. On each graph, the darker line shows the chances of a first substantive hearing, while the lighter line shows the chances of a first hearing.</p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHdly97tCBLUvlT34rUyZKfzttBSYWozAXj896KVcMuImPppEHkyO6_3NrcKIZ0bCRUtPKrk_FybnBT36Du9iLsv0W2a2jzHZkcj5S9OO_rxy79a5FYr5om5bGeyx53yl_5WbTDkvuL6vfKMxb9lSbdxsECPgU5YBuwDGDWrcUs74KDPltLQ/s3000/bhcDrtNclt_H1S1.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="1200" data-original-width="3000" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHdly97tCBLUvlT34rUyZKfzttBSYWozAXj896KVcMuImPppEHkyO6_3NrcKIZ0bCRUtPKrk_FybnBT36Du9iLsv0W2a2jzHZkcj5S9OO_rxy79a5FYr5om5bGeyx53yl_5WbTDkvuL6vfKMxb9lSbdxsECPgU5YBuwDGDWrcUs74KDPltLQ/s600/bhcDrtNclt_H1S1.png"/></a></div></p>
<p>The graph for the Bombay HC (in red) shows that at the end of one year, <b>40</b>% of the cases have not obtained one hearing. When we focus on substantive hearings only, <b>60</b>% of the cases have not achieved this milestone. The dark and light line are clearly separated, which indicates that these two values are distinctly different from each other.</p>
<p>The graph for the DRT (in green) shows that <b>77</b>% of the cases have not got one hearing at the end of the first year after filing. When we focus on substantive hearings only, this is true for <b>80</b>% of the cases. This means that only 20% of the cases can be expected to get a substantive hearing by the end of the first year from filing.</p>
<p>The graph for the NCLT (in blue) shows that at the end of one year, a little less than <b>50</b>% of the cases have not got one hearing. When we focus on substantive hearings only, this fraction goes up to <b>70</b>%. This means that 30% of the cases are likely to have achieved a first substantial hearing in the first year from filing. The gap between the curves for the first hearing and the first substantive hearing is the largest for the NCLT, among the three venues.</p>
<p>These graphs show that the litigant is most likely to get a first substantive hearing within one year of filing from the BHC.</p>
<p>We have chosen to estimate the chances of getting a first hearing and a first substantive hearing in one year after the case has been filed. But these same graphs can be equally used to estimate the chance of a first substantive hearing for shorter or longer periods of time also. For example, the chance of a first hearing within <i>one month</i> of filing the case is the highest at the NCLT, followed by the DRT, and last, at the Bombay HC. Similarly, the graphs show that the chances of getting a first substantive hearing within <i>one month</i> of filing is the highest at the NCLT, up to three months after filing. But if the case is not heard within this time, the chances of getting either a first hearing or a first substantive hearing are higher for a case which is filed at the Bombay HC.</p>
<h3>Conclusion</h3>
<p>Unpredictable non-substantive hearings constitute a process failure. In this article, we show that for one kind of matter (debt dispute resolution), at three venues, the fraction of non-substantive hearings is 64%, 60% and 77%. From the litigants' perspective of measuring the performance of courts, if a good measure is the fraction of matters that get to a substantive hearing within the first year after filing, we find that this value stands below 50% for all the courts studied.</p>
<p>There is merit in establishing systematic mechanisms for computing such performance metrics. These findings can help litigants estimate the possibilities of events and expenditures, after a case begins. Such information systems would help improve decision-making about suing, about settling, and the choice of venue, for the litigant. A regular estimation of these metrics can also be a useful guide for changes made in court processes, with the understanding that a change in performance metric will be some complex combination of the process change, along with the change in the response of the people who both make up the legal system, and those who use it. <!-- Bhargavi, Karthik, Pavithra: Is there a neat example that we can give for this: when a change was made to court processes, the response was opposite to what was intended, because of litigant choices? Something like the unintended consequences of S.138 of the NIAct increasing the workload of courts, but some other example? --></p>
<p>Finally, this work highlights the difference in objectives for which performance metrics need to be designed. While the producer (court) will find it optimal to use the ratio of aggregate substantive to total hearings, the litigant will optimise based on the metric of substantive hearings per case which can lead to a different choice relative to what the court might expect.</p>
<h3>References </h3>
<p> Nitika Khaitan, Shalini Seetharam and Sumathi Chandrashekaran (2017), <a href="https://vidhilegalpolicy.in/research/2017-3-29-inefficiency-and-judicial-delay-new-insights-from-the-delhi-high-court/"><i>Inefficiency and Judicial Delay: New Insights from the Delhi High Court </i></a>, Vidhi, March 2017.</p>
<p> Pavithra Manivannan, Susan Thomas and Bhargavi Zaveri-Shah (2023), <a href="https://blog.theleapjournal.org/2023/06/helping-litigants-make-informed-choices.html#gsc.tab=0"><i>Helping litigants make informed choices in resolving debt disputes</i></a>, The Leap Blog, 15 June 2023. </p>
<p> Prasanth Regy and Shubho Roy (2017), <a href="https://macrofinance.nipfp.org.in/releases/RoyRegy2017_judicial-delay-debt-tribunals.html"><i>Understanding Judicial delays in debt tribunals</i></a>, NIPFP Working Paper 195, May 2017. </p>
<br>
<p> Pavithra Manivannan, Karthik Suresh, and Susan Thomas are researchers at XKDR Forum, Mumbai. Bhargavi Zaveri-Shah is a doctoral candidate at the National University of Singapore. We thank Geetika Palta for data support, and Purbasha Panda for her support in reading through the case orders. We also thank two anonymous referees and Ajay Shah for useful feedback and comments.</p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-17404512693941777032023-11-23T12:49:00.001+05:302023-11-23T23:15:24.839+05:30The journey of Indian finance<p>by Ajay Shah.</p>
<p>A great tool for making sense of things is a sense of history. At each point in time, we should wonder: what was the situation, what was the problem that was sought to be solved, what was done, how did it work out? This helps in all fields; e.g. we understand special relativity better when we understand the journey of ideas leading up to Einstein.<p>
<p>In this spirit, economic history is central to understanding economics. One of the great failures of modern economics is the loss of the economic history perspective. Most people in a formal education in economics do more convex optimisations than economic history, and that's unwise.</p>
<p>Latika Chaudhary, Tirthankar Roy and Anand V. Swamy invited me to write for their edited book, the <i>Cambridge Economic History of Modern South Asia</i> (forthcoming). I wrote <a href="https://xkdr.org/paper/the-journey-of-indian-finance">a paper on the journey of Indian finance</a>, starting at 1947. Many odd features of Indian finance make sense when viewed in this economic history perspective.</p>
<p>There is an important kind of economic history, an epsilon-delta tradition, where data, archival texts and documents are precisely pinned down. Alongside this, it is good to also have a strategic view. The paper has such a high level treatment of the journey of ideas, interests and institutions. It is organised as 10 sections on banking, the equity market, other financial firms, capital controls, bankruptcy, monetary policy, household finance, systemic risk, the working of financial agencies and the policy process.</p>
<p>In each of the 10 areas, I try to offer the birds eye view, a sense of what happened and why, of what got done and what didn't, and the forces at work. There is a unified chronology, evaluation and bibliography. Many epiphenomena are glossed over, so as to focus on the essence of finance: the play of time, risk, information, individual optimisation, and principal-agent problems. Each of the 10 area-essays needs to be turned into a full blown economic history paper, including epsilon-delta style work. This paper can help others get started on such research projects.</p>
<p>There are two ways to interpret the journey of Indian finance: a market failure view, and a public choice view.</p>
<p>On one hand, there was a journey of ideas, with learning (in some areas) about how state coercion can counter the market failures in finance. This is a story of building knowledge about the place of the state in Indian finance, and then building state capacity to try to help with useful interventions. The story contains many crises, some useful feedback loops, and some loss of institutional memory.</p>
<p>And then, there was the power conflict. The financial system constitutes the commanding heights of the economy. The Indian state has tried to control the financial system, and direct its resource allocation in ways that suit the state. There has been an ebb and flow of different degrees of state control, and different methods through which the control is achieved. Alongside this, policy makers have sought praise through isomorphic mimicry.</p>
<p>A lot was done in the two phases identified in the paper. But it is far from finished. The basic machinery of markets and financial firms is quite incomplete. State coercion in finance requires fundamental reorientation towards state capacity in addressing market failure, through clarifying the objectives of financial agencies and establishing their checks and balances. These difficulties are an important source of Indian economic underperformance: finance remains central to the journey of Indian economic development. The future of Indian finance lies in building the knowledge and the community for these tasks.</p>xhttp://www.blogger.com/profile/14462096253602478048noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-68728765449061472122023-11-21T13:59:00.002+05:302023-11-22T16:10:41.732+05:30Announcements<h3>DAKSH is hiring for its Research Team</h3><br>
<h3>Responsibilities</h3>
<ul>
<li>Research and writing on access to justice, the working of the justice system, technology, data and the impact of procedural and substantive law on the administration of courts.</li>
<li>Collating, cleaning and analysis of data.</li>
<li>Project management including managing external stakeholders and proactively tracking tasks and project deliverables.</li>
<li>Developing high-quality knowledge products (reports, white papers, working papers) with research findings and disseminating such products to donors, partners and the general public.</li>
<li>Developing and implementing advocacy strategies.</li>
<li>Cultivating relationships and building networks with researchers, practitioners, policymakers and technology experts.</li>
<li>Engaging in public discourse by publishing articles, blog posts, and op-eds.</li>
</ul><br>
<h3>Education and skills</h3>
<ul>
<li>Undergraduate degree in law, any other post-graduate degree desirable.</li>
<li>At least five years of demonstrable work experience.</li>
<li>Strong research and writing skills.</li>
<li>Strong analytical skills and the ability to synthesise complex information into clear, actionable recommendations.</li>
<li>Good interpersonal skills and ability to work collaboratively.</li>
<li>Willingness to travel.</li>
<li>Ability to work with strict deadlines.</li>
<li>Deep passion to make an impact in the field of judicial reforms.</li>
<li>Knowledge of Hindi or Kannada with verbal fluency – writing skills would be an advantage.</li>
<li>Prior working experience in legal practice or a research organisation would be an advantage.</li>
</ul>
<p>This will be a three-year engagement.</p>
<h3>Location: Bangalore</h3>
<p>Interested candidates may send their CVs and a writing sample to careers@dakshindia.org</p>
<h3>About DAKSH</h3>
<p><a href="https://www.dakshindia.org/">DAKSH</a> is a non-profit working on law and justice reforms since 2015. We have done original research that highlights ground realities and presents systemic reforms required in the law and justice system from a citizen's perspective. DAKSH works at the intersection of data science, public policy and operations research. We are actively involved in creating sustainable solutions to improve judicial efficiency, process, administration and management.</p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-56459211335338637332023-11-20T13:29:00.003+05:302023-11-20T14:00:32.208+05:30Announcements<h2>Call for Student Research Associate: JDC- Justice Definitions Project</h2><br>
<h3>About Judicial Data Collaborative</h3>
<p>The <a href="https://judicialdatacollaborative.in/">Judicial Data Collaborative</a> is a community of researchers, technical experts, academics, organisations and interested people who want to create a platform to exchange ideas and collaborate on judicial data. The Judicial Data Collaborative is convened by <a href="https://www.dakshindia.org/">DAKSH</a>, a Bangalore-based nonprofit working on judicial reforms and access to justice.</p>
<p>One of the initiatives of the Judicial Data Collaborative is the <a href=" https://judicialdatacollaborative.in/judicial-data-wiki/">Justice Definitions Project</a>, in which we are co-creating an interactive, research-oriented wiki. This initiative aims to connect official literature, databases, and research on terms that affect the study of the justice system in India. For more information, <a href="https://judicialdatacollaborative.in/judicial-data-wiki/">visit</a>
<h3>Position: Student Research Associate</h3><br>
<h3>Project Overview</h3>
<p>The Justice Definitions Project aims to compile, organise, and make accessible crucial data about the Indian justice system. This initiative will enhance the understanding of the legal landscape, enabling informed decisions and research. The Student Research Associates will work on the assigned definition terms by collating information relating to it and uploading it
on our wiki, in the prescribed format. The Student Research Associates will be guided by the team at DAKSH, and the work will be reviewed by the members of the collaborative. The Student Research Associates will be awarded certificates based on their contribution to the project.
<h3>Key Responsibilities:</h3>
<ul>
<li>Collaborate with a diverse team of researchers, legal experts, and data analysts to curate and validate judicial data.</li>
<li>Contribute to the creation and maintenance of a comprehensive database related to the Indian legal system and its terminology.</li>
<li>Engage in data quality control and ensure the accuracy of information.</li>
<li>Collaborate on data visualization and presentation of research findings.</li>
</ul>
<h3>Qualifications:</h3>
<ul>
<li>Current enrollment in a recognised undergraduate Law Program. (Third year or Senior).</li>
<li>Strong analytical skills and a keen interest in legal research.</li>
<li>Excellent communication and team collaboration skills.</li>
<li>An inclination towards meticulous and detail-oriented work.</li>
</ul>
<h3>Duration:</h3>
<p>This is a part-time position requiring a commitment of approximately 5-7 hours per week, with a flexible schedule to accommodate your academic commitments. The position will be based remotely, allowing you to work from your location.</p>
<h3>Benefits:</h3>
<ul>
<li>Valuable hands-on experience in legal data analysis, research and writing.</li>
<li>Exposure to the work of a leading public policy research organization.</li>
<li>Opportunity to contribute to transparency and accountability in the Indian legal system.</li>
<li>Mentorship and guidance from experienced professionals in the field.</li>
</ul>
<h3>Apply Now</h3>
<p>Join us in our mission to drive transparency and accountability within the India by filling out the google form <a href="https://docs.google.com/forms/d/e/1FAIpQLSf6psWOYDWDvw8Xs9Hrx0x_P__n4FSu-WubIE7OIvnU1bSPjA/viewform?pli=1">here</a></p>
Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-79901618934694654572023-11-14T16:52:00.002+05:302023-11-14T17:16:37.321+05:30Announcements<p><a href="https://trustbridge.in/">TrustBridge Rule of Law Foundation</a> and <a href="https://xkdr.org/">XKDR Forum</a> run a monthly seminar series on <b><i>"Contracts and Contract Performance"</i></b>. This seminar series builds knowledge and community on the subject of the design and functioning of contracts, both private and public, in the Indian economy.</p>
<p>The first seminar in this series is being held on <b>28th November, 2023</b>.</p>
<h3>Registration</h3>
<p>Prior registration required for attendance. Register <a href="https://docs.google.com/forms/d/e/1FAIpQLSfnEXMM7Ndk1ssxkP-7O9P9JdmL6GXHitH9nFJQflOlDFfJqw/viewform">here</a>.</p>
<h3>Venue</h3>
<p>TrustBridge Rule of Law Foundation, 2nd Floor, B-40, Voluntary Health Association of India (VHAI), Qutab Institutional Area, New Delhi-110 016</p>
<h3>Program</h3>
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<th align="left">17:00 -- 17:10</th>
<th align="left">Opening remarks</th>
</tr>
<tr>
<th colspan=2><hr/></th>
</tr>
<tr>
<th align="left">17:10 -- 17:45</th>
<th align="left">Session 1: <i>Mediation as a mechanism for contractual
disputes resolution</i></th>
</tr>
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<th align="left"></th>
<th align="left">Presenter: Karan Gulati and Saurabh Modi, TrustBridge</th>
</tr>
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<th colspan=2><hr/></th>
</tr>
<tr>
<th align="left">17:50 -- 18:25</th>
<th align="left">Session 2: <i>Delays in S. 138 NI Act cases: are cheques an
effective lever of contract performance</i></th>
</tr>
<tr>
<th align="left"></th>
<th align="left">Presenter: Siddharth Raman, XKDR Forum</th>
</tr>
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<td colspan=2><hr/></td>
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<th align="left">18:25 -- 18:30</th>
<th align="left">Closing remarks</th>
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Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-50837834881419981272023-11-06T13:40:00.007+05:302023-11-07T10:00:36.844+05:30Announcements<p><a href="https://trustbridge.in/">TrustBridge</a> is an organisation that works on improving Rule of Law for better economic outcomes. We focus on understanding the gaps in the existing legal and regulatory framework, evaluating how they impact economic growth, and studying the various ways that these could be improved upon. We aim to undertake legal, quantitative and policy oriented research and dissemination that will inform principles and evidence-based policy making. We believe that implementing ideas that emerge from our research will help bring us closer to our objective of improving the Rule of Law. Our work is in the areas of Energy Transition, Financial Markets, Contract Performance in government and private contracts, and Governance in the start-up ecosystem.</p>
<p>An area of work for TrustBridge is to understand how contracts function and how frictions in contracting can be reduced to achieve better economic outcomes.</p>
<p>Some of our work in this field includes:<p>
<ul>
<li><p><a href="https://blog.theleapjournal.org/2023/10/improving-judgment-enforcement-let.html#gsc.tab=0"><i>Improving judgment enforcement: Let judgment creditors file insolvency resolution applications</i></a>, Karan Gulati and Anjali Sharma, October 2023.</p></li>
<li><p><a href="https://blog.theleapjournal.org/2023/10/reducing-challenges-to-arbitration.html#gsc.tab=0"><i>Reducing challenges to arbitration awards: lessons from court data</i></a>, Madhav Goel, Akshay Jaitly, Renuka Sane and Anjali Sharma, October 2023.</p></li>
<li><p><a href="https://blog.theleapjournal.org/2021/05/litigation-in-public-contracts-some.html#gsc.tab=0"><i>Litigation in public contracts: some estimates from court data </i></a>, Devendra Damle, Karan Gulati, Anjali Sharma and Bhargavi Zaveri, May 2021.</p></li>
</ul>
<p>TrustBridge is looking for one full time researcher to work on its projects in the contracts space. The position is based in Delhi.</p>
<h3>Job requirements for Policy Research Associate position</h3>
<p>As a policy research associate, you will work on project deliverables under the supervision of a project lead. You will be expected to review laws and government policies, undertake literature survey and quantitative analysis, write blogs, articles and papers and interface with collaborators and stakeholders.</p>
<p>The requirements for the role are:</p>
<ul>
<li><p>An academic background in the fields of Data Science, Economics, Engineering, Management and/or Public Policy.</p></li>
<li><p>Two to three years of work experience, preferably in a research intensive organisation. Candidates with more experience can be considered for mid-senior level roles.</p></li>
<li><p>You must possess high quality research skills and some understanding of statistics and quantitative analysis.</p></li>
<li><p>You must have demonstrable writing skills, preferably in the public policy domain.</p></li>
<li><p>Coding skills and a functional understanding of any one programming language, such as R and HTML will be an advantage. A working knowledge of LaTeX and Linux are preferred.</p></li>
<li><p>You must be comfortable with working in an interdisciplinary research environment consisting of people from varying backgrounds such as economics, law, public policy and data science. You should be curious and passionate about research and willing to work on outputs independently as well as in teams.</p></li>
</ul>
<p>The remuneration offered will be commensurate with your skill and experience and will be comparable with what is found in other policy and impact institutions. Interested candidates must email their resume to <b>info@trustbridge.in</b> with the <b>subject line: Application for "Research Position: Contracts"</b></p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-66096241913460683472023-10-27T13:52:00.003+05:302023-10-30T13:30:24.388+05:30Author: Karan Gulati<div>
Karan Gulati is a Researcher at the TrustBridge Rule of Law Foundation, New Delhi.
