E-Commerce Taxation

By Benoy Sasi, Advocate, HC

16/07/2007

E-Commerce Taxation

(By Benoy Sasi, Advocate, High Court of Kerala)

The emergence of internet, the newest mode of technology changed the pattern and style of commerce. Shortly e-commerce means the whole gamut of commercial activities taking place in the cyber medium. The desired balance between the interest of the government and the tax payers has challenged the fundamental concepts of direct and indirect taxation.

In e-commerce geographical boundaries are irrelevant. The various issues of taxation raised by e-commerce is based on cross border transaction. The issues raised by e-commerce taxation are complete and the subject is also controversial in nature because it has created a serious conflict of interest between the developed and the developing nations. The Government of India is focusing to create a balance between economic growth and the generation of revenue in the Info Tech global environment.

It is a time to raise a question that, whether our Income Tax Act, 1961, is ready to take the challenge of taxing non-resident players of cross-border e-commerce?

Though the residence of a person and source of income are the two fundamental principles which confer territorial jurisdiction upon a taxing authority to impose income tax, e-commerce taxation in the environment of cross-border commerce, the application of the aforesaid principles may lead to double taxation of a person. For instance, a Web-site, based in a country, say USA, can do its entire business of trading in goods or securities on render services in a country say, India, without any physical presence in India. Banks, retailers, wholesalers brokers and even professionals such as doctors, lawyers and architects based in USA, are free to do their regular business or professional activities as the case may be in India, without any physical presence here.

A resident is taxable on his global income whereas a non-resident is taxable on income sourced in India. Since cross border transactions lead to double taxation, based on the principles of ‘residence’ and ‘source’ as aforesaid, the mechanism of Double Taxation Avoidance Agreements (DTAAs) has been evolved as principle of International taxation. DTAA's are governed by S.90 of the Income Tax Act.

It is one of the opinion, that the words 'accrue' and 'arise' in S.5 of the Income Tax Act are wide enough to tax enterprises operating web -sites from foreign lands, for the purpose of sale of goods or rendering services to consumers in India. S.9 of the Income Tax Act states the incomes which are deemed to accrue or arise in India.

In the case of professional connection, Supreme Court held in Barendra Prasad Ray & Ors v. Income Tax Officer (1981, 2 SCC 693) where the foreign counsel appeared with the Indian counsel, engaged by the Indian solicitors and argued the case on behalf of the client, Supreme Court that there was an indirect professional connection between the Indian solicitors and the non-resident counsel which could be said to be a “business connection” and thus the counsel had earned income for the work done in India within the meaning of S.9 of the Income Tax Act.

The system of taxation need to be equitable between all countries. When taking the two aspects on the basis of source based taxation and residence based taxation in e-commerce, it is easier to administer the residence based taxation than the source based taxation. But, if the residence-based tax principles are applied to e-commerce, developing countries stand to lose revenue because few of the high technology companies of developed nation will engage in e-commerce activities in developing countries while being a resident there. They will conduct business activities in developing countries while being permanently resident in developed world, with the medium of the internet facilities.

Considering the question, whether the conventional transaction can be used as the basis in the case of e-transactions, then the determination of an arm’s length price involving product previously distributed as tangibles and now as e-deliverables in the e-commerce environment, is a significant issue. Suppose a publisher in the US sold books electronically to the Indian consumer, directly through a website that is connected to a server in a low-tax jurisdiction. Here if it is a regular transaction, it may be possible to determine an arm’s length price for the product purchased by virtual distribution operation ie. server for resale in the importing country, based on the price previously paid by the independent distributors.

Generally, the payment received by the commercial provider of the limited duration digital product would be characterized as business profits. Fees for technical services, such as online technical documentation, trouble shooting information etc. would be in nature of tax deduction at source (TDS). Payment for web-based advertisement has been characterized as business profits. Income in the hands of professionals such as lawyers, doctors etc. providing advice to client via e-mail, video conferencing etc. would be in the nature of business profits.

Income from search and retrieval facilities of general online information and data has also been characterized as business profits. If a web-site hosts electronic catalogues of several merchants on its server which enable cyber consumers to place online orders, in consideration of a commission from merchants, such commission would be in the nature of business profits. In the case of online auction, the web site operator displays many items for purchase by auction. The user purchased these items directly from the owner thereof. The seller compensates the website operator with a percentage of the sales price or a flat fee. Such revenue is also characterized as business profits.

