Our Courts are chocked!!

The Union Law Minister has recently announced that the number of undertrial prisoners languishing in various jails across the country will be reduced by two-thirds within six months. Under the law, the Government has powers to release convicted prisoners after certain years of imprisonment. However, it has no such powers when the matter involves an accused undertrial. Of course, the Government can at any time withdraw any case pending in a court of law as well as deny sanction to prosecute any accused in cases where sanction is required. But convicting or freeing those under trial falls within the ambit of the judiciary.

The Government’s stated reason for freeing a large number of them is that many of those who are under trial and languishing in our prisons are in such a position because they could not get adequate legal aid. In some cases, prisoners have been behind bars for more than the maximum term of imprisonment for offences they had been charged with.

According to the Law Minister, the Chief Justices of High Courts would appoint a task force to monitor the plan. The task force, under the chairmanship of the state legal service authority or a senior judge, would depute teams to visit jails and identify prisoners who deserve to be freed. The teams would look into individual cases to identify those who were entitled to be released. The Law Minister has said, “Of the undertrials, roughly around two lakh have been in jail for several years essentially because of delays in the justice delivery system.” It appears that the Union Cabinet has approved the plan.

On the face of it, the plan seems excellent and a small step towards decongesting our prisons. According to a survey conducted and released in November, last year by the International Centre for Prison Studies, Kings College, London, in 218 countries and territories, a total of 3.73 lakh prisoners are lodged in nearly 1,336 prisons in India. As per the study, more than 9.8 million people are held in different prisons throughout the world. The study stated that the maximum number of prisoners across the globe is in the prisons of the US, which host 2.31 million prisoners. The US is followed by China (1.57 million), Russia (0.89 million) and Brazil (0.47 million).

The real problem does not lie with the courts but with the Government that knows what needs to be done to solve the problem of delay in our courts. Yet it chooses to skirt the issue.

As per the information furnished by the Law Minister to Parliament in December, 2009, a total of 3,11,39,022 cases were pending in courts across the country. The detailed break up is as follows:

# Supreme Court: 52,592 pending cases

# High Courts: 38,74,090 pending cases

# Maximum pending cases: Allahabad High Court — 9,11,858

# Pending cases in Uttar Pradeshs district and subordinate courts: 51,60,174

# n Total pending cases in subordinate courts: 2,64,09,163


Strength of judiciary:

# High Courts — Sanctioned: 886, Actual in position: 606

# Subordinate courts — Sanctioned: 16, 685, Actual in position: 13,556


Average disposal per judge:

# High Courts: 2,504 cases per year (2008)

# Subordinate courts: 1,138 cases per year (2008)


According to one estimate, the number of judges required to dispose of the total pending cases promptly is 1,547 in the High Courts and 4,400 in the subordinate courts.

Addressing a gathering in Chennai in July last year, Chief Justice of India KG Balakrishnan said: “We are not able to bring it (the number of pending) cases down significantly, though we want to. Some States in the country don’t pay enough attention to the judiciary. Unless there is a large number of courts, how can the pendency come down?”

For speedy and quick disposal of cases, several committees have been formed in the past. In 1924 a committee was formed under the chairmanship of Justice Rankin. After independence, other committees constituted included the Justice SR Das Committee in 1949, Justice JC Shah Committee in 1972, the Satish Chandra Committee in 1986 and the Justice VS Mallimath Committee in 1990. But the situation from 1926 to 2010 remains virtually the same. The Law Commission, in its 120th report submitted in 1987, examined the problem of understaffing in the judiciary and recommended 50 judges per million of population instead of the present 9.5.

The inadequate number of judges is a major reason for the delays in the disposal of cases. Thus, the solution to the problem lies in the hands of the executive and administrative wings of the Government, and not the judiciary. Former Attorney-General of India Soli Sorabjee, in a lecture in London, lamented that the criminal justice system in India was on the verge of collapsing because of understaffing in the judiciary. He also observed, “Justice delayed will not only be justice denied, it will be the rule of law destroyed.”

More than 60 per cent of the pending court cases in India are due to the action or inaction of some Government official towards a citizen or a group of citizens. The same observations have been made by the Supreme Court more than once. The Arrears Committee headed by Justice VS Mallimath (1990) has identified the following causes for the accumulation of backlog of cases in the High Courts.

(i) Litigation explosion;
(ii) Accumulation of first appeal;
(iii) Inadequacy of staff attached to the High Courts;
(iv) Inordinate concentration of work in the hands of some members of the Bar;
(v) Lack of punctuality among judges;
(vi) Granting of unnecessary adjournments;
(vii) Indiscriminate closure of courts; (viii) Indiscriminate resort to writ jurisdiction;
(ix) Inadequacy of classification and granting of cases; and,
(x) Inordinate delay in the supply of certified copies of judgements and orders, etc.

The problem of court pendency, delay and quick disposal of cases is not something new. Letting off those under trial and in judicial custody is no solution. The initiative taken by the law Minister is commendable. But it doesn’t do anything to alleviate the misery of the common man seeking justice. Much bolder steps are needed. The Government must remember that unless it maintains justice, justice will not maintain us. A crisis looms large and a solution brooks no further delay.