</div>
<div>
<br>
On this blog:
<ul>
<li> <a href="https://blog.theleapjournal.org/2023/10/improving-judgment-enforcement-let.html#gsc.tab=0"><i>Improving judgment enforcement: Let judgment creditors file insolvency resolution applications</i></a>, 26 October 2023.</li>
<li> <a href="https://blog.theleapjournal.org/2021/05/litigation-in-public-contracts-some.html#gsc.tab=0"><i>Litigation in public contracts: some estimates from court data</i></a>, 26 May 2021.</li>
<li><a href="https://blog.theleapjournal.org/2021/03/grievance-redress-by-courts-in-consumer.html#gsc.tab=0"><i>Grievance Redress by Courts in Consumer Finance Disputes</i></a>, 23 March 2021.</li>
<li> <a href="https://blog.theleapjournal.org/2020/05/why-do-we-not-see-class-action-suits-in.html#gsc.tab=0"><i>Why do we not see class-action suits in India? The case of consumer finance</i></a>, 3 May 2020.</li>
<li> <a href="https://blog.theleapjournal.org/2020/03/indias-low-interest-rate-regime-in.html#gsc.tab=0"><i>India’s low interest rate regime in litigation</i></a>, 11 March 2020.</li>
<li> <a href="https://blog.theleapjournal.org/2019/04/delays-in-deposit-insurance.html#gsc.tab=0"><i>Delays in deposit insurance</i></a>, 9 April 2019.</li>
</ul>
</div>
Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-74445321157301272023-10-26T23:02:00.001+05:302023-10-26T23:03:47.112+05:30On the usefulness of Parliamentary law in achieving fiscal responsibility<p>by Pratik Datta, Radhika Pandey, Ila Patnaik and Ajay Shah.</p>
<p>Economists in India have long pondered the design of a fiscal rule. It is felt that once that ideal rule is embedded into the FRBM Act, we would solve the long-standing excesses of Indian public finance.</p>
<p>Pratik Datta, Radhika Pandey, Ila Patnaik and I looked under the hood, at the legal mechanisms through which such a Parliamentary law works. In a recent paper, <a href="https://xkdr.org/paper/understanding-deviations-from-the-fiscal-responsibility-law-in-india"><i>Understanding deviations from the fiscal responsibility law in India</i></a>, we argue that the difficulty lies not in economics but in the Indian constitutional arrangement. Because the budget is enacted through a `money bill', it can readily contain clauses that amend the FRBM Act. We argue that the problem with the FRBM Act lies not in the economic thinking but in the notion that Parliamentary law can constraint leviathan.</p>
<p>On the subject of public finance, the following design elements are embedded in the Constitution:</p>
<ol>
<li> The executive cannot raise money (tax or borrow) or spend money without the authority of the Parliament.
<li> The power to raise money (tax or borrow) or spend money belongs exclusively to
the Lok Sabha. The philosophy of checks and balances associated with the presence of the Rajya Sabha, so eloquently described by <a href="https://blog.theleapjournal.org/2016/01/does-role-of-rajya-sabha-in-legislative.html">Suyash Rai in 2016</a>, is absent when it comes to money bills.
<li> The Parliament cannot authorize expenditure except on demand by the Executive.
<li> The Parliament cannot authorize taxation except on recommendation by the Executive.
<li> The Lok Sabha has the power to assent to, reject or reduce but not to increase the amount of any demand made by the Executive under Article 113(2). The Parliament can neither suggest any new expenditure nor propose an increase in demand over and above what the government suggests in the Demand for Grants.
</ol>
<p>Normative public finance in India needs to grapple with this design of the Constitution. The power of the executive, embedded in this design, should be seen as part of the larger problem of the Indian administrative state. A generation of public finance economists in India have tried to solve the chronic deficits of the union government through Parliamentary law. We suggest that this is not a fruitful line of inquiry.</p>xhttp://www.blogger.com/profile/14462096253602478048noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-44608568085341123122023-10-26T13:26:00.038+05:302023-10-27T11:52:00.252+05:30Reducing challenges to arbitration awards: lessons from court data<p>by Madhav Goel, Akshay Jaitly, <a href="https://blog.theleapjournal.org/2014/10/author-renuka-sane.html#gsc.tab=0">Renuka Sane</a> and <a href="https://blog.theleapjournal.org/2015/12/author-anjali-sharma.html#gsc.tab=0">Anjali Sharma</a>.</p>
<p>Contracts form the bedrock of economic activity in the formal economy. As an economy grows, so does its reliance on contracts. Delays and friction in contract enforcement erode trust in contracts and inhibit the pace of economic growth. In India, contract enforcement generally falls in the jurisdiction of the civil court system, which, according to the National Judicial Data Grid, has more than 11 million pending cases and takes, on an average, more than three years to dispose of a case. One of the solutions to an increasingly overburdened court system in India has been to move certain types of matters to a different judicial forum, either a specialised court or tribunal or by using an alternate dispute resolution (ADR) mechanism. Arbitration is one such alternative mechanism, the framework for which is provided by the Arbitration and Conciliation Act, 1996 (A and C Act).</p>
<p>Contract enforcement by private persons against the state in India brings its own set of problems. Increasingly, government contracts provide for dispute resolution by arbitration. However, anecdotal evidence suggests that the state consistently challenges adverse arbitration awards. In this article, we use Delhi High Court data on challenges to arbitration awards for matters in which the National Highways Authority of India (NHAI) was a party. We analyse the grounds on which these awards were challenged and the manner in which the court dealt with these challenges.</p>
<p>Our main finding is that both the NHAI and the private parties challenge adverse arbitration awards, most often on the merits, even though the A and C Act specifically prohibits this. We also find that the court generally does not interfere with arbitral awards, which is in line with the legislative intent. However, this does not deter such challenges. This may be for a variety of reasons, such as the relatively low cost of litigation vis-a-vis the award value or the incentives of decision makers within the state.</p>
<p>Our analysis adds to the intersection of two growing bodies of recent work in India on the subject. The first that studies government contracting, both from a public administration lens and from the lens of how the government impacts ease of doing business and business outcomes (<a href="https://xkdr.org/paper/learning-by-doing-for-public-procurement">Chitgupi and Thomas (2023)</a>, <a href="https://blog.theleapjournal.org/2022/12/delays-in-government-contracting-tale.html#gsc.tab=0">Burman and Manivannan (2022)</a>, <a href="https://blog.theleapjournal.org/2022/07/identifying-roadblocks-in-highway.html#gsc.tab=0">Mehta and Thomas (2022)</a>, <a href="https://blog.theleapjournal.org/2021/03/how-large-is-payment-delays-problem-in.html#gsc.tab=0">Manivannan and Zaveri (2021)</a>, <a href="https://www.mayin.org/ajayshah/MEDIA/2021/gcontracting.html">Shah (2021)</a>, <a href="https://blog.theleapjournal.org/2020/11/what-ails-public-procurement-analysis.html#gsc.tab=0">Roy and Sharma (2020)</a>). The second studies the functioning of courts and the manner in which they deal with a variety of matters (<a href="https://blog.theleapjournal.org/2023/06/helping-litigants-make-informed-choices.html#gsc.tab=0">Manivannan et. al. (2021)</a>, <a href="https://blog.theleapjournal.org/2021/05/litigation-in-public-contracts-some.html#gsc.tab=0">Damle et. al. (2021)</a>, <a href="https://blog.theleapjournal.org/2020/10/judicial-triage-in-lockdown-evidence.html#gsc.tab=0">Sharma and Zaveri (2020)</a>, <a href="https://blog.theleapjournal.org/2021/03/grievance-redress-by-courts-in-consumer.html#gsc.tab=0">Gulati and Sane (2021)</a>, <a href="https://blog.theleapjournal.org/2019/03/time-to-resolve-insolvencies-in-india.html#gsc.tab=0">Bhatia et. al. (2019)</a>).</p>
<p>The organisation of this article is as follows. We first provide an overview of the legislative and judicial framework to challenge an arbitral award, i.e., Sections 34 and 37 of the A and C Act. We then describe our data set and our methodology for analysis. This is followed by our findings and some recommendations on the way forward.</p>
<h3>An overview of Sections 34 and 37 of the A and C Act</h3>
<p>The design of the A and C Act allows for a two-stage sequential challenge to outcomes of arbitration proceedings, first under Section 34 and then under Section 37 of the Act. Section 34 provides 5 procedural and jurisdictional grounds, along with 3 additional grounds to set aside an arbitral award. These are:</p>
<ul>
<li>Procedural and Jurisdiction:</li>
<ul>
<li>The party was under some incapacity while entering into the arbitration agreement;</li>
<li>The arbitration agreement was not valid under the law to which the parties have subjected it;</li>
<li>The party making the application was not given proper notice of appointment of arbitrator or of arbitral proceedings, or was otherwise unable to present its case;</li>
<li>The arbitral award dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contained decisions on matters beyond the scope of the submission to arbitration; or</li>
<li>The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or the A and C Act, as the case may be.</li>
</ul>
<li>Additional Grounds:</li>
<ul>
<li>The subject matter of the dispute was not capable of settlement by arbitration;</li>
<li>The award is in conflict with the public policy of India, i.e., award is affected by fraud or corruption, or is against the fundamental policy of Indian law, or is in conflict with the most basic notions of morality or justice; or</li>
<li>The award is vitiated by patent illegality appearing on the face of the award.</li>
</ul>
</ul>
<p>It is useful to note that Section 34 proceedings are not appeals (<a href="https://main.sci.gov.in/supremecourt/2019/3712/3712_2019_35_1501_29929_Judgement_09-Sep-2021.pdf">Delhi Airport Metro Express (P) Ltd. v. DMRC (2022)</a>), and the grounds for challenge are limited by the A and C Act itself (<a href="https://indiankanoon.org/doc/190435337/ ">Union of India v. Annavaram Concrete Pvt. Ltd. (2021)</a>). Under the scheme of Section 34, an arbitral award cannot be set aside on merits, that is, on the grounds of erroneous application of law or by re-appreciation of evidence (<a href="https://main.sci.gov.in/supremecourt/2009/10208/10208_2009_Judgement_18-Feb-2019.pdf">MMTC Limited v. Vendanta Limited (2019)</a>; <a href="https://main.sci.gov.in/supremecourt/2017/38654/38654_2017_32_1501_28824_Judgement_28-Jul-2021.pdf">PSA SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin (2021)</a>). Therefore, unless an arbitral award is set aside under the grounds laid down in Section 34, it is ready for execution as a civil court decree against the award debtor. Section 37 of the A and C Act, on the other hand, is an avenue of appeal against an order under Section 34 of the Act. Accordingly, proceedings under Section 37 are governed by the <a href="https://lddashboard.legislative.gov.in/sites/default/files/A1908-05_0.pdf">Code of Civil Procedure, 1908 (CPC)</a> and are in the form of an appeal. However, through consistent judicial pronouncements, the grounds for appeal under Section 37 have been restricted, even as compared to the grounds under Section 34 (<a href="https://indiankanoon.org/doc/142848510/ ">Mahanagar Telephone Nigam Limited vs. Applied Electronics Ltd. (2014)</a>).</p>
<p>While the A and C Act is, to a large extent, modeled on the <a href="https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration">UNCITRAL Model Law on International Commercial Arbitration, 1985</a>, it deviates from the Model Law in two important ways. First, it introduces an additional ground to challenge an arbitral award: patent illegality appearing on the face of the award. Second, it provides for a two-stage appeal process, where Section 37(1)(c) of the Act allows an appeal against an order under Section 34 setting aside or refusing to set aside the arbitral award. These two deviations from the Model Law have implications for the efficacy of the arbitration framework in India. The ground of patent illegality introduces ambiguity and discretion in the otherwise procedural nature of the process of challenging awards. The two-stage appeal process adds to this ambiguity and discretion, and introduces delays in the enforcement of the award. Section 36 of the A and C Act, under which an award is enforced as a decree, adds to these challenges. Section 36(2) specifically gives the court the power to stay the enforceability of an award. Section 36(3) specifies the conditions under which the court may grant such a stay.</p>
<h3>Data and methodology</h3>
<p>For our analysis, we collected judgments from Delhi High Court for the years 2018 and 2019 pertaining to matters where the NHAI is a party. Our choice of Delhi High Court is due to its importance as a court for arbitration matters, as well as because NHAI matters are likely to be brought before it.</p>
<p>Our choice of the years 2018 and 2019 is driven by three factors. First, the arbitration framework has undergone significant legislative change since 2015 and more recent data reflects the current framework. Second, the period from 2020-2022 was marked by disruptions in the judicial system due to the COVID-19 pandemic, and therefore, may not represent the ordinary course of dispute resolution. Finally, the choice of 2018 and 2019 allows for the possibility of extending our analysis to studying the entire life-cycle of such litigation all the way to the Supreme Court.</p>
<p>We focus on the NHAI because of its status as an autonomous, specialised statutory body that has been tasked with development, maintenance and management of India's national highways. NHAI is also one of the largest contracting bodies within government, accounting for nearly 10 percent of the total union government expenditure on public procurement (Sharma and Thomas (2021), Chitgupi, Gorsi and Thomas, (2022)).</p>
<p>We find 96 judgments in Delhi High Court where NHAI is a party. Of these, 82 pertain to matters under Sections 34 and 37 of the A and C Act (details can be found by clicking here) From these 82 judgments, we collect the following details:</p>
<ol>
<li>The nature and quantum of claims filed before the arbitral tribunal;</li>
<li>The party that won the arbitration;</li>
<li>The time taken between filing the petition under Section 34 or 37 of the A and C Act to the final judgment;</li>
<li>The nature of disputes and grounds for the petition under Section 34 or 37; and</li>
<li>Which party won, and the quantification of the claims that were upheld/set aside by the Court.</li>
</ol><br>
<h3>Findings</h3>
<p>Our main finding is in regards to the win-loss record for a challenge to an arbitral award under Sections 34 and 37 of the A and C Act, i.e., the likelihood of success in challenging the arbitral award (Table 1).</p>
<table align= "center" span=75% >
<caption><b>Table 1: Outcome of Section 34 and 37 Challenges</b></caption>
<style type="text/css">
td
{
padding:0 25px 0px 25px;
}
th
{
padding:0 25px 0px 25px;
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<tr>
<th colspan=4><hr/></th>
</tr>
<tr>
<th align="left">Categories</th>
<th width="20%">2018</th>
<th width="20%">2019</th>
<th>Total</th>
</tr>
<tr>
<th colspan=4><hr/></th>
</tr>
<tr>
<td align="left">Petitioner won</td>
<td align = "center">4</td>
<td align = "center">4</td>
<td align = "center">8</td>
</tr>
<tr>
<td align="left">Petitoner lost</td>
<td align = "center">44</td>
<td align = "center">30</td>
<td align = "center">74</td>
</tr>
<tr>
<td colspan=4><hr/></td>
</tr>
<tr>
<td align="left">Total</td>
<td align = "center">48</td>
<td align = "center">34</td>
<td align = "center">82</td>
</tr>
<tr>
<td colspan=4><hr/></td>
</tr>
<tr>
<td colspan=4, align = "left"><font size="2">Source: Delhi High
Court judgments</font></td>
</tr>
<tr>
<td colspan=4><hr/></td>
</tr>
</table>
<p>We find that in 74 of the 82 cases (90.2%) involving NHAI, the court refused to interfere with the arbitral award, irrespective of whether the party challenging the award was the NHAI or the private party. This suggests two things. First, the Delhi High Court's action of ordinarily not setting aside the arbitral award is in line with the legislative intent of Sections 34 and 37 of the A and C Act. Second, despite the court not interfering with the award, parties continue to mount such challenges. This is especially so for NHAI, which is the petitioner in 67 out of the 82 matters.</p>
<p>When we look at the grounds under which awards are being challenged in court (Table 2), we observe that the bulk of the challenges, 77 out of 82 (93.9%), are under Section 34(2A), which is unlike the provisions of the UNCITRAL Model Law, and is an Indian innovation that allows the award to be reviewed on the basis of the substantive merits of the case. Patent illegality is a subjective formulation whose treatment may change from case to case and from court to court.</p>
<table align= "center" span=75% >
<caption><b>Table 2: Nature of Section 34 challenges</b></caption>
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<tr>
<th colspan=4><hr/></th>
</tr>
<tr>
<th align="left">Provision</th>
<th width="24%">2018</th>