When the web site operator pays a content provider for the right to display his copy righted material, the income accruing to the content provider is in the nature of royalty. Subscriptions paid for availing services by the web access digital content including information, music albums, video games etc. for which the registered user pays a fixed periodic fee for access to the interaction site, is treated as business income. When the service provider offers space on its server for hosting the web sites, such a service provider does not obtain any right in the copy-right created by the developer of the content of the web site and the payment made for renting space on the server is considered as business income.

In the case of application hosting, a user who owns a perpetual license to use a software product, enters into a contract with a host entity and this entity loads the software in servers owned and operated by it. Here the charges incurred by this technical support is treated as business profit.

The internet allows free flow of digital products from anywhere to any where, which in this information age constitutes a large chunk of cross border e-commerce. Several countries realizing the inherent and practical difficulties of the task and accepting the power of the internet, on the negative side, online smuggling however, would be very tempting and easy due to the very nature of the internet and only a minimal effort of organizing payments from illegal channels is required.

Because of the explosion of the internet, companies are discovering that instead of spending millions of dollars and years installing complex software programs on their own computers to help automate their operations, they can pay companies to do it for them as a service. Customers then use the software with nothing more than a secure web browser and password. The trend is big, gaining momentum and large companies are embracing it ever rapidly.

To sum up, characterization of e-commerce payments and Indian position on intangibles have been a debatable subject.

To Bail out the Counsel

By T.M. Rajasekharan, Advocate, Kozhikkode

09/07/2007

To Bail out the Counsel

(By T.M. Rajasekharan, Advocate, Calicut)

Expressing solidarity over the plight of one of their members, the legal fraternity in Kerala became agitated and demanded action against the judicial officer concerned. The situation went up to the stage of advocates submitting a mass memorandum to the Hon’ble Chief Justice of India requesting his intervention. Ultimately whether and all these might culminate in much ado about nothing is a matter to be seen in future.

The decision of the Kerala High Court granting bail to Shri. Haridas P. Nair, the advocate concerned is reported in 2007 (2) KLT 632. Restricting these notes to some of the observations made by the Hon’ble Judge in his judgment, I would like to point out certain legal aspects that deserve study and comment.

Paragraph 4 of the judgment reads “.....It is to be noted, as submitted by the learned counsel for the petitioner, that no case is registered against the police constables who were in charge of the custody of the third accused in Crime 3 of 2007 in connection with his escape from judicial custody....” If at all any case was to be registered against the police constables in charge of the said 3rd accused, it would be under S.223 of the Indian Penal Code. But S.223 I.P.C. is attracted only if they “negligently suffer such person to escape”. If the escape from custody is despite diligence of the police officials, no offence is made out. Hence the constables could not have been charged in the absence of any negligence on their part. Every escape cannot attract S.223 I.P.C. The constables could at the best be subjected to disciplinary action for dereliction of duty and nothing more.

The bird flew away from the cage. The caretakers suspected the counsel and the suspicion appeared to be reasonably correct from certain facts like telephone conversation between the counsel and his client. There ends the matter as far as the policemen are concerned. In as much as the ingredients of S.223 I.P.C are not made out, arraying the police constables in the list of accused did not arise as the allegations against the advocate are distinct and separate.

However, how far is it correct that bail should as a rule be granted to the accused, if other persons involved in the offence are not proceeded against?

S.437 or S.439 Cr.P.C. does not envisage such a notion. The person in the instant case was charged with non-bailable offences involving administration of justice. Should the learned magistrate probe into “clinching circumstances” that the accused was involved in the offence at that stage, is the question to be considered. Judicial decisions on the point are unanimous in that bail in a non-bailable offence is not a matter of right, but of the discretion of the court.

Much is said about the action of the learned magistrate not granting bail. But curiously the learned Sessions Judges’ inaction in the matter, forcing the aggrieved party to move the Hon’ble High Court appears to have been ignored. Had the Sessions Court acted in time and corrected the situation by granting bail the agony of the advocate concerned could have been reduced considerably.

Yet unfortunate it is that a member of the legal profession had to be confined in judicial custody for about a week. Even if he had any covert or overt hand in the escape of the prisoner, he was entitled to bail on the normal norms prescribed by law as his attendance for investigation, inquiry or trial is practically guaranteed and he was not capable of meddling with the investigation. As the Hon’ble Judge has pointed out, “Normally, an advocate who appears for an accused would not dare to be a party to the escape of the accused”. Hence allegations to the contrary could have been subjected to more detailed scrutiny by the authorities concerned even at the stage of registration of the F.I.R.

