25 Legal Reforms for India

TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA

www.vidhilegalpolicy.in TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA The Vidhi Centre for Legal Policy is an independent legal policy advisory group whose mission is to achieve good governance in India by impacting legislative and regulatory design.

Authors: Arghya Sengupta Alok Prasanna Kumar Debanshu Mukherjee Dhvani Mehta Ketan Paul Rukmini Das Srijoni Sen

TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA The mandate of 2014 is unquestionably a watershed in Indian democracy. After nearly three decades, once again, a billion people have laid their hopes on a government to set India free. Almost six and a half decades after 26th January 1950, there are some institutional changes that have become necessary.

The foremost is the process of appointment of judges. The Supreme Court of India, and the High Courts, have come to occupy a space of constitutional governance unlike their FOREWoRD counterparts elsewhere, and have played a vital part in the survival of democracy. They have ensured the sensitisation of the system to the need for transparency. It is therefore ironic that judges are appointed to these institutions by a process that is opaque, and as the current controversies establish, extremely fragile. The first reform suggested in this briefing book rightly addresses this issue.

The second institution that can be given credit for ensuring the permeation of transparency through what was earlier an opaque government, is the media. The entry of private electronic media has revolutionised governance. If corruption and inept government have today upstaged caste and religion as primary electoral agendas, credit must rightly be given to the media for this evolution. Every powerful institution must have checks and balances. The media cannot be governed by the government – it can justly assert the right to be governed by a jury of its peers. However, this has to be done in a statutory framework with a content regulator who can effectively deal with the black sheep. India runs the risk of becoming an uncivil society where reputations can be tarnished without fear of consequence. Democracy will lose its vigour if reputations and respect are not sacrosanct and the right to privacy in non-public life is wasted away. The reform of the media has correctly been flagged in this briefing book as an important institutional change.

Labour reform is vital, as is the reform of environmental laws, including the set of Forest Acts. These have to be adapted to enable India to break the cycle of poverty, reminding ourselves that in the ultimate analysis, abysmal poverty is the primary cause of environmental degradation. Although Indians are respected the world over for their entrepreneurial spirit, the business environment in India has sapped their energy and demotivated most. This must change. This briefing book focuses on important areas that will herald a new relationship between the government and the citizens, based on trust rather than suspicion.

Commercial litigation and dispute resolution must be on commercial timelines – the slow dance from now to infinity is a luxury that business disputes cannot afford. The laws have to be changed – and more than that, the mindsets have to change. The appointment of regulators with domain knowledge to provide effective, yet transparent and fair regulation should be the object of regulatory reform – not to create a second tier of jobs for the retired!

The issues for reform raised in this briefing book are vital and I do hope they spark a debate and engage the attention of the Government so that India can finally embark upon its tryst with destiny.

Harish Salve, Senior Advocate, Supreme Court of India.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA INTRODUCTION

ew governments have traditionally advocated big-ticket policy reforms as part of their 100-day agenda. As this Ngovernment sets its own 100-day agenda and takes steps towards its fulfilment, the time is opportune to introduce an oft- ignored area of reform – identifying the laws and rules that are in need of urgent introduction, amendment or repeal. Legal reform suffers from a strange paradox: while several big-ticket policy reforms require precise changes to law and regulation in order to be effective, very little public attention is paid to the actual shape such changes take in law. For example, it is widely accepted that labour laws need to be modernised, but what legal changes are imperative as we talk about modernisation? Are we talking about amendments to legislations, or large-scale repeal? What new laws and regulations need to be introduced, if at all, in this area?

This Briefing Book for the new government, ‘Towards the Rule of Law: 25 Legal Reforms for India’ is designed to draw the attention of government, civil society and citizens squarely to 25 reforms that ought to figure prominently on the agenda of the new government, with specific emphasis on the legal changes necessary to effectuate them. It is inspired by the fundamental vision of creating an effective legal framework for an equitably growing and humane India. With this in mind, four broad reform actions are suggested to the new government: Renew Basic Institutions — revitalise institutions fundamental to democracy and economic growth; Clear the Thorns — deregulate over- regulated sectors with overlapping rules; Regulate the New India — update laws and provide legal frameworks to confront new challenges; and Build a Possible India — assert India’s place in the world as a model constitutional democracy.

Through these reform actions, five key areas crucial for India’s growth and achievement are covered — judicial and administrative reform, economy, development, human rights and technology. In each of these areas, the overwhelming mandate given by the people in 2014 provides a historic opportunity to fundamentally fix broken systems, even by constitutional amendments if required. This opportunity must be capitalised on. At the same time, small victories are sometimes as important as major overhauls. To this end, we suggest a combination of big change and easy wins which we believe deserve the consideration of the Government of India.

As a legal policy think-tank, the vision of the Vidhi Centre for Legal Policy is to achieve better governance through better laws. Better laws must be high-impact and capable of positively affecting the lives of the people they intend to serve. It is with the firm belief that the 25 suggested legal reforms do so that this Briefing Book has been put together. We hope you enjoy reading it as much as we did researching and writing it.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA table of contents

The Briefing Book: A Framework...... 6 Ministry-wise Reforms...... 7

Renew Basic Institutions...... 9 Streamline Judicial Appointments...... 10 Make Tribunals Effective...... 11 Advance Police Reforms...... 12 Regulate the Media...... 13 Streamline PSU Governance...... 14 Reform Bankruptcy Laws for Individuals...... 15

Clear the Thorns...... 17 Reduce Government Litigation...... 18 Expedite Arbitrations...... 19 Clarify Forest Laws...... 20 Prevent Water Wars...... 21 Harmonise Labour Laws...... 22 Reform the Corporate Insolvency System...... 23

Regulate the New India...... 25 Simplify Nuclear Liability...... 26 Promote Renewable Energy...... 27 Ensure Safer Clinical Trials...... 28 Create a Two-tier Patent System...... 29 Protect Net Neutrality...... 30 Allow Crowdfunding of Small Businesses...... 31

Build a Possible India...... 33 Expand RTE Coverage...... 34 Bolster Free Speech...... 35 Draft a New Anti-trafficking Law...... 36 Strengthen Abortion Laws...... 37 Manage Refugee Influx...... 38 Consolidate Anti-corruption Legislation...... 39 Repeal Obstructionist Laws...... 40

References...... 41

Acknowledgements...... 43

Afterword: Implementation of Suggested Reforms...... 44

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY THE BRIEFING BOOK: a Framework

KEY FOR TOPICS Judicial and Administrative Reform Economy Development Human Rights Technology and Innovation

Renew Basic Clear the Regulate the Build a Possible Institutions Thorns New India India

Streamline Judicial Reduce Government Simplify Nuclear Expand RTE Appointments Litigation Liability Coverage

Make Tribunals Expedite Promote Bolster Free Effective Arbitrations Renewable Energy Speech

Advance Police Clarify Forest Ensure Safer Draft a New Anti- Reforms Laws Clinical Trials trafficking Law

Regulate the Prevent Create a Two-tier Strengthen Media Water Wars Patent System Abortion Laws

Streamline PSU Harmonise Protect Net Manage Governance Labour Laws Neutrality Refugee Influx

Reform Bankruptcy Reform the Corporate Allow Crowdfunding of Consolidate Anti- Laws for Individuals Insolvency System Small Businesses corruption Legislation

Repeal Obstructionist Laws

06 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA MINISTRY-WISE REFORMS

The table below matches the 25 suggested reforms with the nodal ministry responsible for it.

Ministry of Law and Justice Streamline Judicial Appointments….……...... ………10 Make Tribunals Effective...... ….…...... 11 Reduce Government Litigation...... ……...... 18 Expedite Arbitrations...... ……...... 19 Repeal Obstructionist Laws...... ……...... 40 Ministry of Home Affairs Advance Police Reforms...... ……...... 12 Bolster Free Speech...... ……...... 35 Manage Refugee Influx...... ……...... 38 Ministry of Finance Reform Bankruptcy Laws for Individuals..…...... …...15 Allow Crowdfunding of Small Businesses…...... …....31 Ministry of Corporate Affairs Reform the Corporate Insolvency System...... ……..23 Ministry of Communications and Information Technology Protect Net Neutrality...... ……...... 30 Ministry of Environment and Forests Clarify Forest Laws...... ……...... 20 Ministry of Health and Family Welfare Ensure Safer Clinical Trials...... ……...... 28 Strengthen Abortion Laws...... ……..37 Ministry of Heavy Industries and Public Enterprises Streamline PSU Governance...... ….…...... 14 Ministry of Human Resource Development Expand RTE Coverage...... ……34 Ministry of Information and Broadcasting Regulate the Media...... …….13 Ministry of Labour and Employment Harmonise Labour Laws...... …….22 Ministry of New and Renewable Energy Promote Renewable Energy...... ….…27

Ministry of Water Resources Prevent Water Wars...... …...... ….21 Ministry of Women and Child Development Draft a New Anti-trafficking Law..……...... 36 Department of Atomic Energy Simplify Nuclear Liability...... ……...... 26 Department of Industrial Policy and Promotion Create a Two-tier Patent System...... ….…....29

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 07 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA RENEW BASIC INSTITUTIONS

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY JUDICIAL AND ADMINISTRATIVE REFORM

STREAMLINE JUDICIAL APPOINTMENTS Making the process of appointments to the Supreme Court and High Courts participatory and transparent

Issues First, too much latitude is allowed to Parliament to change the composition and functions of the Commission. It Withdraw the Constitution The Supreme Court of India and is thus necessary that not only the the High Courts are the guardians establishment of the Commission but (120th) Amendment Bill, of the Constitution of India. Given also its composition and functions 2013 and the Judicial their exalted constitutional status, are laid down by a constitutional it is imperative that the method of amendment. Second, there is no Appointments Commission appointing judges to these courts is procedure or criteria laid down in the Bill, 2013. such that only persons of the highest Act for shortlisting of candidates or integrity and aptitude are chosen. for resolving disagreements in the Unfortunately, the current system of Commission. The past experience of appointments, led by a collegium of judicial appointments, both when it senior Justices of the Supreme Court, was led by the executive as well as o The criteria and procedures pursuant to a decision of the Court the judiciary, suggests the definite for shortlisting and selection of itself, has proven unequal to this need for dispositive rules in this regard candidates; task. The corridors of the judiciary thereby bringing an optimal degree of o The grounds and procedures for are rife with widespread charges of transparency into the process. Third, transfer of judges to be followed by nepotism and factors other than merit despite vesting the Commission with the Commission. guiding appointment decisions. The the power to transfer judges and process is completely opaque without Chief Justices from one High Court Such reform will ensure that the best any possibility of holding decision- to another, the Bills neither specify candidates for judicial office are makers accountable. It is inconsonant the grounds nor the procedure for selected in an optimally transparent with best practices worldwide which doing so. It is imperative that clearly manner. This will reaffirm respect for have shown a discernible pattern of delineated grounds for transfer of the institution of the judiciary currently moving towards optimally transparent judges and the procedure to be sullied by wanton speculation and and accountable processes of followed are laid down in the Act. rumour surrounding the appointments appointment. Finally, it proceeds process. Further, it will do so in a on an indefensible interpretation of manner that is perfectly consonant Article 124(2) and Article 217(1) of IMPLEMENTATION with the independence of the judiciary. the Constitution which prescribes the method of judicial appointments. AND IMPACT

• The Constitution (120th Amendment) SOLUTION Bill, 2013 passed by the Rajya Sabha and The Judicial Appointments The Constitution (120th Amendment) Commission Bill, 2013 pending in the Bill, 2013 and the Judicial Rajya Sabha should be withdrawn. Appointments Commission Bill, 2013 were introduced in the • A more detailed constitutional Rajya Sabha in August 2013. amendment should be introduced The Constitution Amendment Bill containing the following: provides for the establishment of a o The composition of the Judicial Judicial Appointments Commission Appointments Commission; to appoint judges, the composition, o The functions of the Commission. functions and procedures of which are laid down in the accompanying • A new, reworked bill must be Bill. In principle, the concept of an introduced alongside the constitutional appointments commission is salutary. amendment providing for: However three key amendments to the existing scheme are necessary.