<th width="24%">2019</th>
<th>Total</th>
</tr>
<tr>
<th colspan=4><hr/></th>
</tr>
<tr>
<td align="left">S. 34(1)</td>
<td align = "center">2</td>
<td align = "center">1</td>
<td align = "center">3</td>
</tr>
<tr>
<td align="left">S. 34(2)</td>
<td align = "center">-</td>
<td align = "center">-</td>
<td align = "center">-</td>
</tr>
<tr>
<td align="left">S. 34(2A)</td>
<td align = "center">45</td>
<td align = "center">32</td>
<td align = "center">77</td>
</tr>
<tr>
<td align="left">S. 34(3)</td>
<td align = "center">1</td>
<td align = "center">1</td>
<td align = "center">2</td>
</tr>
<tr>
<td colspan=4><hr/></td>
</tr>
<tr>
<td colspan=4, align = "left"><font size="2">Source: Delhi High
Court judgments</font></td>
</tr>
<tr>
<td colspan=4><hr/></td>
</tr>
</table>
<p>The findings from Tables 1 and 2 together indicate that award debtors routinely challenge arbitral awards on substantive merits, even though the courts routinely turn down such challenges.</p>
<p>We also find that, on average, it takes the court 805 days (2.2 years) to dispose of a Section 34 challenge and 208 days (0.6 years) to dispose of a Section 37 challenge. A matter in which both Section 34 and 37 challenges are brought will be in court for about 3 years after the award has been made by the arbitral tribunal.</p>
<p>In 36 of the 82 matters, we get data for the size of the claim. The total value of claims, across these 36 cases, is Rs. 17.5 billion and the average per case claim value is Rs. 485 million. While these may not be significant for an entity of NHAI's scale, for private parties dealing with NHAI, these may be consequential. And so may be the additional time of three years and the cost of litigation to secure these claims.</p>
<p>Some simple calculations also give us a sense of what these challenges with minimal chance of success mean for the government. At an interest rate of 8% per annum (MCLR during 2018 and 2019 was in this range), compounded annually, after the three year litigation challenging the arbitral award, the government will have to bear an additional interest cost of Rs. 4.5 billion on these awards. This does not take into account the cost and time consumed by the litigation.</p>
<h3>Why do parties challenge arbitral awards?</h3>
<p>There may be two main reasons why parties continue to appeal even though the chances of the award being overturned are low:</p>
<ul>
<li><p>Low costs: for large value awards, the cost of the litigation challenging the arbitral award is lower than the expected benefit to the award debtor even at low probability of the award being overturned (Mehta and Thomas (2022) supra). Additionally, for the government, the economic considerations around litigation costs may not be as relevant as for private litigants. Empanelled lawyers for the government and its agencies are often remunerated far less than lawyers representing private parties. Further, incentives of the bureaucracy are often such that they do not accept adverse outcomes in contractual disputes and litigate till the last available forum, regardless of cost.</p></li>
<li><p>Delaying the enforcement: parties may resort to challenging the award to delay enforcement. Filing a petition under Section 34 of the A and C Act often forces the award holder to delay an execution petition under Section 36 of the Act. This could be because of the uncertainty regarding the outcome of the challenge, and due to potentially wasteful litigation costs, should the award be stayed or overturned. Anecdotal evidence shows that the executing court is often cognizant of the filing of a petition under Section 34 while taking substantive decisions under Section 36 of the Act. The executing court typically awaits the outcome of proceedings under Section 34 or 37 before taking any coercive action against the award debtor. Therefore, it is likely that much of the litigation under Sections 34 and 37 is a means of delaying enforcement of the award, and not because the litigants expect to succeed.</p></li>
</ul>
<h3>Legislative solutions</h3>
<p>Disincentivising litigants from challenging arbitral awards on merits, especially if the litigant is the government, is important to ensure that the A and C Act remains relevant as an alternate dispute resolution mechanism. This can be achieved through two levers. First, that courts take up Section 34 challenges only in cases where there is a high likelihood of the challenge succeeding. Second, the cost of challenging the award either under Section 34 or Section 37 are high enough to alter the economic incentives of the award debtor. To this effect, we suggest three legislative solutions:</p>
<ol>
<li><p><i>Amending Sections 34 and 37 of the A and C Act to introduce a prima facie test of satisfaction:</i> As the law stands currently, the courts must hear petitions under Sections 34 or Section 37 and decide them on merits, irrespective of the grounds of challenge and the chances of success. This takes up significant resources. Introducing a prima facie test of satisfaction will enable the Court to dismiss the petition at the pre-notice stage itself, unless the petitioner is able to satisfy the court that it has a good case on merits. This will be similar to the procedure adopted by the Supreme Court while hearing fresh special leave petitions under Article 136 of the Constitution of India. The decision of the court to entertain a petition under Section 34 or Section 37, based on a prima facie view of the merits, has cost advantages to the litigants as well as the court. Dismissal at the pre-notice stage means that the litigants do not bear the cost of a full appeal and the court also spends less time and resources in deciding the petition on merits (Shavell (2010)). Further, deciding the merits at the pre-notice stage may also reduce time and costs during the full appeal as part of the assessment of the merit will already have been done by the court.</li></p>
<li><p><i>Amending of Sections 34 and 37 of the A and C Act to introduce a mandatory pre-deposit of fees proportionate to the arbitral award for the admission of petitions to set aside arbitral awards:</i> As pointed out earlier, the economic incentives are stacked in favour of a challenge to the award. One way of counteracting this would be to increase the cost of a challenge. This can be achieved by adopting a mandatory pre-deposit of a proportion of the award value with the court before a challenge can be instituted. Such a pre-deposits can be tiered, with a higher proportion being required under Section 37 as compared to Section 34.</li></p>
<p>Another way of achieving this outcome will be to amend Section 82 of the Act to introduce a clarification that empowers the courts to frame rules to introduce barriers to unmeritorious challenges. These could include, as suggested above, a prima facie test or a mandatory pre-deposit of a proportion of the award value under challenge. This method leaves the discretion of framing such rules, and the substance of these rules with each High Court which could take into account local conditions while framing them. Further, the desired objective will be achieved without hard coding too much detail in the statute itself, which might make it inflexible and require more amendments going forward.</p>
<p>In October, 2021, the General Financial Rules, 2017 (GFR), the procurement rules for union government and its agencies, were amended to introduce Rule 227A which requires government departments challenging arbitral awards to pay 75% of the award value into an escrow account, to be used sequentially for the settlement of lender's dues, project completion and then as payment to the contractor. However, the impact of this change is in respect of of government challenges to arbitral awards. Our analysis shows that even private parties routinely challenge arbitral awards, and hence an amendment to the A and C Act introducing a pre-deposit may be desirable.</p>
<li><p><i>Amending Section 37(1)(c) to remove the second challenge avenue for the award debtor:</i> Section 37(1)(c) of the A and C Act permits an appeal of the order of the court either setting aside or refusing to set aside an arbitral award under Section 34. This affords the award debtor a second avenue to continue litigation and stave off enforcement of the award. Our analysis shows that while courts generally uphold the award even during this challenge, both time and resources of the court and the litigants are consumed. Further, even at this stage courts may adjudicate the matter on merits, despite this already having been done at the award stage and at the Section 34 stage. Further, as mentioned earlier, no analogous provision to Section 37(1)(c) exists even in the Model Law as well as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.</p>
<p>One possibility is to completely remove Section 37(1)(c) from the A and C Act and align the framework for challenging an arbitral award with the Model Law. Alternatively, Section 37(1)(c) could be amended to remove the appeal available to the award debtor, but retain the appeal available to the award holder. This will protect against frivolous appeals by the award debtor, while providing adequate remedy in matters where an award has been erroneously overturned under Section 34.</li></p>
</ol>
<h3>Conclusion</h3>
<p>In India, delays of the court system have increasingly led both government and private parties to opt for ADR mechanisms such as arbitration to resolve contractual disputes. However, for arbitration to be used effectively, it is important that challenges to the outcome of arbitration are limited to the procedural and jurisdictional grounds laid down in the A and C Act. Our analysis shows that this may not be so, and that both government and private parties routinely challenge arbitral awards on merits. Challenges to arbitration awards appear to have become a way of delaying enforcement. The Delhi High Court has been sanguine in the manner of its dealing with these challenges, most often refusing to interfere with the arbitration outcome. However, this does not seem to have deterred challenges, especially from government agencies.</p>
<p>One way of disincentivising such challenges is to amend the A and C Act to remove the legislative loopholes. These include: (i) introducing a prima facie test of the merits of the challenge, (ii) seeking a pre-deposit of a part of the award value before allowing a challenge, and (iii) removing the second challenge permitted under the Act. These changes could go a long way in curbing the litigious behaviour of parties to delay enforcement of high value awards.</p>
<p>Contract enforcement is hard when there exists an imbalance of power and resources between the parties to a contract or where the incentives of one of the parties are not driven entirely by commercial considerations, as in the case of government contracting with private parties. Creating legislative boundaries against strategic actions by parties, whether government or private, is one way of dealing with this challenge. There are other ways, that seek to change the behaviour of government departments and agencies, through measures such as a National Litigation Policy or the government procurement rules.</p>
<h3>References</h3>
<p>Aneesha Chitgupi and Susan Thomas, <a href="https://xkdr.org/paper/learning-by-doing-for-public-procurement"><i>Learning by doing for public procurement</a></i>, XKDR Working Paper No. 22 (2023).</p>
<p>Pavithra Manivannan, Susan Thomas, and Bhargavi Zaveri-Shah, <a href="https://blog.theleapjournal.org/2023/06/helping-litigants-make-informed-choices.html#gsc.tab=0"><i>Helping litigants make informed choices in resolving debt disputes</i></a>, The Leap Blog (2023).</p>
<p>Anirudh Burman and Pavithra Manivannan, <a href="https://blog.theleapjournal.org/2022/12/delays-in-government-contracting-tale.html#gsc.tab=0"><i>Delays in government contracting: A tale of two metros</i></a>, The Leap Blog (2022).</p>
<p>Aneesha Chitgupi, Abhishek Gorsi, and Susan Thomas, <a href="https://blog.theleapjournal.org/2022/11/learning-by-doing-and-public.html#gsc.tab=0"><i>Learning by doing and public procurement in India</i></a>, The Leap Blog (2022).</p>
<p>Charmi Mehta and Susan Thomas, <a href="https://blog.theleapjournal.org/2022/07/identifying-roadblocks-in-highway.html#gsc.tab=0"><i>Identifying roadblocks in highway contracting: lessons from NHAI litigation</i></a>, The Leap Blog (2022).</p>
<p>Pavithra Manivannan and Bhargavi Zaveri, <a href="https://blog.theleapjournal.org/2021/03/how-large-is-payment-delays-problem-in.html#gsc.tab=0"><i>How large is the payment delays problem in Indian public procurement?</i></a>, The Leap Blog (2021).</p>
<p>Ajay Shah, <a href="https://www.mayin.org/ajayshah/MEDIA/2021/gcontracting.html"><i>The bottleneck of government contracting</i></a>, Business Standard (2021).</p>
<p>Anjali Sharma and Susan Thomas, <a href="https://xkdr.org/paper/the-footprint-of-union-government-procurement-in-india"><i>The footprint of union government procurement in India</i></a>, XKDR Working Paper No. 10 (2021).</p>
<p>Devendra Damle, Karan Gulati, Anjali Sharma, and Bhargavi Zaveri-Shah, <a href="https://blog.theleapjournal.org/2021/05/litigation-in-public-contracts-some.html#gsc.tab=0"><i>Litigation in public contracts: some estimates from court data</i></a>, The Leap Blog (2021).</p>
<p>Karan Gulati and Renuka Sane, <a href="https://blog.theleapjournal.org/2021/03/grievance-redress-by-courts-in-consumer.html#gsc.tab=0"><i>Grievance Redress by Courts in Consumer Finance Disputes</i></a>, The Leap Blog (2021).</p>
<p>Anjali Sharma and Bhargavi Zaveri, <a href="https://blog.theleapjournal.org/2020/10/judicial-triage-in-lockdown-evidence.html#gsc.tab=0"><i>Judicial triage in the lockdown: evidence from India's largest commercial tribunal</i></a>, The Leap Blog (2020).</p>
<p>Shubho Roy and Anjali Sharma, <a href="https://blog.theleapjournal.org/2020/11/what-ails-public-procurement-analysis.html#gsc.tab=0"><i>What ails public procurement: an analysis of tender modifications in the pre-award process</i></a>, The Leap Blog (2020).</p>
<p>Surbhi Bhatia, Manish Singh, and Bhargavi Zaveri, <a href="https://blog.theleapjournal.org/2019/03/time-to-resolve-insolvencies-in-india.html#gsc.tab=0"><i>Time to resolve insolvencies in India</i></a>, The Leap Blog (2019).</p>
<p>Steven M. Shavell, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1326563"><i>On the Design of the Appeals Process: The Optimal Use of Discretionary Review versus Direct Appeal</i></a>, 39 J. Legal Stud. 63 (2010).</p>
<p><a href="https://main.sci.gov.in/supremecourt/2019/3712/3712_2019_35_1501_29929_Judgement_09-Sep-2021.pdf"><i>Delhi Airport Metro Express (P) Ltd. v. DMRC, (2022)</i></a> 1 SCC 131.</p>
<p><a href=" https://indiankanoon.org/doc/190435337/ "><i>Union of India v. Annavaram Concrete Pvt. Ltd., (2021)</i></a> SCC OnLine Del 4211.</p>
<p><a href="https://main.sci.gov.in/supremecourt/2009/10208/10208_2009_Judgement_18-Feb-2019.pdf"><i>MMTC Limited v. Vendanta Limited, (2019)</i></a> 4 SCC 163.</p>
<p><a href="https://main.sci.gov.in/supremecourt/2017/38654/38654_2017_32_1501_28824_Judgement_28-Jul-2021.pdf"><i>PSA SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin, (2021)</i></a> SCC OnLine SC 508.</p>
<p><a href="https://indiankanoon.org/doc/142848510/ "><i>Mahanagar Telephone Nigam Limited vs. Applied Electronics Ltd., AIR (2014)</i></a> Delhi 182.</p>
<br>
<p>Madhav Goel, Renuka Sane and Anjali Sharma are with the TrustBridge Rule of Law Foundation. Akshay Jaitly is the co-founder of TrustBridge Rule of Foundation and Partner, Trilegal. We thank Karan Gulati, Ajay Shah and two anonymous referees for their inputs and comments.</p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com1tag:blogger.com,1999:blog-19649274.post-85756383273294315732023-10-26T10:44:00.016+05:302023-10-27T13:55:15.341+05:30Improving judgment enforcement: Let judgment creditors file insolvency resolution applications<p>by <a href="https://blog.theleapjournal.org/2023/10/author-karan-gulati.html#gsc.tab=0">Karan Gulati</a> and <a href="https://blog.theleapjournal.org/search/label/author%3A%20Anjali%20Sharma#gsc.tab=0">Anjali Sharma.</a></p>
<p>Judgments form the basis of a sound legal system. However, the mere issuance of judgments, without ensuring their prompt enforcement, takes away the incentive to turn to the courts. It also reduces trust in contracts and property rights, the bedrock of economic activity. This discourages investment, curbs entrepreneurial enthusiasm, and impedes national development (<a href="https://documents1.worldbank.org/curated/en/832891468338681960/pdf/268950WDR00PUB0ces0work0poor0people.pdf">World Bank 2003</a>; <a href="https://www.researchgate.net/profile/Matthieu-Chemin/publication/5165369_The_Impact_of_the_Judiciary_on_Economic_Activity/links/0a85e53bedc13a8813000000/The-Impact-of-the-Judiciary-on-Economic-Activity.pdf">Chemin 2007</a>; <a href="https://manaswinirao.com/files/paper2_dissertation.pdf">Rao 2020</a>). Beyond economic consequences, a delay or failure in enforcing judgments diminishes public confidence in the judiciary (<a href="https://www.cambridge.org/core/journals/latin-american-politics-and-society/article/abs/judging-the-judiciary-understanding-public-confidence-in-latin-american-courts/572D6696DEAA4C27EC63BF34E374FA7E">Salzman and Ramsey 2013</a>).</p>