Republic of scams

Benjamin Franklin once said, “There are three things that men are most likely to be cheated in: A horse, a wig, and a wife.” One can easily substitute the word horse for wealth, as the former was considered a measure of a man’s wealth at the time. The desire to become rich has been at the root of all scams recorded in history.

India is not new to scams — they have plagued us right from the time of independence. But the regularity with which they are taking place is truly shocking. Also, given that most of the scams involve the same old tricks of cheating such as underwriting or fudging company books, one will not be wrong in saying that history is repeating itself. The only thing that distinguishes one scam from another is that the companies and the principle actors are different. But the motive remains the same in each case.

The Rs 7,000-crore scam that chairman of Satyam Computers Services Ramalinga Raju has admitted to has taken the wind out of corporate India. He has disclosed that the company’s balance sheets were dressed-up over several years. It is a crime for which he and his brother as well as the chief financial officers of the company have been arrested.

There can be no doubt about the fact that this was a case of corporate fraud of epic proportions, which like other similar white-collar crimes will take centrestage in public memory for some time to come. In the aftermath of the fraud there has been a lot of talk about effective and transparent corporate governance and a system of institutionalised checks and balances.

The role of checks and balances is best illustrated in the thriller Silver Blaze, wherein Sherlock Holmes deals with the theft of an expensive racehorse on the eve of an important race. Asked whether there is any point to which Holmes wants to draw the Scotland Yard detective’s attention, Holmes points to “the curious incident of the dog in the night-time.” The detective replies, very aptly, that the dog did nothing, to which Holmes responds that the dog made no noise because it knew the thieves well. Perhaps, this is what happened to the internal and external auditors in Satyam’s case. As it is, the laws in our country are so lax that a thief who has stolen a bottle of liquor gets almost the same quantum of punishment as that of a prince embezzler.

Much has been made of the role of independent directors in the Satyam saga. I asked an officer, who had retired from a top audit and accounts service, as to what he was doing these days. He said that he was an independent director in a large number of companies. Then I asked him as to how seriously he took his job, to which he replied that he was only interested in the sitting fees and perks, and that if he raised too many queries he would be eased out of the board.

The truth is that even Government companies and organisations do not function as models of probity and efficiency because of the continuous interference, not only in taking decisions but also in awarding contracts. Large amounts of funds are misused by those who exercise control over these companies from their seat of power.

When the infamous Harshad Mehta scam took place, Mr Manmohan Singh, who at the time was the Finance Minister, described the scam as a system failure and had subsequently declared that steps would be taken to rectify the situation. But promptly after that surfaced the Ketan Parekh scam.

Each scam that comes to light seems to be bigger than the previous one. And each of them is due to greed and the lack of any deterrence. The best of laws with the worst of men can be misused and the worst of laws with good men will never deter these corrupt practices. There is no coherent, integrated machinery in our country to deal with such fraud in the private corporate sector.

The responsibility of enforcing the law in the corporate sector is split between the Serious Fraud Investigation Office, Department of Company Affairs, SEBI, Banking Department and the State police. The police comes in the final picture and can take action only for offences of cheating, fraud and defalcation. A police case can mean a long-drawn affair, which may take even 10 years to be finalised.

Truly speaking, there is hardly any worthwhile punishment for the collaborators and the auditors in such cases of fraud. The Companies Act undoubtedly lays down the duties and powers of the auditor. But the penalty for non-performance is pathetic and puny. If an auditor fails in carrying out his duties properly, the maximum penalty is a fine of Rs 10,000.

Incidentally, PricewaterhouseCooper, the firm which audited the books of Satyam, received a consolidated audit fee of Rs 4.3 crore for the financial year 2007-08, almost twice as much as Satyam’s peers like TCS, Infosys and Wipro pay to their auditors. Satyam promoters and others who have benefitted — some by insider trading — could not have carried out their scam with the fear of being found out by the auditors. According to one report, about Rs 800 crore was made by insider trading and sale of shares in this scam.

The truth is that there can be big or small money involved in auditing, depending upon the size of the company. No auditor, unless he wants to be out of the business, would be too harsh or expose any wrongdoings. There are many Ketan Parekh, Harshad Mehta and Satyam scams waiting to emerge if company auditors are willing to put their neck on the block and lose their business. But it is doubtful, if anybody would commit harakiri.

According to company law, for fudging of accounts there is a maximum fine of Rs 5,000 and imprisonment of up to two years. No doubt the Companies Act does provide for special audit, investigation, reconstitution of the board of directors and even ‘dawn raids’. But the penalties for non-compliance are as good as non-existent. Moreover, there is no mechanism even for test-checking a few corporate balance sheets and accounting statements certified by auditors.

Those who do not learn from history are condemned to repeat it. The investigation into the Enron fraud had also shown its auditors, Arthur Anderson, as guilty as Enron’s CEO. No doubt that there are a number of very good companies with impeccable records, though the same cannot be said about every company. The Government must decide what it should do and then do it to end such occurrences. It would be prudent to remind it of what Mrs Indira Gandhi said: “My grandfather once told me that there are two kinds of people, those who work and those who take the credit. He told me to try to be in the first group. There was less competition there.”