10 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA JUDICIAL AND ADMINISTRATIVE REFORM

MAKE TRIBUNALS EFFECTIVE Streamlining the nation’s tribunals to improve efficiency and allow functional autonomy

Issues In addition, where tribunals were supposed to divert the flow of cases Redraft the Tribunals The idea behind tribunals is to provide from overburdened courts, they are Bill, 2014 to ensure a more efficient and specialised becoming overburdened themselves, means of dispute resolution between due to inefficient functioning. uniformity in appointment, citizens, and also between citizens terms and conditions of and the State. At present 29 tribunals SOLUTION of various sizes and jurisdictions service and retirement of function under the aegis of different ministries. They operate outside the The reforms necessary to revamp the tribunal members. regular court structure, replacing the tribunal system in India will require existing judicial structure in some legislative, procedural, and systemic cases, and providing for a specialised changes to their function. The and draw up their own budgets, with forum for dispute settlement in others. legislation should look to bring about funding allocated directly from the uniformity in the administration of the Consolidated Fund of India, and not tribunal, and in appointment, removal, However, three problem areas have from individual ministries’ allocations. and terms and conditions of service of called into question the very system This will allow operational autonomy to the tribunal Members. The mechanism of tribunals: first, there is a lack of tribunals from their parent ministries. to fund tribunals must be changed to functional autonomy as compared allow tribunals to raise funds directly to courts – functionally, tribunals are • The Law Ministry should set up where possible. Their functioning must dependent on allocation of funds by a single, unified Tribunals Case also be closely monitored through the appropriate ministry and do not Management IT infrastructure along proper collection and collation of data always have the power to hire their the lines of ‘courtnic’ to allow the related to the functioning of tribunals. own staff. Second, with respect to Law Ministry, litigants, lawyers independence of appointees, tribunal and researchers to keep track of members, unlike judges at all levels, IMPLEMENTATION the manner in which tribunals are have short tenures, subject to renewal functioning, the judgments they deliver by the Government at its pleasure. AND IMPACT and their pendency positions. This Further, in several tribunals the pool will allow the Law Ministry to better monitor the functioning of tribunals of possible appointees to the tribunal • The existing Tribunals, Appellate and address the issues that they may inevitably includes retired government Tribunals and Other Authorities Bill, face in terms of appointments or officials whose administrative 2014 needs to be amended to bring infrastructure. This makes it easier for decisions are in fact being challenged greater uniformity. This will also the efficiency of the tribunals to be before the tribunal. Finally, there is require amendments to the Allocation assessed and improved on an ongoing the problem of inefficiency – far from of Business Rules, 1961. Tribunals basis. improving the disposal rate of cases should be uniformly administered by and providing quick and ready justice the Law Ministry, and the coverage With these changes, tribunals will delivery, tribunals seem to have of the Bill should be expanded to no longer be under the control of become bogged down with cases encompass a wider set of tribunals. the Ministry whose decisions they in the same manner as the regular This will ensure that the Ministry are supposed to be examining. An judicial system, attributable to the whose decisions are being reviewed autonomous and fully functioning lack of appointments and adequate by the tribunal is also not the one tribunal system will ease the burden infrastructure. which appoints members to the of cases before the High Courts, tribunal, granting the tribunals far and provide for certainty in dispute Unsatisfactory dispute resolution more independence. resolution while re-affirming the faith in tribunals has resulted in increase of citizens and foreign investors in the in litigation at the High Court and • New provisions must be introduced justice delivery system in India. Supreme Court levels, nullifying to giving tribunals full functional some extent the benefits of having autonomy. Where possible, tribunals the tribunal supplement the Court. should be allowed to raise their funds

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 11 JUDICIAL AND ADMINISTRATIVE REFORM

ADVANCE POLICE REFORMS A way forward for a new Delhi Police Act that focuses on consultation

Issues various stakeholders to pass a new IMPLEMENTATION Delhi Police Act. Clearly, a different approach is needed to resolve this AND IMPACT Law enforcement in India is a legacy gridlock. of the British Raj – a system put in The following process is place with the intention of controlling recommended as a way forward to a the public and stifling civil liberties. SOLUTION new Delhi Police Act – Since independence, efforts have been made to change the police The Kerala Legislative Assembly, • The MHA should draft a new Delhi into a force that is more integrated before enacting a new Police Act, Police Bill in accordance with the with the society it serves. But police referred the Bill to a Select Committee Model Police Bill of the PADC. The Bill reform remains one of those issues headed by the Home Minister of the should incorporate the Prakash Singh that is caught in an endless loop state. The Select Committee toured directives in letter and spirit. of commissions, committees and the state and held town hall meetings • The draft Bill should be sent to the public interest litigation (‘PIL’). In in each district. Feedback on the Bill Delhi Legislative Assembly that then recent years, under pressure from the was also invited through the internet makes a committee responsible for judiciary and the public, some states and this effort was widely publicised eliciting views from the public through have acknowledged the importance in the media which resulted in a high extensive consultations. of an effective and independent police level of public participation in this • The Legislative Assembly should force, and taken some positive steps consultation process. As a result of debate the views of the people and in this area. The Delhi Police Act of this process, the Select Committee recommend a modified Bill to the 1978, however, has remained largely suggested 790 amendments to Centre. The Delhi Government should untouched. the Bill, 240 of which were passed maintain a dialogue with the Centre to in the House after debate. The tackle unresolved issues. Reform measures have been proposed process resulted in what is widely since the late nineties, most notably acknowledged as one of the best Involving the public in such an by the Police Act Drafting Committee Police Acts of the country. unprecedented manner would result (PADC) in 2005 and the landmark in a way out of the current impasse Supreme Court ruling in Prakash Singh A similar consultation procedure that surrounding police reforms. If the v. Union of India [(2006) 8 SCC 1]. In clarifies the people’s mandate may experience in Kerala is any indication, that PIL, the Supreme Court directed prove to be a way out of the current it is also likely to lead to an inclusive the Centre and States to comply with impasse surrounding the Delhi Police Bill that accurately reflects society’s the seven binding directives laid out Act. Therefore, a Bill that is drafted expectations from its police. in the judgment. However, Delhi has along the lines of the Model Police lagged behind in this process. Under Bill of the PADC, should be subjected pressure to replace the archaic 1978 to an extensive consultation process. Act, the Ministry of Home Affairs Such a process must incorporate the (‘MHA’) produced the Draft Delhi principles in the recently introduced Police Bill, 2010 which was sent to Pre-Legislative Consultation Policy, the Delhi Government for its views. and also include widespread grass- The Draft Bill was condemned by both roots consultations as was done by civil society and the Delhi Government the Kerala Government. – the former on the ground that the recommendations of previous Committees had been ignored, and Initiate extensive public the latter because the Bill gave no control of the police to the Delhi consultations as part of Government. a pre-legislative process

Since then, there has been little for a new Delhi Police Act. success in building consensus among

12 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA DEVELOPMENT

REGULATE THE MEDIA A mandatory system of self-regulation for the news media that balances media freedom and public interest

Issues who constitutes a news media Enable, through statute, professional/ news media entity will have to be introduced for this Calls for better governance of the a mandatory system of purpose. Another is the power to news media have been heard in recent self-regulation of the impose penalties on errant members times around the world, not least including the power to fine and to in India. The debate on this issue, news media industry that direct the government to revoke however, seems stuck in the binary of allows no opt-outs. licenses. A comprehensive law that self-regulation versus institution of a incorporates these elements is clearly statutory regulator. the need of the hour. regulation and statutory regulation The existing regulatory framework is the system of Bar Councils, IMPLEMENTATION demonstrates the shortcomings of established under the Advocates Act, both these approaches. News media 1961. Under the statute, the State Bar AND IMPACT regulation in India is fragmented, Council consists of members elected with multiple regulatory bodies. In through the system of proportional The following principles must most cases, decisions made by these representation by means of a single therefore be incorporated in a new bodies are not enforceable. The transferable vote from amongst comprehensive law that sets up a Press Council of India, a statutory advocates on the electoral roll. The news media self-regulatory authority body governing the print media Bar Council of India comprises for print and broadcast media. While may entertain complaints and issue certain ex-officio members such as regulation of internet news media is admonishments for violation of its the Attorney General of India, and also an important issue, it is best dealt guidelines, but does not have the one member elected from each State with separately in a manner that takes power to enforce compliance. The Bar Council. The Bar Councils are into account the unique characteristics self-organised News Broadcasting responsible for admitting advocates of the open internet. Standards Authority governing news on their rolls, setting standards of broadcast media has the power to conduct and enforcing compliance fine, but its jurisdiction extends to only • With the convergence of media through suspensions or disbarment. those organisations that choose to be platforms, it is necessary that such a self-regulatory authority’s jurisdiction members of the News Broadcasters The Advocates Act therefore does not encompasses both print and Association. Therefore its efficacy leave it to the discretion of either the broadcast media. depends on voluntary compliance with government or the industry to appoint its orders. a governing body, but instead sets up • Enrolment according to the a framework according to which such Calls for more vigorous statutory procedures laid down by the authority a body shall be constituted. A process regulation, such as setting up a must be made mandatory for all of election is similarly mandated under media regulatory authority to offset news media entities, so that it is not the Chartered Accountants Act, 1949 these drawbacks, lead to widely possible to opt out. The authority must for the constitution of its governing expressed fears of censorship and lay down procedures for licensing and Council. state suppression of free media. It is delicensing. therefore necessary to move beyond a simplistic binary of self-regulation and While this system cannot be emulated • The members of the authority must statutory regulation, and to explore wholesale for the regulation of the be media professionals selected by models that incorporate the best media, certain elements which the industry in a transparent manner, elements of each. incorporate facets of self-regulation along with some ex-officio members. and statutory regulation are worthy of consideration. One such element • The authority must be statutorily SOLUTION is a statutorily laid down selection granted the power to lay down rules of process of an independent governing conduct backed by punitive measures, One such mechanism that body from amongst members of the including fines and directions to incorporates elements of self- profession. Guidelines to determine government for delicensing.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 13 ECONOMY

STREAMLINE PSU GOVERNANCE Streamlining ownership and improving corporate governance in public sector undertakings to unshackle the economic powerhouses