<p>In India, enforcing monetary judgments is particularly challenging, as evidenced by its low ranking on the World Bank’s ‘Enforcing Contracts’ indicator and data from the National Judicial Data Grid (NJDG). To ensure and expedite the enforcement of such awards, we propose that judgment creditors – holders of a judgment by a court or tribunal – should be allowed to initiate insolvency resolution proceedings against judgment debtors. Due to the severe consequences under the Insolvency and Bankruptcy Code (IBC), such proceedings will deter non-compliant debtors from evading their obligations.</p>
<h3>The problem</h3>
<p>Enforcing judgments with monetary components is an especially difficult problem. In 2020, India ranked 163rd out of 190 countries on the <a href="https://archive.doingbusiness.org/en/data/exploreeconomies/india#DB_ec">World Bank’s Doing Business indicator</a> for ‘Enforcing Contracts’. This metric measures the time and cost of enforcing a standard contract in a civil court. In India, once a dispute is initiated, it takes 1,445 days till enforcement, costing 31% of the claim value. In addition to the time already spent securing a judgment, enforcement takes 305 days. As per the <a href="https://njdg.ecourts.gov.in/njdgnew/index.php">NJDG</a>, while approximately 4.5 lakh new execution petitions are instituted each year, only 3.9 lakh are disposed. Even then, less than 15% result in an award or decree.</p>
<p>This poor track record on court-led enforcement also dilutes alternate dispute resolution mechanisms, which operate in the shadow of the law. When parties understand that enforcing settlement agreements is likely to be prolonged, often with poor outcomes, their incentives change. Consequently, such mechanisms are used not to resolve disputes but to avoid payments and cause delays. In fact, poor performance on contract enforcement may be why Indian and international businesses often include international arbitration clauses in contracts when dealing with cross-border transactions.</p>
<p>At present, enforcement of civil judgments is governed by the Code of Civil Procedure 1908 (CPC). To ensure enforcement, a court can attach a judgment debtor’s (a person against whom a judgment capable of execution has been passed) assets, imprison them, or appoint an individual to manage their property. Once attached, the debtor cannot dispose of or transfer the property. If they fail to fulfil the judgment claim, the attached property can be auctioned off. While the CPC comprises intricate and complex procedures, which may be necessary to deal with the myriad of matters adjudicated by the civil court system (for example, specific performance, partition trusts, inheritance rights, etc.), there are no provisions to determine the true value of the debtor’s assets or reverse undervalued or preferential transactions. This allows assets to be unduly siphoned off. Due to the non-specificity of provisions regarding monetary awards, judgment debtors can also exploit procedural gaps and employ dilatory tactics to delay or frustrate the enforcement of such awards.</p>
<h3>A proposed solution</h3>
<p>The IBC already recognises judgment creditors as ‘creditors’ (<a href="https://www.indiacode.nic.in/show-data?actid=AC_CEN_2_11_00055_201631_1517807328273&sectionId=782&sectionno=3&orderno=3">Section 3 (10)</a>) with legitimate ‘claims’ (<a href="https://www.indiacode.nic.in/show-data?actid=AC_CEN_2_11_00055_201631_1517807328273&sectionId=782&sectionno=3&orderno=3">Section 3 (6)</a>) against a debtor. However, because they have not been explicitly recognised as financial or operational creditors, they cannot initiate insolvency resolution proceedings. Instead, they must wait for a financial or operational creditor or the corporate debtor to set the ball rolling on insolvency proceedings and, even then, only file their claims during the process without any participatory rights. This inability to initiate insolvency takes away a potent lever to ensure compliance with judgments.</p>
<p>We propose that judgment creditors be allowed to initiate insolvency resolution proceedings under the IBC. Such a move will pose a significant threat to non-compliant debtors. This is because the IBC creates two significant deterrents against wilful non-payment of claims: (i) the displacement of the promoter when the insolvency resolution proceedings commence, and (ii) a possibility of liquidation of the company if the resolution fails. Given these grave consequences, the judgment debtor’s incentive will be to voluntarily fulfil the judgment claim. This change should be prospective, allowing all creditors to adjust to evolving dynamics.</p>
<p>In fact, when allowed, admission of an insolvency application filed by a judgment creditor should be made simpler than one filed by other creditors. This is because the IBC requires that four factors be considered before admitting an insolvency resolution application: (i) whether there is a claim of a certain threshold, (ii) whether it is undisputed, (iii) whether it has become time-barred, and (iv) whether it has come to the correct bench of the tribunal. In the case of judgment claims, the first three are validated by a court or a tribunal; hence, there are no ambiguities that may delay the admission proceedings.</p>
<p>This is not a novel solution. Judgment creditors can initiate insolvency proceedings in both the United Kingdom and the United States of America.</p>
<ul>
<li><em>United Kingdom:</em> Judgment creditors have specific rights to push a debtor into administration or winding up (analogous to insolvency resolution and liquidation proceedings in India, respectively). Under paragraph 11 of schedule B1, read with Section 123, of the <a href="https://www.legislation.gov.uk/ukpga/1986/45/data.pdf">Insolvency Act 1986</a>, a creditor may file an administration application if an order of any court in their favour is returned unsatisfied. Under Section 122, a creditor can file a winding-up application on the same grounds. When it comes to individuals, the process is slightly different. Section 267 of the Insolvency Act allows a creditor to present a bankruptcy petition if the individual owes a judgment debt of £5,000 or more.</li>
</ul>
<ul>
<li><em>United States of America:</em> Judgment creditors possess distinct rights to push a debtor into involuntary bankruptcy proceedings. Under 11 USC § 303 of the <a href="https://www.govinfo.gov/content/pkg/USCODE-2011-title11/pdf/USCODE-2011-title11.pdf">US Bankruptcy Code</a>, upon satisfying the prerequisites, creditors can file an involuntary bankruptcy petition against a debtor. If the court determines the involuntary petition is valid, it will issue an “order for relief,” initiating the bankruptcy process. For individual debtors, this often translates to a Chapter 7 liquidation or a Chapter 13 repayment plan.</li>
</ul>
<p>To enable this in India, the IBC must be amended to recognise judgment creditors of a monetary award as financial creditors holding financial debt under Sections 5 (7) and 5 (8), respectively. This is because the award includes interest, penalties, or costs, and aligns with the time-value-of-money considerations intrinsic to financial debts. As loans accrue interest over time, judgment awards accumulate interest until settled, mirroring the financial obligations of the judgment debtor. Once a court has passed a monetary award, the claim is rooted in the judgment award, not the original transaction. Hence, even when the underlying dispute is related to the provision of goods or services, the judgment award should be understood to represent a financial debt. This view has been endorsed by the Supreme Court of India and should be legislatively incorporated. The Court, in <a href="https://main.sci.gov.in/pdfdate/index1.php?filename=supremecourt/2021/3887/3887_2021_5_1501_36111_Judgement_30-May-2022.pdf&dno=38872021&dt=2022-05-30"><em>Kotak Mahindra Bank Limited v A Balakrishnan</em></a> (2022 INSC 630), has noted that:</p>
<blockquote><em>Taking into consideration the object and purpose of the IBC, the legislature could never have intended to keep a debt, which is crystallised in the form of a decree, outside the ambit of clause (8) of Section 5 [financial debt] of the IBC.</em></blockquote>
<p>Classifying judgment creditors as financial creditors during the insolvency process would also ensure that they have an influential participatory role, commensurate with the significance of court-sanctioned monetary awards.</p>
<p>Allowing judgment creditors the power to initiate insolvency proceedings will generate strong monitoring and compliance effects in the pre-insolvency world. Other financial creditors of the debtor will factor current and potential adverse judgment claims into their credit decisions. This, in turn, will generate strong incentives to avoid adverse judgments and to comply with judgment claims when they arise. Conversely, businesses would be compelled to take a proactive stance in settling disputes, knowing the ramifications are not just reputational but could also threaten their solvency and control over the enterprise. It will signal to the market that judgments are not just moral proclamations but actionable financial commitments.</p>
<h3>An illustration</h3>
<p>To better understand how this will play out, let us consider an arbitration proceeding between <em>X Co and Y Co </em>concerning a contract violation, where the arbitrator awards Rs. 2,00,00,000 to Y. X will likely challenge such the award under Section 34 of the Arbitration and Conciliation Act 1996 (Arbitration Act). Since the grounds for challenge under Section 34 are procedural, courts generally uphold arbitral awards.</p>
<p>Traditionally, Y would have been forced to then rely on the procedure set out under the CPC. However, as mentioned, enforcement under the CPC is notorious for delays. The award would remain stuck in court procedures, and Y may face a cash crunch. The money they rightfully won, tied up in legal battles, would not be accessible for business needs, growth, or reinvestment. At the same time, X would remain operational, benefiting from the liquidity that it has withheld (<a href="https://blog.theleapjournal.org/2020/03/indias-low-interest-rate-regime-in.html#gsc.tab=0">Gulati and Roy 2020</a>).</p>
<p>However, things may be different if Y is allowed to initiate an insolvency resolution proceeding. Although X may prefer an appeal under Section 37 of the Arbitration Act, the confirmation of the award under Section 34 will convert it into a claim under the IBC (a right to payment reduced to judgment). The initiation of the insolvency proceeding will immediately shift the dynamics. Under IBC, X’s promoters could be displaced, and there may be a potential change in the company’s ownership. Thus, it will attempt to clear the dues and settle its dispute with Y. In essence, the IBC will be the much-needed lifeline for Y, ensuring it doesn’t remain stuck in the quagmire of the CPC and can promptly access its rightful claim.</p>
<h3>Concerns</h3>
<p>One potential concern regarding the proposal might be the risk of overburdening the insolvency resolution process and, consequently, the NCLT. While the IBC recognises that <em>time is of the essence</em>, it is already struggling with capacity challenges and mounting delays. Overloading this system could create an environment reminiscent of the current civil court enforcement mechanism, fraught with delays and backlogs. This would counteract the benefits and efficiencies the proposed change aims to introduce.</p>
<p>However, this concern does not acknowledge the strong deterrents to frivolous insolvency proceedings built into the IBC. Judgment debtors will need to comply with the minimum default value requirement of Rs. 1,00,00,000. Further, the filing of the insolvency application is understood to aid negotiations between the filing creditor and debtor, often resulting in a settlement between parties outside the purview of the NCLT. As per the Insolvency and Bankruptcy Board of India, 28% of the insolvency resolution matters are <a href="https://ibbi.gov.in/uploads/publication/0d26415640ac24dab79ebdcbc11a64a8.pdf">settled or withdrawn</a>. These figures do not account for the negotiations in the shadow due to the mere threat of an insolvency application being filed. Thus, the actual strain on the NCLT might be lower than anticipated. </p>
<p>Similarly, there may be concerns about whether insolvency proceedings can take away the judgment creditor’s right to prefer an appeal against the underlying judgment. These concerns can be alleviated by deferring to good design principles. One way of doing this is to only allow judgment creditors to initiate insolvency proceedings when the judgment debtor has exhausted all statutory remedies (e.g., an appeal under Section 37 of the Arbitration Act by X in our example). As an alternative, it may be recognised that even under the IBC, there is a 14-day period within which an admission application is to be decided. The judgment debtor may file a statutorily permitted appeal against the underlying judgment within this period. In practice, the time between filing an insolvency application and its admission is far more than 14 days. This gives the judgment debtor ample opportunity to prefer statutorily permitted appeals. In such cases, the judgment claim will be viewed as disputed until the appeal is decided, resulting in non-admission of insolvency proceedings. The path to be taken between the two alternatives is a procedural policy decision independent of the merits of the core proposal of allowing judgment creditors to initiate insolvency proceedings.</p>
<h3>Conclusion</h3>
<p>The efficacy of a legal system not only lies in the issuance of judgments and their timely enforcement. For India, where enforcing monetary judgments remains a daunting challenge, it is pivotal to usher in mechanisms that effectively bridge this gap. Allowing creditors to initiate insolvency resolution applications presents a powerful tool that can drastically transform the landscape of judgment enforcement.</p>
<p>Not only will this proposal push judgment debtors to be more compliant, but it will also signify a broader shift in the perception of judgments. Such reforms, emphasising actionable financial commitments, will help restore public faith in the judiciary, boost investment, and stimulate economic growth. By embracing this change, India can pave the way for a more robust and efficient legal system, thus fostering a climate of trust, accountability, and development.</p>
<h3>References</h3>
<p><i><a href="https://archive.doingbusiness.org/en/data/exploreeconomies/india#DB_ec">Doing Business: 2020</a></i>, The World Bank, 2020.</p>
<p><i><a href="https://www.cambridge.org/core/journals/latin-american-politics-and-society/article/abs/judging-the-judiciary-understanding-public-confidence-in-latin-american-courts/572D6696DEAA4C27EC63BF34E374FA7E"> Judging the judiciary: Understanding public confidence in Latin American courts</a></i>, Ryan Salzman and Adam Ramsey, 2013, Latin American Politics and Society, Volume 55, Issue 1, pp 73-95.</p>
<p><i><a href="https://blog.theleapjournal.org/2020/03/indias-low-interest-rate-regime-in.html#gsc.tab=0">India’s low interest rate regime in litigation</a></i>, Karan Gulati and Shubho Roy, 11 March 2020, Leap Blog.</p>
<p><i><a href="https://manaswinirao.com/files/paper2_dissertation.pdf">Institutional Factors of Credit Allocation: Examining the Role of Judicial Capacity and Bankruptcy Reforms</a></i>, Manaswini Rao, 2020, JusticeHub.</p>
<p><i><a href="https://www.researchgate.net/profile/Matthieu-Chemin/publication/5165369_The_Impact_of_the_Judiciary_on_Economic_Activity/links/0a85e53bedc13a8813000000/The-Impact-of-the-Judiciary-on-Economic-Activity.pdf"> The Impact of the Judiciary on Economic Activity: Evidence from India</a></i>, Matthieu Chemin, 2007, Cahier de recherche / Working Paper.</p>
<p><i><a href="https://documents1.worldbank.org/curated/en/832891468338681960/pdf/268950WDR00PUB0ces0work0poor0people.pdf">World Development Report 2004: Making Services Work for Poor People</a></i>, The World Bank, 2003.</p>
<br>
<p>The authors are a research fellow and the research director at the TrustBridge Rule of Law Foundation. We are thankful to Madhav Goel and Renuka Sane for their insightful comments. Views are personal.</p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-63720219867891064042023-10-11T17:40:00.000+05:302023-10-12T13:29:17.835+05:30Announcements<h3>Position for researchers in the field of Legal Systems Reform</h3>
<p class="justify"XKDR Forum is a Mumbai-based inter-disciplinary group of researchers working in the fields of legal systems reform, technology policy, public procurement and the land market. In these fields, the organisation engages in academic and policy oriented research, and advocacy.</p>
<p class="justify">At present, we are looking for candidates for the profile of Research Associate (Legal) and Research Associate (Quant.) to participate in an ongoing research program in the field of legal system reform.</p>
<p class="justify">Our work in this field includes:</p>
<ul>
<li><a href="https://xkdr.org/paper/evaluating-contract-enforcement-by-courts-in-india-a-litigants-lens">Evaluating contract enforcement by courts in India: a litigant`s lens (Manivannan, Thomas, Shah, 2021).</a></li>
<li><a href="https://blog.theleapjournal.org/2023/06/helping-litigants-make-informed-choices.html">Helping litigants make informed choices in resolving debt disputes (Manivannan, Thomas, Shah, 2023).</a></li>
<li><a href="https://macrofinance.nipfp.org.in/PDF/icts_concept_note-2019.pdf">How to Modernise the Working of Courts and Tribunals in India, (Shah, Datta, et.al, 2019).</a></li>