Most condemnable act on the side of the police was the seizure of the robs of the Advocate. The criticism is yet to be focused on this aspect.

The Indian Constitution — Some Creative Mutations Mooted

By V.R. Krishna Iyer, Judge Supreme Court

09/07/2007

The Indian Constitution — Some Creative Mutations Mooted

(By Justice V.R. Krishna Iyer)

More than a semi-centennial span has passed and several amendments inscribed making our long and complicated Constitution an arcane, logomachic and even obscurantist instrument. This supreme deed is now a lawyer’s bizarre paradise and judges’ interpretive and authoritarian pronouncement, alienating the people, including intellectuals, from its meaning. The investment of powers, fundamental values and vision are often a riddle for the common man facilitation arbitrary executive and legislative action.

Everything that could be thought of or raked up has been used to weaken confidence in the Government, has been used to prove that Ministers are incompetent and to weaken their confidence in themselves, to make the Army distrust the backing it is getting from the civil power, to make the workmen lose confidence in the weapons they are striving so hard to make, to present the Government as a set of nonentities over whom the Prime Minister towers, and then to undermine him in his own heart, and, if possible, before the eyes of the nation. All this poured out by cable and radio to all parts of the world, to the distress of all our friends and to the delight of all our foes! I am in favour of this freedom, which no other country would use, or dare to use in times of mortal peril such as those through which we are passing.

Arbitration by retired judges was statutorily conceived as a process of reducing court docket arrears which were shocking and dilatory. But the arbitral remedy aggravated the malady, the arbitrators arbitrarily charging Rs.10,000/- to fifty thousand per day, (of course with moderation in some cases) each day consisting of two or three hours work and the proceedings being adjournment-merry to the lucrative pleasure of the participating judges and advocates. The judges formally retire but manage to occupy membership of strange commissions doing recommendations which are often ignored by government. The Bias Commission (I cannot sure of the exact name) where judges retired from every conceivable Commission occupy without limitation of time, drawing high salary and doing little work.

A judge, great while on the Bench and became a celebrity on retirement, making professional income by way of consultation from the party on retirement. He took fees for consultation and later became an arbitrator in the same matter, took fees and gave his verdict in favour of the same party! This is prima facie the limit of misconduct. But horrendous is the refusal of the Supreme Court which declined to hear the misconduct charge! Arbitration business needs new moral principles with statutory regulations and conciliation alternatives lest the people lose credibility in this quasi-judicial operation. Imagine how, some judges never wrote judgements or took years to produce one. Whom to blame when they are not accountable with punitive sanctions! Why judges only? MPs draw heavy T.A. large salaries and perks and walk out under curious, eccentric pretexts! Constitutional instrumentalities are slowly suffering moral decadence.

The Founding Fathers had expressed certain democratic views about the governance of the country. But in practice their perceptions and expression of principles have been ignored by the Executive and their ideology has been openly defied even by the judiciary. Their concept of representative government has poor purchase and Nehru, Ambedkar, Rajendraprasad, Patel and other leading cadres have ceased to possess relevance. The weak and the underprivileged who had great expectations from swaraj have no voice in the rule of the Republic. Winston Churchill, in the British House of Commons, opposing the basics of the Indian Independence Act, articulated his hostility to handing over power to rogues, rascals and freebooters. This was a vicious description of the patriotic Indian leaders, but today, sixty years, after skeptical nationalists with integrity and humanism wonder whether that description is being fulfilled by the present generation of Indians in power. The Preamble to the Constitution speaks of a Socialist, Secular, and Democratic Republic. Alas! Socialism has been burked and Yankee imperialism is alleged to influence our foreign policy and our internal administration and ‘Westoxicated’ our culture through exotic investments by tycoons. The written text of the Founding Deed speaks of secularism and socio-economic justice to the masses and classes. But no more secular classes, only lunatic casteism and religious rivalry competitive pluralism. Democracy highlighted in the Preamble has been de facto liquidated and only the rich can afford to contest elections, only communal forces and corrupt methodologies can nominate candidates or shape policies. Rarely, if ever, has an elected candidate secured fifty one percent of the Constituency’s voter totality. A small percentage of the people in the voter’s list can buy and become the winner candidate. Money matters in the elections and communalism too, making the vast majority in the constituency a mockery. Governance by a Coalition renders the vice of the people a terrible travesty of Abraham Lincoln’s definition of Government, by the people, of the people and for the people. The judiciary has often denied the imperativeness of misplaced Article 32 as a fundamental right and the expression ‘class’ has been substituted by counterfeit caste. The poor have been denied human rights and India’s billions have suffered power eclipse. The billionaires, Indian and foreign, have control over the three instrumentalities of Government. For fifty years or so the judiciary, which has great authority, used to be appointed by the President of India on the recommendation of the Prime Minister who ordinarily consults the Chief Justice of India. But now, in open defiance of Ambedkar’s views in the Constituent Assembly, a few judges of the Supreme Court, composing a Constitution Bench, by a majority seized power to appoint judges through a collegium without any warrant in the Constitution a weak executive and a divided parliament have allowed this usurpation to pass muster. The performance of the alleged collegium is often extraordinarily inefficient on the administrative side.