Issues Operating Cos should provide for the Restructure non-banking presence of technical and financial experts on their respective boards and Public Sector Undertakings (‘PSUs’) PSUs in a particular sector sub-committees. While the Parent Co contribute significantly to the Indian (energy, for example) may supervise the functioning of the economy. However, due to problems Operating Cos under its control, the associated with (a) lack of autonomy on a pilot basis before day-to-day operations could be largely and (b) lack of financial and technical implementing this on a wider left to the discretion of the Operating expertise at the management level Cos’ Boards. Any governmental (in certain sectors), PSUs are often scale. supervision at the Operating Co criticised for failing to make optimal level may be exercised through the use of national resources and assets Government’s representatives on the available at their disposal. While SOLUTION board of the Parent Co. disinvestment is seen as a way of bringing market discipline to PSUs and improving their performance, it is The Government should consider IMPLEMENTATION not always a politically acceptable way repealing all statutes establishing of doing so. The political economy in non-banking PSUs and transferring AND IMPACT India has not always been conducive its shareholding in those PSUs to to disinvestments and the process is companies incorporated under the A new framework law will have to be susceptible to hurdles in the form of Companies Act, 2013 and classified drafted for the overall governance backlash from the work force and legal in accordance with the business of PSUs under the restructuring challenges in Courts. of the PSUs under consideration proposition outlined above. A study (‘Operating Cos’). The Government’s of similar ownership models in other shareholdings in all the Operating The regulatory framework that jurisdictions will be useful before Cos could then be transferred to a attempts to improve the corporate introducing the above concept common parent company (‘Parent governance of companies in general in India. A study of competition Co’), incorporated under a framework has not been very effective in law implications of the proposed law drafted for the formation and relation to the PSUs. The Securities restructuring will also be required. governance of the Parent Co and the and Exchange Board of India has Implementing the above could unlock Operating Cos. The Government may in the past initiated proceedings the true potential of the PSUs in a big directly control the board composition against many listed PSUs for failing way and provide them with a level of such Parent Co, while allowing a to appoint independent directors in playing field with market participants sufficient degree of independence accordance with the requirements in many sectors. The Parent Co for its functioning. The Government of listing agreements of stock may also be used as a Sovereign should have very little or no direct exchanges. Given that the Articles Wealth Fund at an appropriate stage involvement in the board composition of Association of such PSUs provide and used for making investments or management (including matters of for appointment of directors by the in (a) different kinds of assets (both employment and remuneration) of the President of India (through the relevant domestically and internationally) and Operating Cos, leaving such matters Ministry), the process is prone to (b) developmental activities, as long as to be controlled and overseen by the delays, undermining the globally there is no risk posed to the financial Parent Co board. The management of acceptable standards of corporate and operational security of the PSUs the PSUs could be regulated through governance. An efficient way of under its control. rules drafted by the relevant Operating improving the productivity of PSUs Cos and incorporated in their Articles without subjecting them to any large- of Association. The Parent Co could scale disinvestment is to streamline also be entrusted with vigilance their governance structure and enforcement for all the Operating professionalise the management. Cos. Further, the governance related provisions of the Articles of Association of the Parent Co and

14 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA ECONOMY

REFORM BANKRUPTCY LAWS FOR INDIVIDUALS

Modernising the personal insolvency regime in India to ensure better bankruptcy protection for individuals

Issues IMPLEMENTATION Amend existing personal AND IMPACT One of the main purposes of insolvency laws for insolvency law is to support the The Government should consider collection efforts of creditors by limiting judicial discretion implementing the above institutional providing a mandatory and collective aND MAKING THE SYSTEM and substantive changes through a procedure, where the assets of the single comprehensive law that takes debtor are distributed among the OBJECTIVE. into account modern best practices. stakeholders in an orderly manner. An efficient mechanism for resolving Once triggered, insolvency laws personal insolvencies can benefit typically suspend the exercise court ‘declares’ that the concerned lenders by providing a predictable of individual enforcement rights person is insolvent. If the assets of a system of recovery. It will also benefit (moratorium). In the context of bankrupt individual are not sufficient bankrupt individuals by allowing debts personal insolvency, such suspension to discharge his obligations, the law to be renegotiated in the insolvency of individual enforcement rights of permits discharge of the outstanding proceedings. Such renegotiated the lenders can provide breathing obligations in certain circumstances debts may cause some losses for the space to the bankrupt individual for that are subject to the discretion of lenders, and increase their incentives redeeming himself financially. With the the courts. Such provisions requiring to conduct proper screening of growth of organised consumer lending adjudication at the early stages of the the debtors at the time of lending and micro-finance in India, an effective proceedings subject the system to and discourage predatory lending mechanism for resolving personal considerable delays. and insufficient monitoring. Over a insolvencies is critical for providing period of time, as seeking insolvency adequate protections to borrowers SOLUTION protection becomes a matter of facing the risk of insolvency. Personal ordinary course, this may also reduce insolvency in India is primarily The decision-making institutions of the stigma associated with individual governed by the Presidency Towns an insolvency system (courts and insolvency and reduce the incidence Insolvency Act, 1909 (for the erstwhile administrators) play a vital role in the of insolvency-related suicides in the Presidency towns) and Provincial success or failure of a system. The country. Insolvency Act, 1920 (for the rest of practices of Indian courts, lawyers and India). insolvency administrators that cause delays in insolvency proceedings This regime has not seen many need to be closely examined and substantive changes over the past appropriately reformed. Specific 100 years and has proved to be very time limits need to be introduced for ineffective in practice. The system is resolving insolvencies without any prone to delays, and does not provide possibility of extensions. Further, sufficient incentives for debtors or measures like imposition of an creditors to initiate proceedings. automatic moratorium at the time Moreover, the system remains of filing an insolvency petition must inaccessible to a large section of be introduced to facilitate quick society due to the costs associated renegotiation of debt during the with initiating proceedings. The moratorium. Discharge of debt (in present law on personal insolvency cases where assets are not sufficient) provides considerable powers to should be automatic if certain the courts on various matters, which objective criteria are satisfied. Further, require detailed adjudication at several special bankruptcy courts should be stages. For instance, the moratorium established for the poor where the (that suspends individual enforcement costs of the proceedings are covered rights) can only be imposed after a by the State.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 15 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA CLEAR THE THORNS

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY JUDICIAL AND ADMINISTRATIVE REFORM

REDUCE GOVERNMENT LITIGATION Revising the National Litigation Policy to unlock the judicial gridlock

Issues disciplinary action against officers who Give enforceability to the recommend routine appeals or who collude to stop litigation. The Central Government is the single National Litigation Policy by • Administrative procedures should be largest litigant in the country in terms prescribing penalties and introduced that place strict monetary of initiating cases, and responsible limits on routine appeals, especially in directly for a significantly large consequences for failure areas that tend to see greater litigation number of cases as a respondent. Ill- – tax, land acquisition, and service conceived appeals by the Government to adhere to it while filing law. only add to the economic costs of a cases. • Alternate remedies like conciliation slow and inefficient judicial machinery and negotiation should be made that is barely able to handle the available in matters which purely explosion of cases in its docket. reality, and without normative rule involve monetary pay-outs and do not Serious measures are therefore changes, technological solutions will involve serious breaches of law by the needed both in the short and long be inconsequential. private litigant. term to handle the problem. One • The Central Government should, solution to the problem is to fix the Normatively, the National Litigation in conjunction with an Information ‘demand side’ of litigation – reduce Policy should be made binding and Technology service provider, set up the number of cases that reach the enforceable against officers of the a database in the Central Agency courts. As the single largest litigant, Government, in a manner akin to the and each of the regional branch the Government is in a unique position procedure adopted by the Central secretariats of the Law Ministry, to lessen the burgeoning docket. Board of Direct Taxes, to ensure that which will contain details of cases appeals are restricted only to high in the region, and train staff to use Government litigation, unlike private value tax disputes. A lower monetary the system properly, allowing the litigation, suffers from an agency threshold should be introduced for Law Ministry and the Committee problem. Given the length of time appeals in matters that form the of Secretaries to monitor litigation needed to finally dispose of a case, it bulk of government litigation, and effectively. is always easier and less of a burden alternative dispute resolution methods to kick the ball further down the field should be made an option. The immediate impact, if implemented by filing an appeal or petition, than Additionally, there should be greater by the Government through binding to take a call to resolve the dispute monitoring of the number of pending office orders and prompt monitoring amicably. In addition, direct costs of cases where the Government is a of implementation of the orders, litigation are actually much lower for litigant. would be to reduce the Government’s the government than for the private litigation burden significantly. This party given that the government can would also ease up the Court system take advantage of economies of IMPLEMENTATION for the general public, as well as for scale in engaging lawyers, et al. Thus, more significant disputes brought by litigation is a cost-effective option for AND IMPACT the government or private parties. the government, even if the actual costs are borne by the larger judicial • The Cabinet should issue a revised system and the economy at large. National Litigation Policy which will be binding on all Departments and officers, and which will also set up a SOLUTION Committee of Secretaries to monitor the implementation of the Policy, in The remedy for the present state of coordination with the Ministry of Law affairs is a combination of normative and Justice. rule changes and technological • The specific responsibilities of the solutions. Without technological Committee of Secretaries should solutions, normative rule changes include the task of monitoring will be ill-informed and divorced from cases and the power to recommend

18 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA JUDICIAL AND ADMINISTRATIVE REFORM

EXPEDITE ARBITRATIONS Amending the Arbitration and Conciliation Act to speed up arbitration in India

Issues of courts and in converting India into IMPLEMENTATION an attractive destination for arbitration. To achieve the above, three key AND IMPACT The intention behind the Arbitration interventions are necessary: and Conciliation Act, 1996 was to • An effective way of reducing the The following changes can be made provide speedier private resolution role of courts is to prevent appeals to the statute to implement the above of disputes. However, practice in from orders of the Chief Justice under proposed solutions: India over the last two decades does section 11(5) of the Act, appointing • Inserting an explanation to section not demonstrate the achievement arbitrators when parties have failed 11, that any order of the Chief Justice of this goal. One of the primary to appoint one. Section 11 orders under that section is an administrative reasons for this is the recourse to comprise a large number of arbitration order, and is thus not subject to courts at various stages of arbitration. matters before courts, and preventing appeal. Arbitration petitions and enforcement appeals from these orders would • Illustrating the circumstances giving proceedings get entangled with the reduce delays to a great extent. rise to ‘justifiable doubts’ under general backlog of cases and lead • Another possible strategy for section 12(1) and 12(3)(a), modifying to an inordinate delay in final awards reducing delays is to pre-empt and inserting the IBA Guidelines on being rendered and enforced. challenges to arbitrators by illustrating Conflicts of Interest in International Although the Indian law is modelled the grounds described in section Arbitration as a Schedule to the Act. on the UNCITRAL Model Law on 12 as ‘justifiable doubts as to his • Inserting an explanation to sections International Commercial Arbitration, independence or impartiality’. 34(2)(b)(ii) and 48(2)(b), excluding there remains much room for Clarifying the scope of ‘justifiable ‘patent illegality’ from the meaning improvement in the Act. While other doubts’ would reduce chances of of ‘public policy of India’, as a aspects of India’s legal and regulatory delay in enforcement of the award ground for refusing enforcement of framework have been shaped to due to a challenge to the award under an international arbitral award, even if attract more and more foreign section 13(5). seated in India. investment, several potential investors • A further method of reducing the shy away from projects in India that scope of challenges to awards is Each of the above changes would would require contracts with Indian narrowing the definition of ‘public work towards significantly reducing parties and naturally require dispute policy’ in sections 34(2)(b)(ii) and 48(2) the number of times parties approach settlement clauses. Arbitration clauses (b), as laid down by courts. Inclusion courts in connection with arbitrations, are especially desired in contracts with of the concept of ‘patent illegality’ thereby speeding up the overall Indian parties, since foreign parties are within the meaning of ‘public policy’, arbitral process. This in turn would keen to avoid long delays in litigation even in the context of international provide an important fillip to the before Indian courts. However, a 2013 arbitrations, has far widened the investment climate in India. Ernst & Young study shows that even scope of challenge to arbitral awards. Indian parties prefer to seat their Limiting the definition of public policy arbitrations in Singapore or London, to the ‘fundamental policy of India’ rather than anywhere in India. Most and ‘interests of India’ and ‘justice’ or survey participants were of the view ‘morality’ would not render it devoid that arbitration in India was not cost- of meaning, but would eliminate the effective and did not provide timely scope for challenge in a large number solutions. of situations. SOLUTION Make Chief Justice orders Of course, amending the law is not the appointing arbitrators single solution to the several problems mentioned above, but a few small administrative orders, to amendments to the Act can go a long prevent appeals. way in effectively moving disputes out