<li><a href="https://www.youtube.com/watch?v=ybvwp9qhJqY&list=PLtTZMsw3z1_Mvtp8xmxGAzaY4kjD71czD&pp=iAQB">Indian Legal System Reform Seminar (2023).</a></li>
</ul>
<p class="justify">More information can be found on: <a href="https://xkdr.org/field/legal-system">https://xkdr.org/field/legal-system</a></p>
<p class="justify">As a research associate, you will work on project deliverables under the supervision of a project lead. You will be expected to conduct field research in courts, implement defined research tasks, work on written documents, reports and articles and interface with external collaborators and stakeholders.</p>
<p class="justify">The requirements for the role of a research associate (Legal) are:</p>
<ul>
<li>An undergraduate degree in Law such as B.A.L.L.B (Hons.)/ B.B.A.L.L.B. (Hons.) or graduate degree in Law such as L.L.B. </li>
<li>Minimum one complete year of work experience, preferably in a research intensive organisation.</li>
<li>Familiarity with procedural laws and practice rules in litigation and ability to understand court documents.</li>
</ul>
<p class="justify">The requirements for the role of research associate (Quant.) are:</p>
<ul>
<li>An academic background in the fields of Data Science, Economics, Engineering, Management and/ or Public Policy. </li>
<li>Minimum one complete year of work experience, preferably in a research intensive organisation.</li>
</ul>
<p class="justify">Candidates must possess high quality research skills, basic Excel skills, coding skills and a functional understanding of any one programming language. In keeping with the current work environment at the organisation, a working knowledge of LaTeX and Linux are preferred.</p>
<p class="justify">You must be comfortable with working in an interdisciplinary research environment consisting of people from varying backgrounds such as economics, law, public policy and data science. You should be curious and passionate about research and willing to work on outputs independently as well as in teams.</p>
<p class="justify">The remuneration offered will be commensurate with your skill and experience and will be comparable with what is found in other research institutions. Interested candidates must email their resume to <b>careers@xkdr.org</b> with the <b>subject line: Application for "Research Position, Legal System Reform"</b></p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-88539185701233319042023-10-09T13:53:00.002+05:302023-10-09T14:12:30.225+05:30Announcements<p><h2>Conference: Investments for a Sustainable Tamil Nadu: Reforms and Strategies for the Power Sector</h2></p>
<p>Organised by <a href="https://xkdr.org/">XKDR Forum</a> and <a href="https://trustbridge.in/">TrustBridge</a>.</p>
<p>Given the vast magnitudes of investment required in the energy transition, and given the limitations of Indian public finance, the main path to energy transition investment lies in private investment. Only domestic and foreign private sectors have the scale of resourcing required to terminate contracts with coal-fired plants and build a new world of renewables and storage. This process faces limitations which are collectively bucketed as 'investability'. One of the most important states in India from the perspective of energy transition is Tamil Nadu. It was one of the first states in India to have achieved almost universal electrification and was also at the forefront of the transition to renewables — both wind and solar — in the country.</p>
<p>In this conference, we present a review of the electricity sector in Tamil Nadu - through a collection of facts and evidence about the sector and the state that can form the basis of policy proposals to improve investability for transition finance.</p>
<h3>Program Agenda:</h3>
<p><b>Panel 1 (2:00 - 3:00 PM): Electricity's Role in Tamil Nadu's Development Strategy</b></p>
<p>Presenter: Ajay Shah, XKDR Forum</p>
<p>Panelists: Vikram Kapur IAS (Govt of Tamil Nadu), S Narayan IAS (Retd; Government of India), and Karthik Muralidharan (CEGIS)</p><br>
<p><b>Panel 2 (3:00 - 4:00 PM): The Impact of KUSUM-C in Addressing the Political Economy of Distribution</b></p>
<p>Presenter: Renuka Sane, Trustbridge</p>
<p>Panelists: Anas Rahman (International Institute for Sustainable Development) and Martin Scherfler (Auroville Consulting)</p><br>
<p><b>Panel 3 (4:30 - 5:30 PM): Improving Regulation in the Power Sector</b></p>
<p>Presenter: Akshay Jaitly, Trustbridge</p>
<p>Panelists: Hansika Dhankhar (Shakti Sustainable Energy Foundation) and Ann Josey (Prayas Energy Group)</p><br>
<b>Date:</b> 13th October 2023,<br>
<b>Time:</b> 2:00 - 6:00 PM,<br>
<b>Venue:</b> Dvara Trust (Kerala Meeting Room), 10th Floor-Phase 1, IIT-Madras Research Park, Kanagam Village, Tharamani, Chennai-600113.
<br><br>
<p>The event is in-person and you can register <a href="https://xkdr.org/event/investments-for-a-sustainable-tamil-nadu-reforms-and-strategies-for-the-power-sector">here!</a></p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-79713077497701498582023-09-28T20:19:00.012+05:302023-09-28T23:25:09.530+05:30Fairness and legislation for virtual courts<p>by Mugdha Mohapatra and Ajay Shah.</p>
<p>The weaknesses of the judicial branch are a major problem impeding the Indian state. In the field of legal system reforms, there are substantive issues (such as judicial independence, and intellectual capabilities of judges), and there are process engineering issues (of making courts work as more efficient services production organisations). There has been considerable interest in using modern computer technology, in order to reduce defect rates and increase productivity of these process (Datta et al, 2019).
<p>Computer technology can be applied in many dimensions of the working of courts. As an example, an important path to progress lies in improving scheduling within the day. Here, a layer of rules and computer technology could be layered on top of the existing physical hearings. Within the overall field of computer engineering as applied to the legal system, one important idea is the dream of 'virtual courts'.</p>
<p>In this article, we present a careful definition of the term 'virtual court' and associated words. We examine the foundations of fairness that should be present in the various elements of virtual courts. We describe how the present Indian legislative landscape achieves a certain level of fairness in physical courts. These provisions interfere with the adoption of virtual courts today, and the way forward for policy lies in finding the ways to solve these issues of fairness in a virtual court setting.</p>
<h3>The question of virtual courts</h3>
<p>Virtual courts are an idea that is much talked about. The <a href="https://doj.gov.in/virtual-courts/">Department of Justice</a> has suggested that moving to virtual courts can have significant gains for both the litigant and the court administration, as it reduces the burden on litigants to appear in courts and makes courts processes easier. On <a href="https://indianexpress.com/article/india cabinet-approves-rs-7k-cr-for-phase-iii-of-e-courts-project-8938998/">September 14, 2023</a>, the Cabinet approved Rs.7000 crores for Phase III of the e-Courts project. A key component of this mission is the establishment of virtual courts, for which, around <a href="https://doj.gov.in/phase-iii/">Rs.500 crores have been allocated</a>. The e-Committee of the Supreme Court, which oversees the implementation of the e-Courts project, visualises `<a href="https://ecommitteesci.gov.in/vision-document-for-phase-iii-of-ecourts-project/">virtual courts</a>' as having cases being filed from anywhere, and where each stage of a case can be conducted online.</p>
<p>Some countries such as the United States, Singapore and Canada have successfully used technology for filing, submission of evidence, and video conferencing in courts. Based on these examples, it is suggested that virtual courts should be relied upon in India, in the adjudication of cheque bouncing cases and motor accident claims, as these constitute the bulk of pending cases in the subordinate courts of India (Parliamentary Standing Committee Report on the Functioning of Virtual Courts, 2020).</p>
<p>Several High Courts have attempted to set up <a href="https://www.livelaw.in/news-updates/himachal-pradesh-high-court-virtual-courts-mobile-traffic-magistrates-motor-vehicle-challans-231900?infinitescroll=1">virtual courts</a>. But litigants and lawyers <a href="https://vcourts.gov.in/virtualcourt/index.php">continue to appear in person</a> for adjudication, and these courts are not truly virtual. Three hurdles hold back virtual courts in India today:</p>
<ol>
<li> Laws and rules that are incompatible with the vision of completely virtual courts,</li>
<li> Limitations in technology that can meet the standards of authenticity required under the law, and</li>
<li> The lack of acceptance of virtual courts by litigants and court personnel today.</li>
</ol>
<p>In India, virtual courts can not arise in a legal vacuum. An extensive set of laws define aspects of the operation of courts. It is important to identify the provisions in the present Indian legal framework that frustrate the ready rollout of virtual courts.</p>
<p>These restrictions are not anachronisms. These laws and rules have been put in place to achieve important elements of fairness: to ensure that parties are sufficiently aware of proceedings through summons, that electronic evidence is authentic and immutable, witnesses are not coached or coerced and the rights of an accused person are not denied. Violations of these safeguards can disadvantage litigants, and create an uneven playing field for parties. The present arrangements have arisen from over a century of thinking, by some of the best minds that aspired to establish the rule of law within a liberal democracy. The path to virtual courts lies in deeply understanding how fairness arises (or flounders) in a court procedure, and gradually evolving the laws and rules for virtual courts in a way that achieves fairness.</p>
<h3>1. Terminology</h3>
<p>Several terms are used to describe the use of technology in courts in sometimes confusing ways. Drawing on the <i>E-Courts Phase III Vision Document</i> and documents from the Department of Justice, we assemble a set of terms and definitions for this field.<p>
<dl>
<p><dt>Online Hearings</dt><dd>The practice of conducting court business through video conferencing, where both/one of the parties appear online. Online hearings were relied upon heavily during the COVID-19 pandemic, without any further digitisation of court processes.</dd></p>
<p><dt>Digital Court</dt><dd>This is a court that uses a digital platform to carry out many processes that are currently being done in a physical form. These courts have dispensed with mandatory physical hearings, and requiring parties to provide physical copies of affidavits and applications. These courts are integrated with filing systems and payment systems, that are online (E-Courts Vision Document-Phase III, p.10). In practice, this has meant a courtroom where court records (such as signed documents and physical evidence) are collected, and stored in a physical format. These are then digitised and shared with the judge and all parties. These courts have the ability to conduct hearings and record evidence online, but often choose to conduct physical proceedings. They also continue to require physical summons to be provided to parties, and physical evidence to be submitted to the court. This has been implemented in the <a href="https://delhidistrictcourts.nic.in/DigitalNIActCourtsProjectImplementationGuidelines.pdf">Digital Negotiable Instruments Act Courts of Delhi</a>.</dd></p>
<p><dt>Paperless Courts</dt><dd>All activities in a <a href="https://ecommitteesci.gov.in/project/paperless-courts/">paperless court</a> are conducted through a digital platform. These include preparation of the list of cases to be heard for the day, dictation and storage of orders, and providing information on case status, through a dashboard. These courts may conduct hearings physically. Physical files and evidence are digitised to prepare an e-file for the judge. A paperless court transitions the internal functioning of courts from relying upon physical records to digital records. While a digital court focuses on making the interaction of the litigant, lawyers and judge digital, a paperless court only changes the inner working of the court. <!-- A digital court may choose to be paperless. --></dd></p>
<p><dt>Virtual Courts</dt><dd>In a <a href="https://ecommitteesci.gov.in/service/virtual-courts/">virtual court</a>, parties will not have to come to court for any proceedings or processes. Everything from the filing of a case to the delivery of summons, submission of evidence and recording of statements can be done online. These courts are different from the mere use of video conferencing technology in courts, as they seek to fundamentally reimagine the procedure of adjudication.</dd></p>
</dl>
<p>There are frequently cited examples for progress that has been made in technological developments in courts, such as in Digital Courts in Delhi and Kerala. These are developments that fit within the definitions of digital courts and online hearings, and are not fully virtual courts.</p>
<h3>2. Laws of procedure and where it matters in the stages of a case</h3>
<p>Procedural justice exists as a foundation of substantive justice. The principles that courts are required to follow are clearly laid down in the Civil Procedure Code (CPC), the Criminal Procedure Code (CrPC) and the Indian Evidence Act.</p>
<p>The <a href="https://indiankanoon.org/doc/53830884/"> recognised object of the CPC</a> is to ensure that all parties appearing before the court are treated equitably, and settle their disputes within a clear framework of rules. In criminal cases, procedural justice is even more important as it ensures that an accused cannot be denied his personal liberty based on the decision of the court without being given a chance to defend himself. The basic safeguards that these laws provide are: (1) Make every attempt to inform a party of proceedings against them before taking any adverse action; (2) Ensure evidence is authentic and immutable; and (3) Ensure a party has all the information necessary to defend themselves. These safeguards are placed by procedural law at various stages in the life-cycle of a case. Table 1 presents the general stages of a case, and how sections of these procedural laws place are reflected as these safeguards, at each stage of the case.</p>
<p><b>Table 1: Safeguards at each stage of the case</b></p>
<table style='font-size: 78%'>
<tr>
<th width="4%">No.</th>
<th width="14%">Stages of a case</th>
<th>Safeguard</th>
<th>Relevant Provision</th>
</tr>
<tbody>
<tr>
<td>1.</td>
<td>Filing of a Case</td>
<td>Parties should submit complete documents. All documents must be compliant with the specified format.</td>
<td>S. 26 and Order II, Order VI of the CPC, Chapter XVII and Chapter XV of the CrPC.</td>
</tr>
<tr>
<td>2.</td>
<td>Summons and Warrants</td>
<td>Every attempt should be made to inform parties regarding the proceedings against them. All modes of issuing summons should be exhausted before adverse proceedings or warrants are used.</td>
<td>Order V of the CPC, Chapter VI of the CrPC.</td>
</tr>
<tr>
<td>3.</td>
<td>Submission of Responses</td>
<td>Parties should be given an opportunity to respond to the claims made or charges against them.</td>
<td>Order VIII CPC, Chapter XVI and Chapter XVIII CrPC </td>
</tr>
<tr>
<td>4.</td>
<td>Submission of Evidence </td>
<td> Evidence should be authentic and immutable.</td>
<td>Chapter IV and V of the Indian Evidence Act.</td>
</tr>
<tr>
<td>5.</td>
<td>Recording of Statements and Cross-Examination</td>
<td>Identity of the person giving a statement must be proven. Statements must not be recorded under coercion and duress or coaching. Statements must be recorded under oath.</td>
<td>Order XVI of CPC, Chapter XXIII of CrPC.</td>
</tr>
<tr>
<td>6.</td>
<td>Arguments and Judgement</td>
<td>Every party should have an opportunity to present their argument. Parties should be aware of the outcome and opportunity of appeal</td>
<td>Order XX of the CPC and Chapter XXVII of the CrPC</td>
</tr>
</tbody>
</table>
<p>Recently, there have been some changes to these existing procedural laws, but they have been changes in the name of the law, rather than in the substance of the law, when viewed from the perspective of implementing virtual courts.</p>
<h3>3. Methodology </h3>
<p>The analysis in this article takes two broad approaches: (a) An examination of the existing procedural laws (CPC and CrPC) and how they apply to virtual courts, based on both case laws and secondary literature. (b) A study of the rules of practice, policy documents and implementation guidelines for court digitisation in order to identify how technology has been deployed in courts.</p>
<p>We conducted a legal examination of the CPC, CrPC and Indian Evidence Act, from the perspective of the different stages of a case (listed in Table 1). Table 2 presents all the stages of a case which <i>cannot</i> be done online, without violating the safeguards identified in Table 1.</p>
<p><b>Table 2: Stages of a case and admissibility of online mode</b></p>
<table style='font-size: 84%'>
<tr>
<th width="4%"><b>No.</b></th>
<th><b>Stages of a case</b></th>
<th><b>Can be done entirely online under CPC</b></th>