Every generation is a new nation, said Ambedkar, quoting Jefferson, in the Constituent Assembly. Now let us see whether any substantial mutation may be mooted to make the Constitution truly socialist, secular and democratic.

Corruption, in its various dimensions, has consumed the country’s integrity and ability. The Parliament with the exception of an excellent Speaker and exceedingly capable members and ministers, only some of them, is a shameful picture of jungle behaviour and absence of dignity and high values or powerful debate. One wonders whether the berserk behaviour of Parliament exasperating even the Hon’ble Speaker, rarely discuss legislative bills of importance and issues of national concern. Oh! The pity of it. As we see the two Houses in functional futility we remember the great Churchill in the Commons.

Indeed, many members have criminal antecedents and even ministers are not above board. But are they accountable to the people or is there a right of recall? The Cabinet, with its executive supremacy is often incompetent to understand legislation or national inquest. Some MPs could be purchased with the result the rich dominate and the rule of unlaw, with undefined privileges, trample over the rule of life. The judiciary, which is the glory of the nation, is appointed on the fancy of a collegium. Some of them have a dubious background and it is openly discussed that a percentage of them, though small, is guilty of arrogance, incompetence and delinquency. For these reasons some fundamental changes are a must, if India is to be a brave new Bharat with swaraj secured under Mahatma Gandhi’s leadership is to survive.

Delay in Administration of Criminal Justice

By A.P.J. Abdul Kalam, His Excellency, The President of India

02/07/2007

Delay in Administration of Criminal Justice*

(By A.P.J. Abdul Kalam, His Excellency, The President of India)

Dimensions of criminal justice delivery system

I am extremely happy to be with you all on the occasion of the National Seminar on “Delay in Administration of Criminal Justice” marking the conclusion of the golden jubilee celebrations of the Indian Law Institute. I am particularly happy that the subject “Delay in Administration of Criminal Justice” has been chosen to be the topic of the seminar. The theme is so topical and I sincerely hope that the deliberations during the seminar would throw up practical solutions to the extremely serious problem of delay in administration of criminal justice that is plaguing our nation. I am reminded of what our great legal luminary Justice Shri V.R. Krishna Iyer once said, “Man lives in the short run, but litigation lives in the long run”. How true! I would say that it literally crawls in the long run. Dispensation of justice becomes a mockery if it gets delayed and becomes long-drawn-out, making it patently unjust and unfair to all concerned.

I have visited all the States and Union Territories of our country. During the discussions with many citizens from various walks of life, they have expressed a very important point about criminal justice, which I would like to share with you, “If real criminals in our society are left without punishment for many years, because of delay in criminal justice for various reasons, it will indeed result in multiplication of number of people taking to criminal acts.” Now I would like to discuss on the topic “Dimensions of Criminal Justice Delivery System”.

Research—Teaching—Research

Since this seminar is conducted as part of golden jubilee celebrations of the Indian Law Institute, I would like to stress on the importance of research. Good teaching emanates from research. The teachers’ love for research and their experience in research are vital for the growth of any institution. Any institution is judged by the level and extent of the research work it accomplishes. This sets in a regenerative cycle of excellence. Experience of research leads to quality teaching and quality teaching imparted to the young in turn enriches the research.