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 19 DEVELOPMENT

CLARIFY FOREST LAWS Reconciling statutory regimes for a better balance between conservation and the rights of indigenous forest- dwelling tribes

Issues that the bar on the accrual of rights Amend the Indian Forest Act, that these sections impose does not apply in the case of rights granted The implementation of the Scheduled Wild Life (Protection) Act under the FRA. Tribes and Other Traditional Forest • Amending Section 13 of the FRA to Dwellers (Recognition of Forest Rights) and the Forest Rights Act to clarify that in the case of conflict with Act, 2006 (the ‘FRA’) is plagued other statutes, its provisions are to by several problems. The forest reflect that the last will prevail. department is reluctant to relinquish prevail in case of conflict. • Introducing a uniform procedure the control that it enjoyed under the for the settlement of claims to forest colonial-era statute, the Indian Forest land, whether such land falls under Act 1927 (the ‘IFA’), perpetuated post- provisions that indicate that the FRA is a ‘reserve forest’, ‘protected forest’, independence through the Wildlife to override them in case of conflict. ‘national park’, ‘national sanctuary’ or (Protection) Act 1972 (the ‘WPA’) and ‘protected area’ as defined under the the Forest (Conservation) Act 1980 Finally, the promotion of joint forest IFA and WPA. (the ‘FCA’). Forest officials have filed management schemes by the forest • Changing the composition and petitions to block the implementation department under the National functioning of joint forest management of the FRA. They have failed to Afforestation Programme undermines committees to reflect the shift in create awareness among indigenous section 4(e) of the FRA which seeks emphasis from the forest department forest-dwellers about their rights and to empower Gram Sabhas with the to local citizens. continue to obstruct implementation protection and conservation of forests • In the long term, repealing the by rejecting legitimate claims to forest and biodiversity (Jha, 2010). IFA and subsuming its provisions in land for arbitrary reasons. modified form under the FRA.

Clearly, there is a fundamental clash SOLUTION These changes will reduce the between the IFA, WPA and FCA on confusion that currently prevails the one hand and the FRA on the In the long term, the solution must lie about the rights of indigenous tribes other – the former statutes vest in the ultimate repeal of the IFA and in forest lands demarcated for wildlife control over forest land in the State its replacement by an expansion of conservation and ensure that their and its bureaucratic machinery, while the rights-based FRA. Overlapping legitimate claims are not denied. the latter seeks to wrest this control sources of authority under the different Conflicts among forest, revenue away and empower local communities statutes ought to be minimised and and tribal affairs departments will instead. a uniform procedure for balancing be reduced, ultimately paving the interests in forest conservation with way for an administrative machinery Further, the process of settling the rights of indigenous forest- that adopts a uniform, coherent and claims to forest land under the dwellers ought to be introduced. rights-based approach to forest FRA is markedly different from the conservation. other statutes, with the result that In the short-term, the solution lies in indigenous forest-dwellers, in the explicitly clarifying the supremacy of interests of wildlife conservation, the FRA in cases of conflict. are often denied their rights to land contained in ‘protected areas’ or ‘national sanctuaries’ under the WPA. IMPLEMENTATION Section 13 of the FRA states that it AND IMPACT is to be read in addition to and not in derogation of other laws in force, save as otherwise provided in the FRA. The harmonisation of the various However, this has not proved useful statutory regimes ought to be in reconciling the different statutory accomplished as follows: regimes because the IFA, WPA • Amending Sections 5 and 20 of the and FCA do not contain reciprocal IFA and WPA respectively to clarify

20 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA DEVELOPMENT

PREVENT WATER WARS Providing more effective inter-state river water disputes tribunals

Issues SOLUTION addition, a stable and certain dispute resolution will also allow for the concerns of river water pollution to be Given the growing industrialisation of The problems with inter-state river addressed in a systematic way, once India and the increased demand for water dispute settlement can be states are aware how much water water from non-agricultural sectors, attributed to the faulty manner in they are entitled to draw and how to the issue of how to use inter-state which the Tribunal itself is envisaged. preserve it for future generations. rivers will continue to arise in more The Act thus needs to be amended to than one context. Thus, a coherent ensure that the disputes are heard and and certain method of dispute decided in a time-bound manner and resolution needs to be evolved. that the order of the Tribunal becomes Further, any proposal to interlink rivers, binding on the parties with immediate as has been widely suggested, must effect. include a plan on how to effectively deal with disputes about river water use. A stable and certain dispute IMPLEMENTATION resolution mechanism is also essential AND IMPACT to any attempt to clean up polluted inter-state river waters, which will require agreement and coordination Amendments to the ISRWD Act, 1956 between states as to how to use water ought to be made on the following sustainably, as well as a mechanism to lines: enforce such sustainable use. • The Tribunal should be composed of sitting Supreme Court judges with a term of at least three years, who The present mechanism for resolution will continue to hold the post in the of inter-state water disputes is wholly Tribunal only as long as they remain unsatisfactory. Inter-state river water sitting Supreme Court judges. This disputes are placed before ad hoc ensures that the Tribunal works tribunals set up under the Inter- within a fixed time period. Such State River Water Disputes Act, judges should continue to function 1956 (‘ISRWD Act’). However, the as sitting judges and as Members of enforcement of awards under the the Tribunal in a manner akin to the Act are subject to publication by the Tribunal under the Unlawful Activities political executive, rather than being Prevention Act, which has a sitting directly enforceable as with any High Court judge. other court. In addition, vacancies • The award of the Tribunal should commonly arise in the tribunals due become binding and enforceable as to delay in disposing the cases. New soon as it is issued and should not judges then have to be appointed, depend on publication by the Central causing further delays and adding to Government in the Gazette. conflict over river water use. • No further appeal to the Supreme In the absence of a certain dispute Court should be permitted since the settlement mechanism, river water proceedings will be on par with an disputes can spiral into causes for original suit between States being ethnic and sub-national conflict. tried by the Supreme Court itself. With these amendments the resolution of the inter-state river water disputes Amend the ISRWD Act to will be time bound and certain, leaving make awards binding as less scope for conflicts over river water sharing to become politicised. In soon as they are issued.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 21 DEVELOPMENT

HARMONISE LABOUR LAWS Standardising definitions in labour law for more effective targeting in labour welfare

Issues purpose has not been served. Certain must then be used uniformly through categories of employees who receive all applicable labour laws by reference far greater remuneration than the to the Industrial Disputes Act. A similar That labour law reforms are long average manager, and enjoy more exercise must be carried out for the overdue in India is evident. While authority, are treated as workmen term ‘employee’. many of the areas of reform are while protection is sometimes not • Similar terms such as ‘employee’ contentious, as a first step, loopholes, granted to deserving employees and ‘employed person’ must be contradictions and overlaps in the law (2nd National Labour Commission). amended to introduce a single term must be identified, correcting which The lack of consistency therefore that is used across all relevant laws. will have the greatest acceptability contributes to misinterpretation and • Wage limits under different laws amongst all stakeholders. unequal application of the law (Debroy, must be standardised so that benefits 2005). are simpler to access, and are equally One such issue is the varying available. Further, wage limits must be definitions of ‘workman’ and related made alterable by notification so that terms across labour laws. The term is SOLUTION the Act does not have to be amended defined differently under the Industrial every time wage limits need to be Disputes Act, the Factories Act, and There is a need to revisit the definition revised. the Contract Labour (Regulation and of two terms – ‘employee’ and Abolition) Act. ‘workman’ – across all Central labour While the reform of labour laws in India laws, draft a single definition for encompasses many more dimensions, A related term ‘employee’ also suffers each that addresses the problems of making definitions uniform can prove from similar problems. The Minimum over and under-inclusion, and adopt to be a first step for reform in a Wages Act uses the term ‘employee’ it uniformly in all labour laws, thus neglected area of law that is generally while the Payment of Wages Act uses fulfilling the goal of standardisation. thought to be an impediment to the the term ‘employed person’ and the economic development of the country. Mines Act uses ‘employed’. Even where the same term is used, as in Harmonise the wage the Payment of Bonus Act and the ceiling limits for various Payment of Gratuity Act, the language used to define them is different. social security STATUTES under labour laws so that The varied definitions bring with them different wage limits for the similar benefits are made applicability of similar benefits. applicable in a uniform Protection under the Payment of Wages Act, the Payment of Bonus Act manner. and the Employees’ State Insurance Act all mandate different wage limits. This impinges on the usability of the IMPLEMENTATION law, since it is extremely difficult for a worker to know what protections AND IMPACT and advantages he qualifies for under multiple labour laws. The following steps are necessary in order to standardise definitions of the aforementioned terms: The distinction between the workman • The principal definition of ‘workman’ and employees was created to under the Industrial Disputes Act separate out a managerial class should be redrafted to ensure that the which did not need a higher level of protections under the Act are made protection under the law. However, available to the intended categories amidst numerous definitions, this of employees. The redrafted definition

22 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA ECONOMY

6 REFORM THE CORPORATE INSOLVENCY SYSTEM Introducing institutional and substantive changes to the corporate insolvency regime in India to promote economic growth and entrepreneurship Issues close a pending rescue procedure, little control in the insolvency process will necessarily limit the extent to and provides excessive protection to which this procedure can be used to secured creditors. Such provisions Insolvency of a company may be ameliorate the potential inefficiencies need closer examination and other defined in terms of ‘economic’ or of piecemeal asset sales. Further, alternatives need to be explored for ‘financial’ distress. While the former recent corporate collapses in India making the system balanced. Out- relates to the company’s ability to indicate that the directors and of-court rescue mechanisms like efficiently produce and sell goods management may often underestimate ‘pre-packaged’ administrations could and services, the latter signifies its the risks of their actions and be very useful in the Indian context, capacity to service debts. It is widely overestimate their own ability to save where many businesses operate recognised that as long as a failing a failing business. In such instances, through closely held companies and company remains economically there is significant scope for the law to have a limited number of creditors. viable, it should be first subject to step in and protect other stakeholders Pre-packaged administration is a reorganisation, and not liquidation. before a company goes beyond practice where a sale of all or part of Unlike liquidation, where the company redemption. the company’s business and/or assets is closed down, ‘reorganisation’ or is arranged before formal entry into a ‘corporate rescue’ is a process of corporate insolvency procedure. The ‘organisational rebirth’ where the SOLUTION actual sale is then effected on the date debts are renegotiated and every of the commencement of proceedings. effort is made to enable the company In terms of institutional changes, as Further, liability for wrongful trading to return to commercially viable and when the National Company Law (personal liability for the directors operations. Tribunal gets operationalised, caution if they fail to take reasonable steps must be exercised to ensure that to minimise the potential loss to The most recent Doing Business proceedings are completed within the creditors) also needs to be report (a joint project of the World well-defined time limits, leaving no considered for companies bordering Bank and the International Finance room for extensions. Introduction on insolvency. Corporation) ranks India 121 out of a dedicated ‘Insolvency of 189 countries for resolving Practitioners’ profession (with insolvencies. It notes that resolving licensing requirements) for appointing IMPLEMENTATION insolvencies in India takes 4.3 years administrators and liquidators AND IMPACT on an average (which is greater should be considered. The selection than the time taken for resolving and appointment mechanism for The government should consider insolvencies in even Pakistan and administrators and liquidators should implementing the above by Bangladesh). This estimate actually also be prompt. Appropriate training introducing amendments to the appears conservative compared with programs should also be introduced Companies Act, 2013. A robust many anecdotal reports of delays. In for all insolvency officials, including corporate insolvency regime can spite of being structurally similar to judges. some efficiently functioning insolvency help foster growth and innovation regimes of the world, the Indian by enabling efficient allocation Substantively, Indian law permits the regime has not proved to be very of resources from failing or failed debtor or the managers to have very effective in practice. companies to efficient companies, and promote entrepreneurship by providing an indication of the Moreover, the law in its present Introduce pre-packaged maximum downside risks and costs form appears unusual in permitting that the promoters and investors secured (institutional) creditors to administration for expose themselves to at the time of wholly escape the application of resolving insolvencies starting a venture. Further, if the rights the moratorium in corporate rescue of all creditors are better protected procedures in certain circumstances. within the existing in the event of insolvency, it could The ability of secured creditors to framework. go a long way in developing a much prevent the commencement of a needed corporate bond market in corporate rescue procedure, or to India.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 23 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA REGULATE THE NEW INDIA