<th><b>Can be done entirely online under CrPC</b></th>
</tr>
<tbody>
<tr>
<td>1.</td>
<td>Filing of a Case</td>
<td>Yes</td>
<td>Yes</td>
</tr>
<tr>
<td>2.</td>
<td>Summons and Warrants</td>
<td><b>No</b> (Order V, CPC)</td>
<td><b>No</b> (Order VI,CrPC)</td>
</tr>
<tr>
<td>3.</td>
<td>Submission of Responses</td>
<td>Yes</td>
<td>Yes</td>
</tr>
<tr>
<td>4.</td>
<td>Submission of Evidence</td>
<td><b>No</b> (S. 64 and S. 65(B) Indian Evidence Act, 1872)</td>
<td><b>No</b> (S. 64 and S. 65(B) Indian Evidence Act, 1872)</td>
</tr>
<tr>
<td>5.</td>
<td>Recording of Statements and Cross-Examination</td>
<td><b>No</b></td>
<td><b>No</b></td>
</tr>
<tr>
<td>6.</td>
<td>Arguments and Judgement</td>
<td>Yes</td>
<td>Yes</td>
</tr>
</tbody>
</table>
<p>Three stages -- <i>Summons</i>, <i>Submission of evidence</i>, and <i>Recording of statements and cross-examination</i> -- cannot be done entirely online. We now describe the presence of safeguards in these laws in the following Sections.</p>
<h3>4. Legislative foundations and Digital Delivery of Summons</h3>
<p>The physical form of delivery of summons is the only way of delivering summons under the CPC and CrPC. Chapter VI of the Bharatiya Nagarik Suraksha Sanhita, 2023 bill recognises electronic and digital modes of summons as valid in criminal cases. Here, if the court is satisfied that an electronic summons has been delivered, it can deem that the summons is duly served.</p>
<p>Electronic/ digital summons are a mode of delivery in addition to physical summons. But the requirement to deliver a physical summons has <i>not</i> been dispensed with. In order to consider SMS/ Whatsapp/ email as <i>sufficient</i> forms of summons delivery for all matters <i>as a norm</i>, Order V of the CPC, and Chapter VI of the CrPC, requires to be amended.</p>
<p>The aim of the summons processes is to ensure that the defendant is aware of proceedings pending against him, and the required date of appearance. Furthermore, the defendant must also have sufficient time to respond to the summons and find a lawyer. In both civil and criminal cases, registered post and physical delivery of summons is the only form of delivery of summons accepted in the CPC and CrPC. Under Order V of the CPC and Chapter VI of the CrPC, physical delivery may also be done by affixing summons in a public place, publishing summons in a newspaper or handing the summons to an adult male member of the family of the person being summoned.</p>
<p>For instance, in the case of <a href="https://indiankanoon.org/doc/1528815/"><i>Sushil Kumar Sabharwal v. Gurpreet Singh</i></a>, the court held that a defendant cannot be set ex-parte (setting a party ex-parte allows the court to proceed with the case in the absence of the defendant), unless sufficient service of summons can be proven and adequate time has been allowed. Not doing so would be tantamount to a failure of justice, for no fault of the defendant.</p>
<p>In a civil case, as per Order IX Rule 6 of the CPC, the court must be satisfied that summons have been duly served, in order to set a party ex-parte. In a criminal case, no proceedings can take place in the absence of the accused or his pleader, and a warrant for arrest must be issued. Courts ensure that summons have been delivered adequately, and only if they find there is non-compliance with summons, do they issue a warrant.</p>
<p>In addition to registered post and physical delivery, summons may be delivered through email/ WhatsApp. The Supreme Court allowed online delivery of summons, owing to the physical difficulties faced during the pandemic, in <a href="https://www.livelaw.in/pdf_upload/pdf_upload-378217.pdf"><i>Re Cognizance For Extension Of Limitation</i></a>. Each High Court can prescribe additional modes of delivery of summons depending on case types by amending its rules of practice. Service of summons through email <a href="https://delhicourts.nic.in/circulars/May%2011/DHC-notification-rules.pdf.">has been permitted in Delhi</a>, in addition to physical summons, only for civil cases. The Punjab and Haryana High Court has permitted <a href="https://www.scconline.com/blog/post/2023/06/02/punjab-haryana-high-court-issues-guidelines-for-service-of-summons-through-whatsapp-electronic-media-legal-news/">online service</a> in revenue matters. However, in the case of <a href="https://images.assettype.com/barandbench/2023-02/4f953db4-5962-4350-8b16-932774814b2a/Hardev_Ram_Dhaka_v_Union_of_India.pdf"><i>Hardev Ram Dhaka v. Union of India</i></a>, the Registrar of the Supreme Court noted that service through e-mail is not valid, as it is not provided for in the rules. Thus, the service of summons through these alternative, electronic forms, have not yet been accepted as the norm for delivery of summons.</p>
<p>Thus, a mere amendment to allow digital summons is not fair as, not ensuring adequate delivery of summons can disadvantage the defendant in a civil case and potentially deprive an accused of his liberty without a chance of being heard.</p>
<h3>5. Legislative foundations and Submission of Evidence Online</h3>
<p>An important feature of an entirely virtual court is the ability to submit evidence digitally. The Indian Evidence Act (1872) governs the submission and evaluation of evidence in both civil and criminal cases. Allowing parties to submit primary evidence entirely digitally is not possible under the Act. While an electronic record can be submitted digitally, it must be accompanied by a certificate under a separate section of the Act (S. 65B).</p>
<p>Under the Indian Evidence Act, evidence is classified into two types: primary evidence and secondary evidence. Under S. 62 of the Indian Evidence Act, primary evidence refers to an original document submitted to the court. Under S. 63, secondary evidence refers to copies of the original document. Lastly, S. 64 requires that documents must be proved by primary evidence, unless otherwise allowed. This is because of the principle of <a href="https://indiankanoon.org/doc/953942/"><i>best evidence.</i></a></p>
<p>The principle of best evidence requires that a party cannot provide inferior evidence as long as there is better/ superior proof of it. For instance, in a criminal complaint against the offence of cheque bouncing, the complainant is required to submit a physical copy of the cheque.</p>
<p>A different procedure is required to be followed where an electronic record is required to be submitted as evidence. Under S. 65B, a document which is created, stored, copied on an electronic device, and is then shared, must be accompanied by a certificate, that provides the particulars of the device that it was created on, and a certificate signed by a person who is in charge of its management (S. 65B(4)). The purpose of this section is to ensure the <a href="https://indiankanoon.org/doc/187283766/"> authenticity and immutability of electronic output</a>.</p>
<p>Most recently, in the case of <a href="https://indiankanoon.org/doc/172105947/"><i>Arjun Panditrao Khotkar vs Kailash Kushanrao Gorantyal</i></a>, the court clarified that a S. 65B certificate was required to be presented where the digital device, on which the electronic record is first created, cannot be presented before the court. For instance, in a contractual dispute, a copy of the electronically created and signed contract, which is stored in the cloud, must be accompanied by a S. 65B certificate, by the person who is managing/ in charge of the server, as the server cannot be brought to court. Submission of WhatsApp chats, or records of UPI payments where information is stored in the cloud, must also be accompanied by a S. 65B certificate. At the moment, such certificates are physically generated, signed and filed.</p>
<p>The draft of the Bharatiya Sakshya Bill (2023), through S. 61 and S. 63, seeks to address this issue by also recognising electronic/ digital records as primary evidence. The bill continues to maintain a distinction between primary evidence and secondary evidence, and the principle of best evidence has not been done away with it.</p>
<p> The strict standards of authenticity and immutability provided in the Indian Evidence Act should not be changed as this can lead to inaccurate judgements, and cause higher courts to waste time on correcting errors.</p>
<h3>6. Legislative foundations, and Recording of Witness Statements and Cross-Examination Online</h3>
<p>While video conferencing can be used in both civil and criminal cases, for recording of evidence and cross-examination, these include ensuring the identity of the accused, ensuring that the witness is not being tutored or coerced, and appointing an officer to be present with the witness <a href="https://indiankanoon.org/doc/560467/">(State of Maharashtra vs. Dr. Praful B. Desai)</a>. The same safeguards have also been implemented through video-conferencing based on the <a href="https://ecommitteesci.gov.in/document/model-rules-for-video-conferencing-for-courts-2/">`Model Video Conferencing Rules'</a>, prepared by the Supreme Court e-committee.</p>
<p>The desirability of online hearings has been debated extensively (Ferguson, 2022; Legg and Song, 2021). The risks with online hearings include challenges in assessing credibility, establishing emotional connections among courtroom participants, maintaining the solemnity of the legal processes, and transparency in the conduct of proceedings. As a result of these risks, the use of video conferencing depends on the type of case, and varies from case to case. Courts may also require parties to seek permission to use video conferencing. The use of video conferencing has also raised questions on the efficacy of using online modes to conduct trials, because of the possibility of reduced witness credibility, reduced information on non-verbal cues, the reduced importance of the courtroom in the mind of a litigant (Abrams, 2022; Salyzyn, 2012).</p>
<p>The rigour of these requirements have led to the deployment of non-IT-based alternatives to ease the ability to record witness statements and conduct cross-examinations. For instance, in <a href="https://delhihighcourt.nic.in/uploads/VC_Rules2021.pdf">Delhi,</a> witnesses are not required to go to a courtroom, but to a <i>'Court Point'</i>. A Court Point is the courtroom, or where the court is physically convened, or where proceedings are conducted in accordance with court directions. These 'court points' are, in fact, extensions of the physical court, and require the physical presence of the litigant, where oath is administered in the presence of a coordinator. The verification of identity is carried out based on government issued identity cards, or an affidavit by a specified authority. Similar rules exist in several other states, such as Odisha and Telangana (P.R. and Mishra, 2021).</p>
<h3>7. The way forward for virtual courts</h3>
<p>During the pandemic, courts in India relied upon online hearings, where the court staff and registry continued to prepare physical files to sent to the judge. These were not `virtual courts' in the sense of the terminology of this article. The delivery of summons through physical forms was affected, and courts allowed digital summons. But they did not issue any adverse orders against non-compliance with summons. The submission of evidence was through physical forms. Legal scholars highlighted how online hearings during the pandemic led to the loss of certain protections of accused persons, reduced the amount of information on litigants, and the testimony that is available to a judge (Kirby, 2021).</p>
<p>The analysis of legal provisions in procedural laws shows that, at present, it is not possible to construct a fully virtual court owing to the present text of the Civil Procedure Code, the Criminal Procedure Code and the Indian Evidence Act. The safeguards embedded in these laws are over a 100 years old, and are motivated by fundamental concepts of fairness, rule of law and liberal democracy. These include ensuring parties are aware of the proceedings, that evidence is authentic and reliable, that witnesses are not coached or coerced, and that the right of an accused to observe proceedings against him are not compromised. As the cases cited above show, these principles have been reiterated over and over, and are binding upon all judges in India.</p>
<p>What, then, is the path to virtual courts? The need of the hour is not a fragile legal strategy to get things done, nor is it in a quick amendment bill. The need of the hour is sophisticated research. We must delve deeper into what Kelkar and Shah, 2022, term the `invisible infrastructure' that shapes the working of courts in India. These are the unnoticed underlying systems, frameworks, norms, and processes that enable interventions to succeed. There is a need for cautious examination of the law and technological solutions, in order to avoid unintended consequences. A research literature is now required around the following important questions. Will virtual courts be beneficial for litigants? What are the technological solutions that can be used to maintain the legal safeguards highlighted above? How should Courts be trained to use such technical solutions? How can procedural principles of fair play in courts be balanced with the rules that enable virtual courts?</p>
<h3>References</h3>
<p> P. Datta, M. Hans, M. Mishra, I. Patnaik, P. Regy, S. Roy, S. Sapatnekar, A. Shah, A. P. Singh and S. Sundaresan, <a href="https://www.nipfp.org.in/media/medialibrary/2019/03/WP_2019_258.pdf">How to Modernise the Working of Courts and Tribunals in India</a>, NIPFP Working paper series (2019).</p>
<p> A. Ferguson, <a href= "https://vanderbiltlawreview.org/lawreview/wp-content/uploads/sites/278/2022/10/Courts-Without-Court.pdf"> Courts without Court </a>, Vanderbilt Law Review (2022).</p>
<p> A. Salyzyn, <a href= "https://digitalcommons.osgoode.yorku.ca/ohlj/vol50/iss2/4/#:~:text=This%20argument%20is%20developed%20by,and%20emotional%20connections%20between%20courtroom"> New Lens: Reframing the Conversation about the Use of Video Conferencing in Civil Trials in Ontario </a>, Osgoode Hall Law Journal (2012).</p>
<p> Supreme Court E-Committee, <a href="https://ecommitteesci.gov.in/vision-document-for-phase-iii-of-ecourts-project/"> E-Courts- Phase III Vision Document </a>, 2023.</p>
<p> M. Kirby, <a href="https://repository.nls.ac.in/cgi/viewcontent.cgi?article=1434&context=nlsir"> Covid-19 & Law in India & Australia- Lessons from the Pandemic for the Costs and Delays of Legal Process</a>, National Law School of India Review (2021).</p>
<p> M. Legg and A. Song, <a href="https://www.unswlawjournal.unsw.edu.au/wp-content/uploads/2021/04/04-Legg-Song.pdf.">The Courts, the Remote Hearing and the Pandemic: From Action to Reflection</a>, UNSW Law Journal (2021).</p>
<p><a href="https://www.scribd.com/document/475642154/Parliamentary-panel-on-virtual-courts#">Parliamentary Standing Committee Report on the functioning of virtual courts</a>, (2020).</p>
<p> Sandhya P.R. and A. Mishra, <a href="https://www.dakshindia.org/video-conferencing-e-filing-and-live-streaming-in-the-high-court/"> Video Conferencing, E- Filing, and Live Streaming in the High Court</a>, (2021).</p>
<p> Z. Abrams, <a href="https://www.apa.org/monitor/2022/09/fairness-online-trial">Can justice be served online?</a>, American Psychological Association (2022).</p>
<br>
<p>Mugdha Mohapatra is a Research Associate at XKDR Forum. Discussions with Ayushi Singhal, Aayush Tainwala, Aayush Kedia, Anjali Sharma, Karthik Suresh, Pavithra Manivannan, Siddarth Raman, Shubho Roy, Susan Thomas, and two anonymous reviewers have helped shape and improve this article.</p>
Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-74534161422840684382023-07-25T19:45:00.002+05:302023-07-25T19:45:19.353+05:30A conservative path to get to a fully working Linux computer<p>by Ajay Shah.</p><p>Linux
has long been a great operating system, but
there is a bottleneck on getting it properly installed and
working. It is hard to get it to work with all the hardware such as the
wifi, USB devices, audio, suspend/hibernate, etc. This is because this hardware tends to evolve rapidly. The device vendors frequently do not release
source code, or even binaries for Linux. The Linux community solves
this through large applications of brainpower. As a consequence, Linux support for the devices comes through with a lag. If you get a state of the art computer, and try to install Linux on it, this will often prove to be challenging.<br /></p><div>How can we avoid these risks and complexities? There are three conservative pathways to get to a fully working Linux machine.</div><div> </div><div style="text-align: left;"><h4><span style="font-size: medium;">Method 1: Use a chromebook</span></h4></div><div> </div><div>Chromebooks
are wonderful machines where Google takes responsibility for your Linux
install, and for over-the-air updates (exactly as they do with
Android). There are a wealth of <a data-saferedirecturl="https://www.google.com/url?q=https://www.nytimes.com/wirecutter/reviews/best-chromebook/&source=gmail&ust=1690233194280000&usg=AOvVaw0OZxPMuicr8LCUHpqF5cMZ" href="https://www.nytimes.com/wirecutter/reviews/best-chromebook/" target="_blank">good Chromebooks</a> out there, and one that is noteworthy is the <a data-saferedirecturl="https://www.google.com/url?q=https://www.acer.com/gb-en/chromebooks/acer-chromebook-spin-513-cp513-2h&source=gmail&ust=1690233194280000&usg=AOvVaw1Gm6MqLzRZGxtxIfLJKPp3" href="https://www.acer.com/gb-en/chromebooks/acer-chromebook-spin-513-cp513-2h" target="_blank">Acer Chromebook Spin 513</a>.