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY DEVELOPMENT

SIMPLIFY NUCLEAR LIABILITY Revisiting the nuclear liability regime to spur the growth of nuclear power in India

Issues merely to prevent tortious liability claims against suppliers, but in order to maintain the sanctity of the principle Seek an opinion from the The recently introduced Civil Liability of legal channelling of liability to the Attorney-General as to for Nuclear Damage Act, 2010 is operator, the fundamental principle of widely perceived to be a significant this Act. In addition to this deletion, whether Section 46 of the obstacle to nuclear trade and the government should also seek consequently the growth of nuclear the opinion of the Attorney-General Act is limited to criminal energy in India. There are two key on the scope of Section 46. Given liability for operators concerns which have been expressed: the suggested deletion, the ambit of first, the possibility of suppliers being Section 46 ought to be limited only to alone, thereby assuaging held liable for patent or latent defects criminal liability for operators, a view concerns of Indian and in supply and sub-standard services, the Attorney-General’s opinion ought by operators exercising their right of to clarify. foreign suppliers. recourse [Section 17(b)]; second, the scope and extent to which suppliers On the contrary, no statutory or are amenable to tort liability claims in regulatory amendment is necessary pragmatic energy considerations Indian domestic courts [Sections 35 in Section 17(b), or in the right to and realpolitik. India today is one and 46]. All three sections, products of recourse against suppliers more of the most attractive destinations a hard-earned bipartisan consensus generally, despite vehement demands for nuclear power, being a massive amongst several parties in the Indian to this effect. Three reasons justify buyers’ market, at a time that the Parliament, are controversial for two this: first, though the principle of fault- nuclear industry is in the doldrums. reasons: they are argued to be out- based liability for suppliers is out-of- In this context, genuine concerns of of-line with comparative provisions line with comparative laws governing suppliers, both Indian and foreign, in other jurisdictions and the Annex nuclear liability, it is a reaffirmation regarding tortious liability must be to the Convention on Supplementary of India’s public policy that those at assuaged. At the same time excessive Compensation for Nuclear Damage, fault must pay for damage caused. complaints by suppliers about 1997 (‘CSC’), to which India is a Secondly, such a principle has a recourse liability must be resisted. signatory; further, by foisting suppliers robust economic justification — the The fundamentals of India’s legal with additional liability, they make threat of liability incentivises suppliers liability regime are strong: reasserting the supply of nuclear technology to take adequate care regarding the our stated position while making a prohibitively expensive, perhaps even safety of their supplies, an incentive small concession to suppliers will be unfeasible. It is necessary to address which would be wholly missing if their the spur that nuclear energy in India both these concerns. liability was transferred to the operator. needs, setting a global precedent on Finally, it can be plausibly argued that an equitable model liability law. SOLUTION the provision as it stands is compliant with Article 10 of the Annex to the Section 35 of the Act currently CSC, which gives countries sufficient purports to oust jurisdiction of civil latitude in drafting their own domestic courts. It is essential to provide teeth law, as evidenced by the use of the to this provision. To this end, the permissive words ‘National law may opening words of Section 35, ‘save provide’ which prefaces the provisions as otherwise provided in Section 46’, relating to recourse. ought to be deleted. The unintended effect of these words is to save the IMPLEMENTATION jurisdiction of the civil court even in matters for which the special AND IMPACT mechanism for speedy compensation has been set up by this Act. Deletion The calibrated reform suggested of this provision is necessary, not above is recommended both by

26 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA DEVELOPMENT

PROMOTE RENEWABLE ENERGY Legislating on renewable energy use to enhance energy efficiency

Issues SOLUTION Enact a comprehensive India is ranked among the top The first step towards facilitating renewable energy law countries in the world in terms of efficient renewable energy usage renewable energy capacity, especially is legislating on it at the Union with mandatory targets, wind and solar. Unfortunately, this level, penalising providers for non- and penalties for non- capacity is not utilised effectively. conformity with purchase obligations and targets set. This legislation must compliance. take into account the legal framework There are a few overarching reasons with respect to coal, petroleum, and for this. First, in spite of several electricity from conventional sources. producers, requirement of purchase policies addressing the challenges of renewable energy solely from such of energy access and sustainability, producers, subsidies and financial Such legislation must be all- existing legal provisions can be found incentives such as feed-in-tariffs and encompassing, taking care of basic only in the Energy Conservation tax benefits. Act, 2001 and a few provisions of legal and regulatory preconditions, as the Electricity Act, 2003. These well as institutional and administrative • It is also important for such a law to Acts mention renewable energy efficiency. Issues such as grid set targets, as already set in existing only peripherally when dealing connection and integration, resource policies, and lay down penalties for with subjects like institutional use, financial incentives, and non-fulfilment, as well as incentives for arrangements and tariff-setting. allocation of permits and rights must compliance. Further, these impose no mandatory be regulated. Existing government obligations. Thus, the lack of a strong schemes that have proved effective compliance mechanism in law for an should also be enforced through the otherwise effective programme has law, such as registration of renewable been one of the biggest barriers to its energy producers and purchase implementation. Second, the lack of obligations from these producers. harmonisation among state policies has made investments in various To ensure that a combination of states contingent on attractive policies regulatory mechanisms does not rather than energy potential. lead to inefficiency, they must be considered and legislated upon As a result, despite India’s energy simultaneously. subsidies representing a significant portion of its budget, electricity IMPLEMENTATION reaches a privileged few. According to the 2011 Census data, one third AND IMPACT of all Indian households have no access to electricity. For those who For achieving the objectives do, electricity tariffs keep rising. Indian mentioned above, the following renewable energy policy is believed legislative steps are suggested: to have delivered renewable energy generation at very high costs because • Enact a law solely addressing the of low operational efficiency. Given the management of renewable energy finiteness of conventional energy, the and its use in power generation. This country needs to become more reliant law should override discretionary and on renewable energies for a more enabling provisions in other laws. sustainable future.

• In such a law, include provisions on registration of renewable energy

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 27 TECHNOLOGY AND INNOVATION

ENSURE SAFER CLINICAL TRIALS Regulating clinical trials to promote safety and efficacy

Issues industry, while placing maximum premium on safety of trial participants. Finalise CDSCO Draft An affidavit by the Ministry of Health and Family Welfare, Government of Guidelines on Audio-Visual IMPLEMENTATION India (‘MOHFW’) stated that 2868 Recording of Informed AND IMPACT deaths occurred during clinical trials between 2005 and 2012. Of these, Consent Process in 89 deaths were directly attributable Clinical Trial issued on International best practices suggest to defects in the clinical trial process. that clinical trials should be regulated Recently, 254 women who were January 9, 2014 making by a dedicated, standalone legal part of a control group in a trial for video-taping mandatory instrument. Consequently, it is a cervical cancer screening method recommended that a new set of rules died. subject to patient waiver. be brought in under the Drugs and Cosmetics Act, 1940, consolidating It is not only the number of deaths extant provisions regulating clinical during clinical trials that is alarming. trials in the same Act, Schedule Y More crucially, several such deaths and guidelines for clinical trials in of the Drugs and Cosmetics Rules, can be attributed to a dysfunctional a comprehensive report with 25 1945 and various regulations and regulatory framework, an under- recommendations in July 2013. notifications issued by the MOHFW. equipped regulator, lack of standard After appropriate revisions, three The new rules will also contain the care and lax ethical approval of its recommendations need to be above recommendations replacing the processes. Three detrimental implemented without delay. First, law currently governing these issues. consequences have ensued. First, video-taping the process of securing the safety of clinical trial patients informed consent and its safe storage Such a change will have the remains in jeopardy. Secondly, as a for a specified time period must be immediate impact of dispelling result of the first, the MOHFW has made mandatory. Exceptions must be the incoherence that currently issued stringent guidelines making made only in cases where the patient, characterises the regulatory it extremely onerous on sponsors to maintain his privacy, waives his framework. Thus, it has significant and investigators to conduct trials right to be video-taped. Secondly, potential to spur the clinical trials in India, while the Supreme Court all trials must appoint a grievance industry, notwithstanding the stringent has intervened stopping 157 trials redressal officer to address patient provisions of compensation and in which due processes were not concerns. Key amongst the officer’s informed consent that have been followed. The combined effect of responsibilities must be to ensure recommended. Unlike in the past, the two is an over-regulation of the speedy payment of compensation in industry growth will not come at the sector. Finally, resulting from the case of trial-related injury or death cost of patient safety but will instead first two consequences, the clinical on the basis of the draft formula for be founded on patient consent and trials industry in India, estimated to compensation prepared by the RK autonomy. be around Rs. 3000 crore in 2014, Jain Committee on 1 May 2014. generating large-scale employment Thirdly, the responsible authority and and making new medicines available the process for approval of clinical for Indian patients, has shrunk trials needs to be streamlined. As per significantly. the Committee’s recommendation a Technical Review Committee comprising experts must be set up to SOLUTION approve all clinical trials in the country. However, this is not sufficient — An Expert Committee appointed by complete transparency in the process the MOHFW under the Chairmanship of approval or rejection along with of Dr. Ranjit Roy Chaudhury strict timelines must be maintained, (‘Committee’) formulated policy to revitalise the sagging clinical trials

28 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA TECHNOLOGY AND INNOVATION

CREATE A TWO-TIER PATENT SYSTEM Introducing a Utility Model Law to catalyse innovation growth in India

Issues will help solve problems faced by month period, handled by a dedicated the large informal economy of India. UM Office. Innovations in agricultural methods • An incentive to commercialise the In India, innovations which use local and processes, as well as mechanical invention by conditional extension resources and technical know-how innovations are areas where UM law to the initial period of protection. For to adapt existing inventions to local would perhaps reap the most benefits. example, if the period of protection needs using frugal innovation are However, it has been seen in other granted was four years, it may be often considered irrelevant in terms nations that the effectiveness of a extended for another four years if the of intellectual property protection. UM law diminishes as a nation enters invention has been commercialised. However, there is a great need to a post-globalised period where the • A mandatory periodic review of the promote the use of such low-cost informal economy only has a minority need to keep the law in place. and highly useful innovations which share of the total economy. Also, cannot be protected under the existing it is important to empirically gauge Around the world, UM law regimes IP regime. The proper commercial whether UM protection has a positive have succeeded in encouraging application of such innovations effect in that particular sector and small-scale innovators to positively depends on a robust IP system whether the SMEs and small-scale contribute to the economy by securing that protects such sub-patentable innovators are indeed being benefited. short-term protection for incremental innovations. The National Innovation Keeping these considerations in mind, innovations. One of the major Foundation has documented over the law should undergo a periodic contributions of this law would be to 1,00,000 ideas, innovations and review to analyse its relevance and generate a huge pool of incremental traditional knowledge practices efficacy. It should also provide for innovations that may go on to trigger such as the clay refrigerator and the strong safeguards against its misuse new inventions and create a fertile automatic onion seed transplanter by big corporations against SMEs and innovation ecosystem. Such a which have originated in rural India, small-scale innovators. system also becomes an inexpensive have commercial potential and source of IP protection which makes yet cannot be protected under the commercialising such products current IP regime due to the prevailing cheaper and easier. India has much inventive step standard. Introduce a second- to gain from a utility model legislation tier system of patent and if carefully enacted, it will serve as The utility model system is a way of a catalyst for an innovation boom. fulfilling this need. The purpose of a protection for utility model system is to establish incremental innovations. a second-tier system of patent protection which requires a lower standard of inventive step than that under current patent law. Also IMPLEMENTATION known as ‘petty patents’, the utility AND IMPACT model law (‘UM law’) establishes a system of short-term protection A legislative framework independent for technical advancements that of the current Patents Act, 1970 is may be incremental in nature but needed to introduce the UM law advantageous to the nation, or the framework in India, since the law subject matter of which may be barred will only be effective if it works as a from patentability under existing fundamentally different application patent law. procedure to the patent protection system. The law should be based on SOLUTION the following core principles – • A very low standard of inventive step A UM law should be introduced in with a focus on novelty and utility. sectors where increase in innovation • Expeditious processing of applications, preferably within a six-

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 29 TECHNOLOGY AND INNOVATION

PROTECT NET NEUTRALITY Introducing net neutrality regulation to protect a free and open internet

Issues • Disclosure of traffic management Introduce ISP policies by ISPs in a periodic report. The beauty of the internet lies in transparency regulation • Prohibition on ISPs entering into the structure of the network. A truly agreements with content providers democratic network, the internet has to keep a check on to influence the flow of data on their been one of the greatest achievements network management network. of our age, and its success is due • Strict penalties for ISPs in the to a key principle it was born with – practices employed by regulations for violation of net neutrality norms. equality. ISPs.

This principle of equality is at the core India has one of the fastest growing of the net neutrality debate. Simply Government and consumers are kept numbers of internet users in the world. put, net neutrality is the principle that in the dark about traffic management An internet based on the principle of internet service providers (‘ISPs’) and practices in use by ISPs. Therefore, net neutrality is key to the growth of governments should treat all data on the first step in addressing the issue India’s internet economy by ensuring the internet equally, not discriminating of net neutrality is to make the system equality, innovation and competition. or charging differentially by user, more transparent. content, site, platform, application, type of attached equipment and The second step would be to modes of communication. Due to a introduce substantive net neutrality worldwide movement to protect a rules. In December 2006, the Telecom neutral internet, the European Union, Regulatory Authority of India (‘TRAI’) Norway, Netherlands and many released a Consultation Paper titled other countries have already enacted ‘Review of Internet Services’ which laws to ensure net neutrality in their discussed the issue of net neutrality. respective jurisdictions. So far, no further public initiative has been taken by TRAI to examine the By removing equality on the internet, issue in detail and enact regulations content providers with deep pockets to protect a neutral internet. The time will be able to afford faster content is ripe for TRAI to take the next step, delivery, leading to a monopolisation invite views from all stakeholders, and of all content on the internet in the move towards enacting a regulation to hands of a few companies. On the address this issue. consumer side, the willingness to pay will determine the quality of access to IMPLEMENTATION the internet. In India, little is known of how ISPs manage internet traffic. In AND IMPACT the absence of laws to the contrary, many ISPs have repeatedly indulged TRAI should enact a net neutrality and in interfering with the flow of data on ISP transparency regulation based on the internet. For instance, during the the following core principles – Indian Premier League in 2010, an ISP • No filtration or blockage of internet promised faster access to watch live traffic as long as the data is being cricket. used for legal purposes. • No discriminatory treatment for users by either speeding up or slowing SOLUTION down data packets of any particular content except for the purposes of Due to the lack of any ISP network congestion management. transparency regulation in India, the

30 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA ECONOMY

6 ALLOW CROWDFUNDING OF SMALL BUSINESSES Crowdfunding ventures through issuance of securities for kick-starting small businesses

Issues to have more than two hundred that they understand the basics of shareholders. Given that a typical investing and the risks associated with Traditional methods of raising finance, crowdfunding offer is made to the securities offerings. like issuing shares to the public in the public at large, start-ups (which are primary markets, private placements generally incorporated as private The offerings may be made on an to institutional and venture capital companies) cannot resort to such a online platform through portals investors and debt finance are not financing option under the present registered as intermediaries with the easily accessible to most small law. securities markets regulator. Initial and companies and new ventures. The periodic disclosure obligations on the eligibility requirements for raising SOLUTION issuer company, including information finance through an initial public offer about the business, financials, (‘IPO’) are very high and most start- managers, the nature and pricing The Government should consider ups may not be in a position to meet of securities, may also be imposed enacting a law on the lines of the those requirements in the early years (to be communicated through the Jumpstart Our Business Startups of their operations. Venture capital portals). The funding portals should Act, 2012 (the ‘JOBS Act’) introduced investors are usually very selective be comprehensively regulated, in the United States. Drawing from and not approachable for many small entrusted with many responsibilities – the Act, such law should (a) allow businesses. conducting due diligence on issuers, start-ups to raise finance by offering arranging for transfer of funds, securities through licensed online investor-education related obligations In this backdrop, crowdfunding portals and (b) permit exemptions and enforcement functions – and provides a useful alternative for from the law governing securities prevented from offering investment ventures with viable business plans offerings in general. Such law advice on the offerings. Given the but no reasonable access to traditional should also prescribe well-defined modes of financing. Crowdfunding increase in securities related frauds allows entrepreneurs to raise capital in the recent past, such law should through an open offer on the internet. Allow issuance of provide for strict safeguards and Such funding is typically in the form penalties to prevent frauds. of donation, pre-purchase of products securities through or in return for equity participation crowdfunding in certain IMPLEMENTATION or profit sharing. Raising funds through donation or a pre-purchase sectors with dynamic AND IMPACT arrangement is not a very sustainable entrepreneurial activity model for attracting people to invest In addition to enacting a new law to in a venture. On the other hand, if the on a pilot basis. facilitate crowdfunding, appropriate investors are allowed to participate in exceptions will need to be introduced the venture’s future cash flows through eligibility requirements and set the in the Companies Act, 2013, the issuance of securities, it may be a maximum amount of funds that Companies (Share Capital and more attractive proposition for them. may be raised by a company and Debenture) Rules, 2014 and the invested by any individual in a given relevant SEBI regulations for enabling Indian corporate and securities year. The investment limits imposed its implementation. Crowdfunding laws impose several limitations on on individuals should be linked to through Foreign Direct Investment companies for offering securities to their annual income or net worth. (‘FDI’) may also be considered in the public at large. For instance, an Given that providing voting rights sectors that do not require prior offer to issue securities to fifty or to crowdfunders may increase regulatory approvals (automatic more people triggers the public-offer a company’s transaction costs, route) as long as other FDI related requirements (which include filing a crowdfunders may be given limited requirements (relating to the nature of prospectus with the regulator, etc.) or no voting rights. Such a law securities and valuation) are satisfied. under the company laws (subject should also emulate the JOBS Act for Allowing small businesses to raise to limited exceptions). Moreover, imposing investor-education related finance through crowdfunding will help a private company is not allowed obligations on investors to ensure them achieve their true potential and encourage entrepreneurial activity.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 31 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA BUILD A POSSIBLE INDIA

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY HUMAN RIGHTS

EXPAND RTE COVERAGE Amending the Constitution to ensure quality primary education for all

Issues made pursuant to Article 21A are not subject to the right under Article 30(1). Amend the Constitution The Right to Education Act, 2009 This should nullify the judgment in (‘RTE Act’), implementing Article 21A to bring aided minority Pramati, without affecting unaided of the Constitution, was enacted minority schools and schools primarily with the aim of providing free and schools within the imparting religious instruction. compulsory education to all children purview of the RTE Act. between the ages of six and fourteen IMPLEMENTATION years. The RTE Act imposes certain obligations on all schools, whether AND IMPACT had not been established as such. aided or unaided, government or Since procedures governing grant private, to carry out the objectives of The above solution can only of minority status to educational the Act. These schools have statutory be implemented by way of a institutions are opaque and non- obligations such as norms and Constitutional amendment. standard across states, there is standards to be maintained, school Specifically, a further clause needs to widespread misuse of the minority recognition, admission of students be inserted after Article 30(1), stating exemption as it exists currently. This and qualifications of teachers. that: is a great setback to the attainment “The right guaranteed under clause (1) of the goal of universal elementary to educational institutions receiving However, by virtue of the Supreme education, almost defeating the aid out of State funds, except Court’s judgment in Pramati purpose of the RTE Act. Educational and Cultural Trust v. Union Madrasas, Vedic Pathsalas and those of India [Writ Petition (C.) No. 416 of educational institutions primarily 2012], minority schools, both aided SOLUTION imparting religious instruction, shall be and unaided, have been exempted subject to Article 21A.” from the purview of the entire statute. The obligation under Article 21A As a result, there are several minority being an obligation of the government This will extend the applicability of schools not providing primarily should certainly extend to government the RTE Act far beyond what currently religious education or language-based aided schools, even ‘minority schools’. exists, and will truly achieve the goal training that are now exempted from A distinction between aided and of free and compulsory elementary the purview of the RTE Act. This unaided minority schools is envisaged education for all. exemption is clearly over-inclusive. in the Constitution, as evident from Article 29(2), which protects the One of the objectives of this Act was right of all citizens to admission to ensure that schools be socially in government aided minority inclusive, representative of a diverse educational institutions, without India. The term ‘minority’ has been discrimination. judicially interpreted to mean linguistic and religious minorities within a The Pramati judgment was based on particular state. Thus, for example, a the Court’s interpretation of Article school established and managed by 30(1) of the Constitution, which a Gujarati speaking community would codifies the fundamental right of all be a minority school in Karnataka. minorities to establish and administer Exempting minority schools, as the educational institutions of their choice. judgment does, excludes a significant The right under Article 21A is also a section of educational institutions, fundamental right, and neither was many of which have been imparting subordinate to the other, until Pramati. quality education for several years. Thus, the right under Article 30(1) Further, this exemption has given rise needs to be made subject to the to the pernicious practice of schools right under Article 21A, so that laws seeking minority status even if they

34 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA HUMAN RIGHTS

BOLSTER FREE SPEECH Circumscribing criminal prosecution for literary works to bolster free speech in India