The basics all work on a Chromebook, and then you get "the
Linux development environment" which gives a familiar apt-get interface
to installing packages. I have installed emacs, svn, R, latex,
etc. and it all just-worked. On many Sundays, my morning ritual
of writing a column for the <i>Business Standard</i> is done using emacs on a chromebook.</div><div><br /></div><div style="text-align: left;"><h4><span style="font-size: medium;">Method 2: Buy linux pre-installed</span></h4></div><div> </div><div>Firms like Dell or Lenovo offer Linux pre-installed on some computers [<a data-saferedirecturl="https://www.google.com/url?q=https://news.lenovo.com/pressroom/press-releases/lenovo-launches-linux-ready-thinkpad-and-thinkstation-pcs-preinstalled-with-ubuntu/&source=gmail&ust=1690233194280000&usg=AOvVaw3oE0vguh-0M-n36aFnVNuw" href="https://news.lenovo.com/pressroom/press-releases/lenovo-launches-linux-ready-thinkpad-and-thinkstation-pcs-preinstalled-with-ubuntu/" target="_blank">example</a>].
Here, again, you're up and running with zero friction. You are
guaranteed that all the devices are supported.
But there is a downside: You are stuck with the distribution that was
chosen by the vendor. This may or may not be to your taste.</div><div> </div><div>It's
good to have the complete knowledge, so as to deal with
future situations of systems administration or full reinstall. As an example, it's nice to have your servers on the identical distribution as your laptop. So I feel incomplete if
someone gives me a perfectly working machine that I did not install. This is indeed schizophrenic: with a chromebook or an android device, I do not expect to ever require systems administration or reinstall, but with a Linux machine, I do.</div><div><br /></div><div style="text-align: left;"><h4><span style="font-size: medium;">Method 3: A conservative path to choosing hardware and OS<br /></span></h4></div><div> </div><div>As a long-time Linux user, I
have found that it's good to understand and get used to one Linux
<i>distribution</i>, and then stick with it across the years on all my systems. For me, this distribution of choice is <span class="il">Debian</span> stable.<br /></div><span class="im"><div><br /></div><div>Debian stable will often not work well on a state of the art laptop. The moniker `stable' implies something that has stabilised after years of testing, and it will not know recent developments in the hardware. What is the way out?<br /></div><div> </div><div>Two factors that should be kept in mind. The
laptops where Linux is available pre-installed from the vendor are
those where device support is superior. And, the laptops that have high production volume are more likely to go out into the expert community
that makes Linux work. As an example, Xiaomi's Mi laptops are a high
volume part (so the second factor is in favour) but where Linux pre-installed is not a choice (so the first factor is not). <br /></div><div><br /></div><div>The key idea of this article is to look at the gap between the date of a laptop release and the date of the Linux kernel. Based on your ability to deal with glitches, you must establish a minimum delay that makes you comfortable. For me, this minimum delay is 1 year: once the linux kernel is atleast a year younger than the laptop, I'm in good shape, based on my ability to deal with difficulties and my risk tolerance. Each person should choose this one number.<br /></div><div><br /></div><div>With this in hand, we have a recipe for screening a laptop before purchase :<ol><span class="im"><li>For a laptop of interest, find out its release date. As an example, when I liked the <a data-saferedirecturl="https://www.google.com/url?q=https://www.mi.com/in/product/mi-notebook-ultra/&source=gmail&ust=1690233194280000&usg=AOvVaw2bHFCZkA5QhO70IxZ4cjXX" href="https://www.mi.com/in/product/mi-notebook-ultra/" target="_blank">Mi Notebook Ultra</a>, I <a data-saferedirecturl="https://www.google.com/url?q=https://www.google.com/search?client%3Dfirefox-b-e%26q%3D%2522Mi%2Bnotebook%2Bultra%2522%2Brelease%2Bdate&source=gmail&ust=1690233194280000&usg=AOvVaw3CbnaChoXwaR776yFCth3q" href="https://www.google.com/search?client=firefox-b-e&q=%22Mi+notebook+ultra%22+release+date" target="_blank">found</a> this the release was in August 2021. Similarly the release date for the <a data-saferedirecturl="https://www.google.com/url?q=https://www.mi.com/in/product/xiaomi-notebook-pro/&source=gmail&ust=1690233194280000&usg=AOvVaw1kth10DowLfP4UmgBMRSjs" href="https://www.mi.com/in/product/xiaomi-notebook-pro/" target="_blank">Xiaomi Notebook Pro 120G</a> <a data-saferedirecturl="https://www.google.com/url?q=https://www.google.com/search?q%3D%2522Xiaomi%2Bnotebook%2Bpro%2B120g%2522%2Brelease%2Bdate%26client%3Dfirefox-b-e%26sxsrf%3DAB5stBjRYyQ-i1c-EPQrz826wIdEy8kW-Q%253A1688622177054%26ei%3DYVSmZK31AtXWhwPS5LGwDg%26ved%3D0ahUKEwjtqZfor_n_AhVV62EKHVJyDOYQ4dUDCA4%26uact%3D5%26oq%3D%2522Xiaomi%2Bnotebook%2Bpro%2B120g%2522%2Brelease%2Bdate%26gs_lcp%3DCgxnd3Mtd2l6LXNlcnAQAzIFCAAQgAQyBggAEBYQHjIICAAQigUQhgM6CggAEEcQ1gQQsAM6BAgjECc6BwgjEIoFECc6CAgAEIoFEJECOgsILhCABBCxAxCDAToLCAAQigUQsQMQgwE6CAguEIAEELEDOgsIABCABBCxAxCDAToNCAAQgAQQFBCHAhCxAzoTCC4QigUQsQMQgwEQxwEQ0QMQQzoHCAAQigUQQzoNCAAQigUQsQMQgwEQQzoQCC4QigUQsQMQgwEQ5QQQQzoQCC4QgwEQsQMQ5QQQigUQQzoOCAAQigUQsQMQgwEQkQI6DgguEIAEELEDEIMBEOUEOhMILhCABBAUEIcCELEDEIMBEOUEOg4ILhCDARCxAxCABBDlBDoKCAAQgAQQFBCHAkoECEEYAFD_Blj_N2C6OWgDcAF4AIAB4wGIAe0rkgEGMC4zNy4ymAEAoAEBwAEByAEI%26sclient%3Dgws-wiz-serp&source=gmail&ust=1690233194280000&usg=AOvVaw0KLednr5gMJUQsEBeKxQud" href="https://www.google.com/search?q=%22Xiaomi+notebook+pro+120g%22+release+date&client=firefox-b-e&sxsrf=AB5stBjRYyQ-i1c-EPQrz826wIdEy8kW-Q%3A1688622177054&ei=YVSmZK31AtXWhwPS5LGwDg&ved=0ahUKEwjtqZfor_n_AhVV62EKHVJyDOYQ4dUDCA4&uact=5&oq=%22Xiaomi+notebook+pro+120g%22+release+date&gs_lcp=Cgxnd3Mtd2l6LXNlcnAQAzIFCAAQgAQyBggAEBYQHjIICAAQigUQhgM6CggAEEcQ1gQQsAM6BAgjECc6BwgjEIoFECc6CAgAEIoFEJECOgsILhCABBCxAxCDAToLCAAQigUQsQMQgwE6CAguEIAEELEDOgsIABCABBCxAxCDAToNCAAQgAQQFBCHAhCxAzoTCC4QigUQsQMQgwEQxwEQ0QMQQzoHCAAQigUQQzoNCAAQigUQsQMQgwEQQzoQCC4QigUQsQMQgwEQ5QQQQzoQCC4QgwEQsQMQ5QQQigUQQzoOCAAQigUQsQMQgwEQkQI6DgguEIAEELEDEIMBEOUEOhMILhCABBAUEIcCELEDEIMBEOUEOg4ILhCDARCxAxCABBDlBDoKCAAQgAQQFBCHAkoECEEYAFD_Blj_N2C6OWgDcAF4AIAB4wGIAe0rkgEGMC4zNy4ymAEAoAEBwAEByAEI&sclient=gws-wiz-serp" target="_blank">was</a> August 2022.</li></span><li>Look carefully at the <span class="il">Debian</span> release of interest. The <span class="il">Debian</span> stable of today, which is called `bookworm' <a data-saferedirecturl="https://www.google.com/url?q=https://www.google.com/search?client%3Dfirefox-b-e%26q%3Ddebian%2Bbookworm%2Bkernel%2B&source=gmail&ust=1690233194280000&usg=AOvVaw2UstJ4tmrLmkDDBcn4c0QS" href="https://www.google.com/search?client=firefox-b-e&q=debian+bookworm+kernel+" target="_blank">has the kernel</a> version 6.1. This has <a data-saferedirecturl="https://www.google.com/url?q=https://en.wikipedia.org/wiki/Linux_kernel_version_history&source=gmail&ust=1690233194280000&usg=AOvVaw0ZXDD2Y2qcE8_7_en8rWOt" href="https://en.wikipedia.org/wiki/Linux_kernel_version_history" target="_blank">a release date</a> of December 2022. </li><li>Restrict yourself to machines which are atleast a year older than this kernel.<br /></li></ol></div></span><span class="im"><div><i>Example: Mi Notebook Ultra</i>. There
is a decent delay between the release date of the Mi Notebook Ultra
(August 2021) and the 6.1 kernel release date (December 2022). Hence,
this is likely to work well.<br /></div><div><br /></div></span><div><i>Example: Xiaomi Notebook Pro 120G</i>. This has a release date of August 2022. As an example of how these
problems play out, this laptop has the sweet Intel work in the 12th
generation "Alder
Lake" CPU, with performance cores and efficiency cores. Harnessing
these properly in the Linux kernel is non-trivial, and <a data-saferedirecturl="https://www.google.com/url?q=https://www.techgoing.com/linux-gets-intel-cpu-size-core-optimization-again-performance-catching-up-with-windows11/&source=gmail&ust=1690233194280000&usg=AOvVaw0dO9t6QvYB4lTUEuvVBYl2" href="https://www.techgoing.com/linux-gets-intel-cpu-size-core-optimization-again-performance-catching-up-with-windows11/" target="_blank">got done for kernel 5.18 in August 2022</a>. Going by our recipe, we should wait a year after the laptop release, and thus
ask for kernel 6.4. We don't yet know when it will show up <a data-saferedirecturl="https://www.google.com/url?q=https://en.wikipedia.org/wiki/Debian_version_history&source=gmail&ust=1690233194280000&usg=AOvVaw1KDypuCygD3rFK-7qFMpTJ" href="https://en.wikipedia.org/wiki/Debian_version_history" target="_blank">in future <span class="il">Debian</span> releases</a>. What is <span class="il">Debian</span> testing today ("trixie") <a data-saferedirecturl="https://www.google.com/url?q=https://blog.frehi.be/2023/06/17/noteworthy-debian-trixiesid-changes-week-1-june-11-june-17-2023/&source=gmail&ust=1690233194280000&usg=AOvVaw1S2x7PwUMQw61xYj-5mNOX" href="https://blog.frehi.be/2023/06/17/noteworthy-debian-trixiesid-changes-week-1-june-11-june-17-2023/" target="_blank">uses kernel 6.3</a> that was released in April 2023, which does not satisfy the one-year test when compared with the release date of August 2022. </div><span class="im"><div><br /></div><div>A long-run strategy that harnesses this recipe, to stay on contemporary hardware and software, consists of buying a new machine every time Debian testing reaches "release candidate 1" ("RC1"):</div><div><ol><li>Watch the current <span class="il">Debian</span> testing. (At present, this is `trixie').</li><li>Wait for it to achieve its Release Candidate 1 ("RC1"). For Debian 12 this was 3 April 2023.<br /></li><li>Identify the kernel version that they have in it and the release date of this kernel (using the URLs placed above). <br /></li><li>Limit
yourself to examining equipment which has a release date of more than a
year prior to this kernel release date. Buy this, and it's likely to
work well.<br /></li><li>At this point, you are on a fully working <span class="il">Debian</span>
testing RC1, but this will rapidly mature into <span class="il">Debian</span> stable, and then you
have a few years of stability. For Debian 12, the stable release was 10 June 2023, which was about two months after RC1.<br /></li></ol></div><div>Under this strategy, every few years, when <span class="il">Debian</span> testing reaches RC1, it is time
to buy a new laptop. You will regularly buy a laptop that is at least one year older than the kernel version in Debian testing. Modern computers are fast enough that this is not an
important constraint, and older laptops are cost-efficient.</div><div><br /></div></span><div>Jumping into a testing RC1 is a bit risky. This level of risk seems fine for a personal laptop but for production systems it is better to do this differently: instead of going in roughly 3 months before the release date, it's good to wait 6 months after the release date.</div><div><br /></div><div><br /></div><div><br /></div><div>I thank Chirag Anand, Ayush Patnaik and Megha Patnaik for useful conversations. <br /></div>xhttp://www.blogger.com/profile/14462096253602478048noreply@blogger.com4tag:blogger.com,1999:blog-19649274.post-65283092041248108542023-06-16T13:39:00.005+05:302023-10-09T13:51:50.903+05:30Announcements<p><a href="https://trustbridge.in/">TrustBridge</a> is an organisation that works on improving Rule of Law for better economic outcomes. We focus on understanding the gaps in the existing legal and regulatory framework, evaluating how they impact economic growth, and studying the various ways that these could be improved upon. We aim to undertake legal, quantitative and policy oriented research and dissemination that will inform principles and evidence-based policy making. We believe that implementing ideas that emerge from our research will help bring us closer to our objective of improving the Rule of Law. Our work is in the areas of Energy Transition, Financial Markets, Contract Performance in government and private contracts, and Governance in the start-up ecosystem.</p>
<p>TrustBridge is looking for two full time associates to work on its projects.</p>
<h3>Position 1: Quantitative Research Associate</h3>
<p>As a quantitative research associate you will deploy quantitative techniques to create and analyse data sets and to generate insights about the problems we are working on.</p>
<p>The requirements for the role are:</p>
<ul>
<li>Prior demonstrable experience of working with R, Python, Julia and other open source tools for generating statistical/economic analysis.</li>
<li>A degree or a professional qualification in Mathematics, Statistics, Economics or Computer Science will be desirable.</li>
<li>You must be curious and passionate about research and be comfortable working in an interdisciplinary environment. You must be ready to work on independent outputs as well as function in teams.</li>
</ul>
<h3>Position 2: Policy Research Associate</h3>
<p>As a policy research associate you will be required to work on projects that seek to engage with governments and with the private sector to generate sustainable reforms in the areas of our interest.</p>
<p>The requirements for the role are:</p>
<ul>
<li>A Master's degree or a professional qualification in economics/management/public policy, strong written and oral communication skills.</li>
<li>Prior work experience in the the areas of interest to TrustBridge.</li>
<li>A quantitative/computational orientation will be a plus.</li>
<li>You must be curious and passionate about research and be comfortable working in an interdisciplinary environment. You must be ready to work on independent outputs as well as function in teams.</li>
</ul>
<p>The remuneration offered will be commensurate with your skill and experience.</p>
<p>Please send an email with your CV to careers@trustbridge.in if you are interested.</p>Anurodhhttp://www.blogger.com/profile/02632580841213435435noreply@blogger.com0tag:blogger.com,1999:blog-19649274.post-11894256739174100342023-06-15T13:47:00.009+05:302023-06-16T13:32:56.544+05:30Helping litigants make informed choices in resolving debt disputes<p>by <a href="https://blog.theleapjournal.org/2022/12/author-pavithra-manivannan.html">Pavithra Manivannan</a>, <a href="https://blog.theleapjournal.org/2014/10/author-susan-thomas.html">Susan Thomas</a>, and <a href="https://blog.theleapjournal.org/2015/12/author-bhargavi-zaveri.html">Bhargavi Zaveri-Shah</a>.</p>
<p>The Indian legal system faces numerous difficulties, and the discourse on legal system reforms has emphasised the workings of the courts from the perspective of judges and registries. Such a focus is not so useful for litigants who are also participants in the legal system. The decisions that they make and the incentives that they face add up to create the case load at the courts.</p>
<p>Consider a supplier of spare parts to a certain manufacturer, who has not been paid her dues. Her lawyer advises her of multiple legal remedies that she can use to recover her dues, from filing a money suit before a civil court to pursuing arbitration proceedings outside a court to initiating insolvency proceedings against the manufacturing company. How would she decide which legal remedy to pursue? More generally, litigants make four classes of decisions: <em>Should one sue? Should one appeal? When faced with a certain proffer, should one settle? When alternative forums are available, which one to prefer?</em> Flaws in a litigant's decision making when faced with such decisions reshape the case flow of courts. In the Indian legal system reform discussion, it is important to think about the incentives and the decision-making of litigants.</p>
<p>At present, litigants make these decisions based on their own, generally limited, prior experience. They are advised by lawyers who specialise in a certain forum. However, lawyers tend to be specialists in one forum or another, and often know impressions rather than systematic evidence. Further, lawyers have an interest in the litigant's decision. Under these conditions, the decisions of litigants might sometimes be sub-optimal.</p>
<h3>First steps in measurement</h3>
<p>All the four types of litigant decisions - to sue, to appeal, to settle and to choose a forum - involve forecasting the time taken in the legal process, and associated expenses. In an ideal world, litigant decision making would be supported by statistical systems that forecast these two numbers.</p>
<p>In this article, we develop a legal system measurement that can produce such insights for litigants, who are litigating on a narrow class of problems. We do this for three Bombay courts, as a proof of concept of a simple analysis that can help litigants.</p>
<p>The narrow class of problems that we focus on are debt dispute resolutions. Several laws in India allow the enforcement of debt contracts in different forms, which provides us a unique opportunity to compare their relative performance in providing redress for debt default. There are also multiple courts and tribunals that adjudicate disputes on debt contracts in different ways. We choose three in Bombay to study:</p>
<ol>
<li><p>The Bombay High Court which has original jurisdiction to adjudicate high value contractual matters.</p></li>
<li><p>The Mumbai bench of the Debt Recovery Tribunal (or DRT), which is a specialised tribunal that has been adjudicating recovery of debts due to banks and financial institutions since 1993.</p></li>
<li><p>The Mumbai bench of the National Companies Law Tribunal (or NCLT), which is a specialised tribunal adjudicating insolvency petitions against companies.</p></li>
</ol>
<p>We build on earlier work that points out that litigants are found to care about the access, efficiency, effectiveness, independence, and predictability of judgements (Manivannan et al, 2023). It is known that secondary data (such as those from court websites) have constraints: (a) it can be used to measure only a subset of these aspects; and (b) even this subset cannot be necessarily computed for all the comparable courts. Assuming that access is not a constraint, Manivannan et al (2023) suggest that the litigant can get an estimate of what she can expect of the amount of time in the court, for each of these courts. They point out that it is possible to get an estimate of what she can expect of costs she will incur, through the expected number of hearings at a given court, where each hearing induces a certain unit cost.</p>
<p>In this article, we move towards three new questions in the field of litigant decision making:</p>
<ol>
<li>How likely is it to get a first hearing in the first year from filing the case in the court?</li>
<li>How likely is it that the matter will get disposed in the first year from the filing of the case?</li>
<li>How many hearings are most likely to take place in the first year from the filing of the case?</li>
</ol>
<p>While the first two questions help to address the efficiency in terms of time expected in a court, the third can be used as a proxy for the kind of costs that a litigant can expect from a given court, since every hearing requires the time of (and fees charged by) legal counsel.</p>
<h3>Data description</h3>
<p>We collect and analyse sample data of cases involving debt disputes, which were listed and heard at three courts in Bombay for the period from September 2021 to December 2022 ('sample period'). The websites of these fora record cases filed across different timelines and do not archive case life cycles of historical cases. This sample period allows us to compare cases that have been filed at the same time and therefore have comparable life cycles.</p>
<ul>
<li><p>In the case of the Bombay HC, the selected matters include <em>suits, summary suits, commercial suits and commercial summary suits</em>, filed under its original jurisdiction.</p></li>
<li><p>For the DRT, we extract cases arising under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993, and the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest (SARFAESI) Act, 2002.</p></li>
<li><p>For the NCLT, we extract all cases listed under the Insolvency and Bankruptcy Code (IBC). We understand that cases involving debt enforcement will be covered under these case-types at the relevant court.</p></li>
</ul>
<p>Table 1 shows the number of cases in the data set for all the three courts. We additionally include the status of these cases as pending or disposed. A case is categorised as disposed of by the courts where the disposal is by way of a decree passed by the court, or if it is settled, or it is has been withdrawn for any reason.</p>
<p>Table 1: Distribution of cases</p>
<table>
<thead>
<tr class="header">
<th style="text-align: left;" width="30%">Court</th>
<th style="text-align: right;">Total</th>
<th style="text-align: right;">Disposed</th>
<th style="text-align: right;">Pending</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="text-align: left;">Bombay HC</td>
<td style="text-align: right;">1243</td>
<td style="text-align: right;">159</td>
<td style="text-align: right;">1084</td>
</tr>
<tr class="even">
<td style="text-align: left;">DRT</td>
<td style="text-align: right;">843</td>
<td style="text-align: right;">125</td>
<td style="text-align: right;">718</td>
</tr>
<tr class="odd">
<td style="text-align: left;">NCLT</td>
<td style="text-align: right;">2645</td>
<td style="text-align: right;">897</td>
<td style="text-align: right;">1748</td>
</tr>
</tbody>
</table>
<p>Thus, for the same period of time, there have been a different number of applications in the matter of debt dispute resolution in these three courts.</p>
<p>While, this can be used to calculate the 'disposal rate' of matters in each court, these measures suffer from two limitations. It does not take into consideration the duration of the pending cases. Further, it does not take into account that the amounts involved and the complexity are different in the cases handled at different courts. An approach that takes these aspects into account is the survival analysis modelling approach.</p>
<h3>Statistical analysis</h3>
<p>'Survival analysis' is a method for modelling the time to an event of interest. If the event of interest is the time to disposal, the model will yield the estimated probability of a case being completed between any two timepoints t1 and t2.</p>
<p>Survival analysis models have been previously employed to study judicial delays including at the Income Tax Tribunals (Datta et al, 2017) and at the NCLTs (Shah and Thomas 2018, Bhatia et al, 2019). In this article, we draw on the intuition of survival analysis and offer simple estimates of two quantities (for each of the three courts):</p>
<ul>
<li>What is the probability of a case being being heard atleast once within one year? The first hearing is generally an important milestone for a litigant to know the possibility of getting interim relief. How likely it is that this will happen within the very first year?</li>
<li>What is the probability that the case is disposed of in the first year?</li>
</ul>
<p>These probabilities are estimated for each of the three chosen courts separately on matters of debt dispute resolution. Much of the earlier research have computed and presented sample means of completed cases only, without taking into account cases that have not been completed. The standard techniques of survival analysis fare well on harnessing information using observations of cases that have not completed as well.</p>
<h3><strong>Q1</strong>: Chances of getting a first hearing in the first year from filing of a case</h3>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhE4xfLGrt-VX3PTNt83tKQoahHqiIRbTtAiobMMYRXAcQ3Qma80h9vedQoyHGLKrJDRB7Wsr25sWjBHRYZqYOdN9S1Wepx3O6cSH-lEbZPCRX50Isks1FBxs320aijmdblLZFQaCddExjS7IPQ55sAqv98pnAGF26nj71UUt6B-UC-xNg/s2700/timeTillHearing1_sep2021dec2022.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="1800" data-original-width="2700" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhE4xfLGrt-VX3PTNt83tKQoahHqiIRbTtAiobMMYRXAcQ3Qma80h9vedQoyHGLKrJDRB7Wsr25sWjBHRYZqYOdN9S1Wepx3O6cSH-lEbZPCRX50Isks1FBxs320aijmdblLZFQaCddExjS7IPQ55sAqv98pnAGF26nj71UUt6B-UC-xNg/s600/timeTillHearing1_sep2021dec2022.png"/></a></div></p>
<p>Figure 1 presents a graph of the survivor function for a matter getting a first hearing across the Bombay HC, the DRT and the NCLT. Here, time to first hearing is on the x-axis. We pull up the probability of getting to the first hearing within a year from these curves for the three courts and present this in Table 2.</p>
<p>Table 2: Chance of first hearing within the first year at Bombay HC, DRT, NCLT</p>
<table>
<thead>
<tr class="header">
<th style="text-align: left;"></th>
<th style="text-align: right;">(in %)</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="text-align: left;" width="50%">Bombay HC</td>
<td style="text-align: right;">36.6</td>
</tr>
<tr class="even">
<td style="text-align: left;">DRT</td>
<td style="text-align: right;">94.0</td>
</tr>
<tr class="odd">
<td style="text-align: left;">NCLT</td>
<td style="text-align: right;">99.8</td>
</tr>
</tbody>
</table>
<p>A case at the NCLT has the highest chance (of nearly 100%) of being heard with the first year from its filing. There is nearly a similar probability of a first hearing at the DRT within the first year, with a 94% chance. At the Bombay HC, on the other hand, there is a less than 40% chance that a similar matter will get a first hearing within a year of being filed.</p>
<p>Using this approach, we could similarly estimate the probability of a case being heard atleast once within say, the first three months of filing. Our analysis finds that for a litigant at the NCLT, there is an 86% chance of getting atleast one hearing within the first three months of filing a case. The corresponding probabilities for the DRT and the Bom HC are 74% and 5% respectively.</p>
<h3><p><strong>Q2</strong>: Chances of getting a case disposed in the first year from filing of a case</h3></p>
<p>Figure 2: the survivor function for disposal for three courts</p>
<p><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYABvDeOqqMMHiRi7Mw0UNbD0TjOqdr_hWWPy4h_iyPgzH1tim0xx3ZOytyphDCwLsJdVNEM-Y-UnuuKoid7mr-jeyuxdtB9gZn11znl2tpPOrQ-LECFqH_Ki8K6DnFnUnoEwWg2ioZKdi3leMoV2tlSfXu1wPVgl1Fh0Lr0OXezxxEgM/s2700/timeTillDisposal_sep2021dec2022.png" style="display: block; padding: 1em 0; text-align: center; "><img alt="" border="0" width="600" data-original-height="1800" data-original-width="2700" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYABvDeOqqMMHiRi7Mw0UNbD0TjOqdr_hWWPy4h_iyPgzH1tim0xx3ZOytyphDCwLsJdVNEM-Y-UnuuKoid7mr-jeyuxdtB9gZn11znl2tpPOrQ-LECFqH_Ki8K6DnFnUnoEwWg2ioZKdi3leMoV2tlSfXu1wPVgl1Fh0Lr0OXezxxEgM/s600/timeTillDisposal_sep2021dec2022.png"/></a></div></p>
<p>Figure 2 shows the litigant the chances of a debt dispute resolution matter getting <em>disposed</em>, within one year of it being filed in each of these three courts. This presents a very different picture than for the survivor function for the chances of getting a first hearing that we see in Figure 1. The chances of disposal are (logically) much lower at any given point in time. Table 3 presents the chances of disposal of case within the first year of being filed. The NCLT has the highest chance of disposal at nearly 40%. Between the Bombay HC and the DRT, the DRT has a higher chance at 17.3%. But the Bombay HC has a similar chance at 16.3% of the case being disposed within the first year.</p>
<p>Table 3: Chance of disposal within the first year at Bombay HC, DRT, NCLT</p>
<table>
<thead>
<tr class="header">
<th style="text-align: left;"></th>
<th style="text-align: right;">(in %)</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="text-align: left;" width="50%">Bombay HC</td>
<td style="text-align: right;">16.1</td>
</tr>
<tr class="even">
<td style="text-align: left;">DRT</td>
<td style="text-align: right;">17.0</td>
</tr>
<tr class="odd">
<td style="text-align: left;">NCLT</td>
<td style="text-align: right;">39.3</td>
</tr>
</tbody>
</table>
<br>
<h3><strong>Q3</strong>: Expected number of hearings in the first year from the filing</h3>
<p>So far, we have focused on the <em>time</em> to completion, which matters greatly through its impact upon the net present value of the moneys recovered. We now turn to the question of the costs of ligitation. We compute the expected number of hearings within the year and present these in Table 4. We recognise that there is a sharp distinction between substantial hearings and infructuous hearings, but in the present state of the research, we treat both alike.</p>
<p>Table 4: Expected number of hearings within the first year at Bombay HC, DRT, NCLT</p>
<table>
<thead>
<tr class="header">
<th style="text-align: left;"></th>
<th style="text-align: right;">Number</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="text-align: left;" width="50%">Bombay HC</td>
<td style="text-align: right;">0.4</td>
</tr>
<tr class="even">
<td style="text-align: left;">DRT</td>
<td style="text-align: right;">2.7</td>
</tr>
<tr class="odd">
<td style="text-align: left;">NCLT</td>
<td style="text-align: right;">4.0</td>
</tr>
</tbody>
</table>
<p>The NCLT has the highest expected number of hearings within the first year of filing at 4 hearings, while the Bombay HC has the least (not even one hearing may happen within the first year of filing).</p>
<p>Using these estimates, a litigant can estimate her legal costs for the first year. For example, we now know that a litigant will face 4 hearings, on average, in the first year after filing at the NCLT. If the legal fees that she is charged by her legal team are Rs.100,000 per hearing, on average, this implies that she can expect to pay Rs.400,000 in the first year from filing.</p>
<h3>Discussion</h3>
<p>Better decisions by litigants are not only valuable for the litigants, but will also improve the working of the Indian legal system. We have shown simple statistical results about delay and costs at three alternate venues for one narrow class of matters. These results point out the differences that exist among three courts, in terms of the kinds of legal remedies they offer, their administrative processes and their capacity. Litigants would have to weigh those considerations also in their thinking.</p>
<p>These results have many interesting implications. For instance, if a bank strategically prefers an early first hearing, it might be better off instituting proceedings at the NCLT compared to the DRT, even if the latter is a forum dedicated to banks and financial institutions. On the other hand, if a bank prefers disposal within fewer hearings compared to an earlier first hearing, the analysis indicates that it is better to approach the DRT.</p>
<p>We recognize that there may be other considerations that weigh with the litigant in making her decisions. For example, Mannivannan et al, 2021 find that litigants also care about the fairness of a judge and the effectiveness of the remedy. But our analysis in this article focuses on metrics that can be evaluated with secondary data from courts. Another consideration is that the analysis does not consider the nature of the legal remedies offered by the three courts. While litigants may approach the Bom HC and the DRT for debt recovery, the NCLT offers a remedy of insolvency resolution. But creditors in India find it optimal to use both recovery and resolution processes to recover their dues. Finally, it is not that the litigant <em>prefers</em> one forum over another, but that important metrics such as the probability of disposal within a given time frame allows the litigant to choose one among multiple choices of forum.</p>
<p>We believe that the comparative approach in this article can be extended in, at least, three ways. First, these measures can be calculated for locations other than Bombay. A comparative exercise of this kind can potentially help understand benches with bottlenecks and potential areas of improvement. Second, within this class of matters, statistical modelling can permit these estimates to vary with case characteristics. Finally, these measures needs to be calculated beyond this narrow class of matters. For example, such an approach could offer more clarity to litigants involved in involuntary litigation, such as criminal litigation.</p>
<p>The data used for this analysis can be found <a href="https://papers.xkdr.org/legalsystem/ManivannanTZ_2023_reproducibleResearch_dataset.csv">here</a>. The dataset can be cited as Manivannan, Pavithra and Thomas, Susan and Zaveri-Shah, Bhargavi (2023), "Helping litigants make informed choices in resolving debt disputes".</p>
<p>If you're interested in seeing other WIP applications of this framework, XKDR Forum is organizing a <a href="https://www.xkdr.org/event/empowering-litigants-through-data-on-courts">roundtable</a> in Mumbai on the 17th of June (Saturday).</p>
<h3>References:</h3>
<p>Bhatia, S., Singh, M., & Zaveri, B. (2019). <a href="https://blog.theleapjournal.org/2019/03/time-to-resolve-insolvencies-in-india.html">Time to resolve insolvencies in India</a>. The Leap Blog, March 11, 2019.</p>
<p>Datta, Pratik & Surya Prakash B. S. & Sane, Renuka, (2017), <i>Understanding Judicial Delay at the Income Tax Appellate Tribunal in India</i>, Working Papers 17/208, National Institute of Public Finance and Policy.</p>
<p>Manivannan, Pavithra and Thomas, Susan and Zaveri, Bhargavi, <a href="http://dx.doi.org/10.2139/ssrn.4286562">Evaluating Contract Enforcement by Courts in India: A Litigant's Lens</a> (November 26, 2022). Also available at SSRN: https://ssrn.com/abstract=4286562.</p>
<p>Shah, A., & Thomas, S. (2018). <a href="https://blog.theleapjournal.org/2018/12/the-indian-bankruptcy-reform-state-of.html">The Indian bankruptcy reform: The state of the art, 2018</a>. The Leap Blog, December 22, 2018.</p>
<br>
<p>Pavithra Manivannan and Susan Thomas are researchers at XKDR Forum. Bhargavi Zaveri-Shah is a doctoral candidate at the National University of Singapore. We thank Ajay Shah for inputs on the survival analysis, Geetika Palta for research and data support, Tushar Anand for helping out with corrections to the data, and participants of the internal seminar series at XKDR Forum for their comments and feedback.</p>
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