Issues effected to sections 95 and 96 of the ensure that the High Court tests the Literary works, often academic CrPC making banning more onerous offensiveness of the material in the scholarship on religion and history, and making first instance review by light of the following principles: have frequently been the subject the High Court, currently provided o Material is to be deemed offensive of criminal prosecution in India. for, considerably stricter. Secondly, only when the offensiveness is Several books like Shivaji: Hindu guidelines need to be issued to intended; King in Islamic India, and Great Soul: the authority (usually the District o The intentions of the author have to Mahatma Gandhi and his Struggle Magistrate) who is responsible under be gathered only from the language, with India have been banned on the section 196 of the CrPC for granting contents and import of the offending ground that they outrage religious sanction for prosecution under material; feelings, promote enmity between sections 153A, 153B and 295A of the o The nature of the work, its intended religious groups or contain assertions IPC. These guidelines must outline audience and the extent of circulation prejudicial to national integration. In considerations to be mandatorily are relevant considerations for some cases, the authors or publishers taken into account while proceeding determining its offensiveness. of such books are also sought to be against the authors or publishers of criminally prosecuted on this ground scholarly works. • The following guidelines may be or for defamation. Forfeiture (banning) issued to sanctioning authorities under of offensive material and criminal IMPLEMENTATION section 196 of the CrPC: prosecution of its author or publisher o The sanctioning authority must are permissible under section 95 of the AND IMPACT before granting the sanction ensure Code of Criminal Procedure (‘CrPC’) that the ingredients of the alleged and under sections 153A, 153B and • Section 95 of the CrPC must be offence are prima facie made out from 295A of the Indian Penal Code (‘IPC’) amended in a suitable way to ensure the material available on record; respectively. However experience that: o The authority must give due suggests that such provisions, while consideration to the following factors: necessary, are prone to misuse. At the nature of the work, its intended the same time, the criminal penalty of Issue mandatory audience and the extent of circulation defamation under sections 499 and before determining the necessity of 500 IPC is arguably unconstitutional, guidelines to be followed prosecution; and an argument made elsewhere (Bhatia, by sanctioning authorities o The sanctioning authority must 2014). Taken together, a better give due regard to the investigation balance thus needs to be struck before prosecution report filed by the police. If no such between respect for religious feelings under sections 153A, report is filed before it, the sanctioning of groups and protection of scholarly authority must order a preliminary and historical work. 153B or 295A IPC can be investigation into the matter before commenced. determining the question of sanction. SOLUTION Implementation of the above o An order forfeiting a work suggestions is necessary to ensure the An analysis of judicial precedent in mandatorily discloses the grounds of freedom of responsible scholarship this context reveals an anomaly. While forfeiture; in India. Specifically it ensures that free speech jurisprudence in India is o The grounds necessarily describe the benefits of India’s progressive progressive, its fruits are available only the effect of the matters contained in free speech jurisprudence inures to pursuant to appellate litigation. This the offending publication; scholars at the stage of publication causes considerable prior hardship to o Forfeiture is a necessary and itself and not appellate litigation, as is authors and publishers against whom proportionate response to the effect of the case today. cases are registered and prosecution the offending publication. commenced. To offset this, a two- pronged approach is suggested. First, • Section 96 of the CrPC must statutory amendments need to be be amended in a suitable way to

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 35 HUMAN RIGHTS

DRAFT A NEW ANTI-TRAFFICKING LAW Proposing a new comprehensive anti-trafficking law to better combat human trafficking

Issues wish to leave sex work: The aim of rehabilitative measures must be the Amend the ITPA to remove effective reintegration of sex-workers. Trafficking in India encompasses many sections that penalise For this, measures such as shelters for dimensions – from the forced labour the welfare, healthcare and education of millions to the commercial sexual the sex-worker, such as of sex workers and their children is exploitation of vulnerable women and section 8 on solicitation. necessary. Work done by NGOs in children. There is little reliable data on this regard must also be given due the extent of trafficking in India, but recognition and support. according to the Trafficking in Persons • Special provisions for minors: Report of the US State Department, which was based on a British law Trafficking in minors must receive 20 to 65 million Indians have fallen intended to regulate prostitution rather special attention in the new law. Some prey to trafficking. In contrast, the than combat trafficking, but rather of the crucial steps in this regard 2012 National Crime Records Bureau a completely new law to replace the are adoption of a single definition of Report mentions only 3,554 reported ITPA, one that battles the crime of the term ‘minor’ as under the age of cases of human trafficking in that year. human trafficking directly. 18, and better integration with the There is clearly a huge gap between Juvenile Justice Act in all steps of the the extent of trafficking in India and new anti-trafficking law. the corresponding reach of the law. IMPLEMENTATION AND IMPACT A new law based on the proposed Numerous laws and initiatives are framework will be more effective used to tackle the problem, but A new law to combat trafficking must in ensuring prosecution of the these are fragmented in nature and incorporate the five-fold framework actual perpetrators of trafficking, often overlooked. While a recent detailed below, to ensure both while reducing the harassment and amendment to the Indian Penal Code effective prosecution of offenders and penalisation of sex-workers that is (‘IPC’) adapted the internationally rescue and rehabilitation of trafficked perpetuated by the present Act. accepted definition of trafficking as persons: an offence, the Immoral Trafficking • Penalisation of the offence of human (Prevention) Act, 1956 (‘ITPA’) trafficking: The new law should reflect conflates the issues of trafficking the newly amended section 370 of and sex-work, and results in the the IPC, and directly punish acts that harassment of the sex-worker more promote trafficking, such as false than the traffickers and pimps. advertisement. • Decriminalisation of the sex-worker: While anti-trafficking groups, public SOLUTION health activists and sex-workers’ collectives are divided on the issue There have been numerous calls for of the extent of decriminalisation of a comprehensive law dealing with clients and pimps, there is broad trafficking in India. While in 2006 a agreement that a new law must set of amendments to the ITPA was decriminalise the sex-worker entirely, introduced in Parliament, differences unlike the present Act. of opinion on whether clients of • Protection for sex-workers: The law prostitutes ought to be penalised must give adequate protection to sex- led to the demise of the proposed workers who wish to continue with this amendments. livelihood, particularly in the shape of recourse to women who face violence What is needed, in the face of in the course of sex-work. these developments, is not a set of • Effective rehabilitation and amendments to the existing ITPA, reintegration of sex workers who

36 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA HUMAN RIGHTS

STRENGTHEN ABORTION LAWS Strengthening the PC&PNDT & MTP Acts to increase prosecutions for sex-selective abortions

Issues SOLUTION • The regulatory mechanisms under the MTP and the PC&PNDT Acts at The practice of abortion of the female the District level should be unified, so Three sets of provisions contribute that the responsibility of implementing foetus is one of India’s biggest to the disconnect between sex- tragedies, one that shows no signs both these laws should rest on the determination and sex-selective same Appropriate Authority. In this of abating. The child sex ratio in the abortion, that must be corrected. 2011 provisional census was 914 girls way, the explicit connection between First, the onus of documentation sex determination and sex selection per 1000 boys. With the advance in must be placed on the registered technology making sex-determination can be made more easily. medical practitioners or other • Compliance under the PC&PNDT a simple task, the problem has taken medical professionals carrying out on alarming proportions. Act should be made easier by the procedures, completing the chain replacing the confusing categories of of referral. Second, the regulatory establishments permitted to perform Abortion in India is legal only if it is mechanisms under the MTP and the tests with categories that better reflect in compliance with the conditions PC&PNDT Acts are currently separate, ground realities. Genetic Counselling laid down in section 3 of the Medical and do not reference each other, Centres, Genetic Laboratories and Termination of Pregnancy Act, 1971 contributing to the disjunct between Genetic Clinics are confusing terms as (‘MTP Act’). Since the sex of the the two – this must be rectified. Third, ultrasounds are no longer performed foetus is not one of the permissible compliance with the documentation for only ‘genetic’ reasons. Instead, grounds for abortion, sex-selective requirements is currently difficult, and terms such as ‘Ultrasound Clinics’, abortion is illegal. What is also must be simplified in order to make ‘Imaging Centres’ and ‘Nursing penalised is the determination of the the paper trail more easily traceable. Homes’ should be employed which sex of the foetus through prenatal are familiar to practitioners and users diagnostic techniques, as outlined alike (Lawyers Collective, Women’s in the Pre-Conception and Pre-Natal Rights Initiative, 2007). Diagnostic Techniques Act, 1994 Simplify the categories (‘PC&PNDT Act’). Thus the balance between women’s reproductive rights, under which diagnostic These steps will assist authorities and anti-SSA activists to track and the need to curb sex-selective establishments are abortions (‘SSA’) is sought to be and prosecute practitioners and maintained. supposed to register establishments, driving up convictions and creating a deterrent effect. themselves under the While the design of the PC&PNDT Act is sound, the law contains certain PC&PNDT Act to facilitate loopholes and omissions that detract compliance. from its effectiveness and result in under-use. This is evidenced by the fact that only 83 convictions under the Act have occurred as of 2011, with a number of states not reporting a single IMPLEMENTATION conviction. When contrasted with the AND IMPACT huge gap in the child sex ratio, the low number of convictions clearly indicate The following steps are necessary to the failure of the Act. A major reason implement the above: for this is that the law does not require • Documentation requirements linking of the sex-determination test under the MTP Act should include with the actual SSA. The chain of details of diagnostic tests performed referral and documentation linking prior to the procedure, thus making these two aspects is broken, and the connection between a sex- needs to be connected. (Expert determination test and a subsequent Interview, Asmita Basu). abortion traceable.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 37 HUMAN RIGHTS

MANAGE REFUGEE INFLUX Amending the Foreigners Act to regularise refugees in India

Issues well-founded fear of persecution Institutionalise refugee based on race, religion, nationality, membership of a particular social According to data collected by the status determination at group or political opinion, is outside United Nations High Commission for his country of nationality, or if having Refugees (UNHCR), India has close the Indian border. no nationality, is outside his country to 2 lakh refugees living within its of habitual residence and is unable or, territory with the number constantly term ‘refugee’. This is essential for owing to such fear, unwilling to avail rising. However, unofficial reports any legislation making any provision himself of that country’s protection. place the figure at above 4.5 lakh. for refugees, since the term is not • Exceptions must be carved out for Currently, the only law specifically easily defined. Second, the single refugees, codifying the principle of governing refugees in India is through most important principle relating to non-refoulement, wherever the Act judicial decisions regulating specific refugees in international law needs prohibits or imposes penalties for situations. There are also ad hoc to be recognised in Indian law – that being present in India without valid administrative advisories by the of non-refoulement, or non-return to documents. Ministry of Home Affairs, regulating country of origin. The Foreigners Act • A new section should be inserted in specific situations concerning penalises those who enter the country the Act, requiring status determination refugees, such as the Advisory on without valid identity documents, or of refugees at the border, along with preventing and combating human may prohibit entry of such persons providing an identification document; trafficking in India, dated 1 May 2012. into India. This implies that refugee- provision for rules outlining criteria seekers are liable to be returned to the for status determination as well as In the absence of specific legislation country they are fleeing from. A legal officials responsible for the same. pertaining to refugees, the general solution needs to be worked out to law applicable to foreigners, the prevent this. These changes in the Foreigners Act Foreigners Act, 1946, applies to will be the first key steps towards legal refugees as well. The status of As a consequence of accepting recognition of refugees in India. refugees is determined by UNHCR, refugee-seekers at the border, a but it has limited reach and resources. structured system must be put in These ad hoc, case-specific measures place for refugee status-determination. lead to a two-fold problem. Moreover, a procedure with such critical security implications should First, India’s national security interests be controlled and carried out entirely are hampered by the absence of a by the government. As a result of this coherent legal structure to ensure procedure, once a person is admitted that all non-citizens resident in India into the country as a refugee, he are properly documented and have a needs to be issued a permit, either in legitimate reason for their presence form of a long-term visa or a refugee in India. Second, the lack of a law permit. This will serve as an identity providing certain basic rights to document, and assist the government refugees violates India’s obligations in maintaining records. under customary international law, which it is subject to, notwithstanding its non-ratification of the 1951 IMPLEMENTATION Refugee Convention. AND IMPACT SOLUTION The following amendments are required in the Foreigners Act, 1946, The foremost requirement in the Indian to implement the above: legal framework is a definition of the • The term ‘refugee’ needs to be defined as a person who, owing to

38 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA DEVELOPMENT

CONSOLIDATE ANTI-CORRUPTION LEGISLATION Tackling graft through a consolidated and updated corruption legislation

Issues Government. However, similar powers powers of the Lokpal and the cannot be exercised at the state level Lokayukta in respect of investigation in the context of State Government and prosecution of corruption At present corruption is being tackled officials engaging in corruption. offences, bringing the Prevention of through four separate statutes Further, the pending bills conflict with Corruption Act in harmony with the and two pending Bills, namely the the provisions of the Lokpal Act and Lokpal Act and the state legislations. Prevention of Corruption Amendment existing legislation in some states. Bill and the Prevention of Bribery An effective and certain anti- of Foreign Public Officials Bill (‘the corruption law will deter corruption in Bills’). The Prevention of Corruption Withdraw pending, the public sector and also encourage Amendment Bill introduces new citizens and victims of corruption to definitions of corrupt acts and incoherent anti- approach the government to seek attempts to provide better tools of corruption Bills and redress against corruption. The enforcement and investigation. The pending Bills must thus be withdrawn Prevention of Bribery of Foreign replace with a fresh and new consolidated legislation Officials Bill seeks to fulfil India’s passed speedily. obligations under the United Nations draft that consolidates Convention Against Corruption to and simplifies the investigate and punish cross border corruption. proposed reforms.

The Bills suffer from some serious defects in drafting and introduce some SOLUTION needless changes to the existing statutory mechanism that muddle In order to overcome the problems existing jurisprudence developed by of uncertainty and lack of protection Courts. Broadly, the issues faced in to unwilling bribers, the two Bills these Bills can be classified into three need to be consolidated to remove kinds of problems: any uncertainties or discrepancies • Those relating to uncertainty of between them. Provisions also need application – Although ostensibly to be introduced to ensure institutional dealing with the same offence of coherence in tackling corruption, at corruption, the two Bills contain both the Centre and State levels. different definitions of the offence. This can lead to the interpretation IMPLEMENTATION that bribing a foreign official and bribing an Indian official are treated AND IMPACT differently under the laws, contributing to uncertainty. • To overcome uncertainty, the • Those relating to unwilling bribers consolidated legislation covering both – The present Bills seem to undo the Indian and foreign bribery should have limited protection given to unwilling a common definition of corruption as bribers in the present Prevention of an offence, and also involve the same Corruption Act, 1988 and provide no investigative agency for foreign and mechanism for unwilling bribers to domestic corruption at the Centre. participate freely in an investigation • New provisions for protection of and receive immunity. whistleblowers should be introduced. • Those relating to conflict of These will provide immunity for institutional powers – The Lokpal and unwilling bribers if they participate in Lokayuktas Act, 2013 empowers the investigation. Lokpal in the context of the Central • The Bill should also clarify the

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 39 DEVELOPMENT

REPEAL OBSTRUCTIONIST LAWS Tackling archaic and obstructionist laws to remove impediments to development

Issues Identify and abolish those to address the problem of laws in disuse: rules and regulations • Identify and repeal those laws, or In a recent report by the Political and that are archaic and provisions in laws, which are found Economic Risk Consultancy, a Hong to be unnecessary obstacles in the Kong based consultancy firm, India obstructionist, and modern context. This must be carried topped the list of the most ‘over- out by a Committee whose mandate regulated countries in the world’. The that can be repealed by is not only limited to identification of complexity of our regulations and government notifications. the laws, but also extends to co- the onerous burdens they impose ordinating the execution of the actual contributed significantly to this repeals by acting as a Nodal Agency. exists for the operation of hotels in the ranking. Deregulation is clearly the • Develop drafting guidelines for country. Outdated laws such as these need of the hour. The first step in this Ministries on the appropriate use that only have potential for misuse are regard is identifying laws for repeal of sunset and review clauses. Such ripe for repeal. and creating systemic safeguards guidelines may specify types of legal that allow such repeal to take place instruments and subject-areas where smoothly. SOLUTION only review is appropriate, and others where both sunset and review are In the past, several bodies including necessary. the seminal PC Jain Commission on A two-fold strategy is required to • Consider ways of simplification Review of Administrative Laws have address this issue. First, a substantive of the repeal procedure, such as by undertaken the task of identifying laws exercise must be carried out of introducing rules that allow repeals by for repeal. While those studies were identifying those statutes and Parliamentary resolutions approving of largely limited to clearing the statute regulations that no longer serve a Executive Orders. Any such process books, a more meaningful project useful purpose, but are used for must be accompanied by adequate in this area should identify those harassment or obstructionism. safeguards such as submission of laws that are not only outdated, but These must be repealed. Secondly, a time-bound report by a Standing also pose some kind of impediment a strategy must be employed going Committee of Parliament on proposed to economic growth and human forward to ensure this problem does repeals. development. not arise in the future. This requires the systematic use of drafting techniques like sunset and review As an example, under the R&D clauses, and simplification of the Cess Act, 1986, a Research and procedure for repeal. A sunset clause Development cess at the rate results in automatic repeal after a of 5% is levied on importers of specified period unless the law is foreign technology. This imposes a expressly extended. A review clause considerable burden on technology mandates formal periodic review companies and has an unclear and of the law, but does not result in outdated scope of application. It is automatic repeal. Simplification of out of sync with modern economic procedures for repeal may involve demands and ought to be repealed. allowing repeal by Parliamentary resolution, as is done in the United Another example is the Sarai Act, Kingdom. 1857. This Act, imposing unnecessary burdens such as requiring the Sarai keeper to employ the number of IMPLEMENTATION watchmen prescribed by the District AND IMPACT Magistrate, is used largely to harass hotel owners. It is unnecessary since The following steps must be adopted an adequate regulatory structure

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SM George, ‘Millions of missing girls: from fetal sexing to high technology sex selection in India’ (2006) 26(7) Prenatal Diagnosis 604.

Second National Commission on Labour, ‘Report of the National Commission on Labour’ (2002) .

S Jha, ‘Process Betrays the Spirit: Forest Rights Act in Bengal’ (2010) 45 Econ. & Pol. Weekly 24.

T Wu, ‘Network Neutrality, Broadband Discrimination’ (2003) 2 J. Telecomm. & High Tech. L. 141.

Vidhi Centre for Legal Policy, ‘Corporate Insolvency Regime in India: A Case for Reform’ (March 2014).

42 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA acknowledgements

The Vidhi Centre for Legal Policy would like to sincerely thank Aditya Ayachit AK Ganguli Dr. Anil Kakodkar Anirudh Nagar Justice (Retd.) AP Shah Arun Jaitley Asmita Basu Indrani Bagchi K Parasaran Karthik Ganesan Justice (Retd.) KN Basha Dr. Kristin van Zwieten Maninder Singh Mohan Parasaran Mohit Abraham Dr. MP Ram Mohan Nandish Vyas Lt. Col. Navdeep Singh Dr. PJ Nayak Justice (Retd.) Prabha Sridevan Col. R Balasubramaniam Rahul Jain Rahul Sharma Dr. Ranjit Roy Chaudhury Ruchira Gupta RV Anuradha Dr. Sabu George Sanjay Ghose Saurabh Bhattacharjee Dr. Shamnad Basheer Shrutipriya Dalmia Siddharth Varadarajan Sushant Mishra TK Viswanathan Vaibhav Chaturvedi Vikram Raghavan Yogesh Pai and several others, who wish to remain unnamed.

Without their guidance, research, expertise and ideas, this Briefing Book could not have been compiled. Errors, if any, are of course ours alone.

Thanks also to our office staff, Alok Palai and Kailash Pant for able secretarial assistance and the endless cups of tea and coffee which kept us going while preparing this Briefing Book.

A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY 43 afterword: implementation of suggested reforms

Suggestions for legal reforms made in this Briefing Book must be implemented through careful drafting of new law or amendments or repeal of existing provisions. We at Vidhi believe that five key steps must accompany legal drafting, irrespective of the area being legislated upon, in order to confront the challenges facing law-making today:

Ensuring Constitutionality: Provisions and laws are often drafted such that they are in conflict with the Constitution of India, or with relevant Supreme Court precedent. This makes litigation inevitable, where provisions are struck down after protracted judicial proceedings. This difficulty can be easily remedied by ensuring constitutionality at the time of drafting, not at the time of implementation, as is the case today.

Ensuring Coherence: Many laws are drafted without reference to or knowledge of other existing statutory enactments that cover a similar field. This leads to complications ranging from confusion and contradiction to the dilution of standards in specific instances. Cognizance of other relevant legislations at the time of drafting is essential for legislative coherence.

Ensuring Compliance: Another challenge facing law-making and reform in India is lack of compliance with international law. India is a party to several international instruments and is under an obligation to incorporate them into domestic law. However, Indian laws are often drafted in complete disregard of international law. It is thus necessary to ensure that the body of international law which India is obliged to comply with is understood while framing domestic legislation.

Ensuring Clarity: The endemic problem afflicting law-making in India is that of badly drafted legislation – provisions that are circular, contradictory, vague and unclear. This leads to deficient implementation and adverse judicial interpretations. There is a need to ensure that Indian laws are clear and specific in both form and substance.

Ensuring Contemporaneity: An increasingly globalised world gives us the opportunity to learn from the experiences of other similarly positioned countries. Foreign law and comparative domain expertise is being increasingly recognised as an important source of information. Indian law-making often does not benefit from progressive developments in other jurisdictions, and it is desirable that contemporary comparative developments are systematically factored into this process.

For more information on drafting work and other projects of the Vidhi Centre for Legal Policy, visit our website — www.vidhilegalpolicy.in or contact us at: Vidhi Centre for Legal Policy, D-21 Jangpura Extension, New Delhi – 110014. Phone: (011) 43102767

44 TOWARDS THE RULE OF LAW: 25 LEGAL REFORMS FOR INDIA A BRIEFING BOOK BY THE VIDHI CENTRE FOR LEGAL POLICY “Legal reforms are the basis for democratic evolution and change. The work undertaken by Vidhi in this Briefing Book can play an important role in the emergence of a strong government committed to good governance, fulfilling the expectations of the citizens of our country.”

- Dr. AS Ganguly, Member of Parliament, Rajya Sabha

“This Briefing Book provides a much-needed roadmap for legal reforms in the country, with a rare combination of wide-ranging topics with detailed and original research on each area of reform.”

- Mr. Sumit Bose, Former Finance Secretary, Government of India

Vidhi Centre for Legal Policy, D-21 Jangpura Extension, New Delhi – 110014.

Phone : (011) 43102767 Email : [email protected] Twitter : @VCLP_India