Suggestions for research by Indian Law Institute

The Indian Law Institute can take up 20 criminal cases decided by the Supreme Court, 40 cases decided by the High Courts and 100 cases decided by District Courts for research. They can go into the case from the time of the crime committed till the final judgment and study with reference to the following aspects:

(a) Identify the time of reporting of the crime from the site and the gaps, if any, between the occurrence and reporting.

(b) The time when the FIR was filed and delay in filing of FIR, if any, with causes for the delay.

(d) Dynamics of advocates in obtaining adjournments and the impact of public interest litigations.

(e) Time delay in leading the witnesses and the arguments by the prosecution and defence.

(f) Time delay in judicial process leading to final delivery of judgments.

Research findings of these cases, I am sure will definitely provide an insight into multiple causes of delay and suggest methods for procedural and legal provisions needed to be modified in our criminal justice system. Now let me discuss how a crime gets manifested.

Manifestation of crime

Firstly, historically conditioned political problems simmer for a long time and are remaining unresolved. At this stage, certain foreign elements also enter into the fray and encourage violence to take advantage of the situation. Over a period of time, many of these activities transform into various forms of crimes ranging from extortion, abduction, drug trafficking, arms trade and brutal killing and massive attack on innocent people. Second type starts with economic and socially conditioned crimes such as smuggling, illicit liquor, land grabbing which over a period of time become organised activities by major groups. These powerful groups enter into various economic activities such as real estate, films and various other financial investments and business. Over a period of time, they are also able to obtain political patronage through their money power and muscle power. Thirdly, business rivalries between competitors also lead to obtaining the services of criminal elements. Over a period of time these activities develop a nexus between business world and criminal world. Fourthly, political competition for electoral or various other forms of alliances to seek power uses the money power and criminal elements. They resort to financial and other forms of servicing by the criminal elements. Over the period, all the four elements develop various forms of linkages and cause societal unrest due to the invisible nexus between and among them. In this process all forms of administrative machinery are also drawn into these problems knowingly or unknowingly. It is against this complex background we need to address the subject of criminal justice in India today.

Suggested solution

I have thought about it several times. Some people suggest that the solutions are in creating good governance. Many children ask me, when can I see a corruption free, peaceful and safe India? I have been telling them that they should transform themselves and to a certain extent attempt to transform their parents and families if they are deviant through their love and affection. But how long can they wait? Will the situation survive till they grow up? Therefore I was thinking and thinking, I found what appear to be some basic facts:

(a) Those who are in power and are enjoying power in the above context, by themselves do not have any reason to change the system. They will even resist changes.

(b) Coming to ordinary powerless citizens by their very nature of lives, they cannot do much, because the very power system will punish them if they raise their voice. Therefore, generally citizens are resigned to their fate. When occasionally few young whistle-blowers who are keen to correct the system bring out the facts, the powerful nexus of criminal elements systematically eliminates them. Therefore what is the solution?

Those who are in the powerful system and have power but think that it is wrongly used should now come out and be ready to face the wrath of others. They have to assert that the system has to be changed in the interest of one billion people of the nation. It is not enough to have one or two like this, we have to mobilise hundreds and thousands of them at various levels as genuine societal reformers. It has to come from political system, bureaucratic system, judicial system, police system and various other government and non-government agencies that wield power should be ready to expose the criminal process in power and ready to fight it and bring out a fundamental difference to the common man by effecting systemic changes at all levels. It may need lot of sacrifice and I am sure the people who sacrifice today will be remembered by the posterity for centuries to come. This is the new satyagraha which is required for the 21st century India for the sake of our youth, who rightly deserve a prosperous, peaceful and safe India well before 2020. I am sure we can definitely achieve this if all of us collectively work together. Now let me discuss some details of justice delivery process.

Justice delivery process

When I think of justice delivery system following event comes to my mind. The criminal justice system has the following components— the affected person, the accused, police, witnesses, lawyers and multi-levels of judiciary apart from the influence of the society. Many times, the affected person himself or herself is the cause of the delay in reporting of the crime. If the reporting is with mala fide intentions in the first place, the affected person cannot expect sympathy for not getting justice in time. However, in certain cases, particularly in respect of women the reporting takes place much after the occurrence of the crime. This is probably due to the fear of defamation of the aggrieved party. In such cases, there is a need for sympathetic treatment and the complaint cannot be ignored because of the delay. It should be acted upon immediately even though the accused might have taken many actions to destroy the evidence. In view of this, police may have to act faster to prevent further destruction of evidence. Let us discuss the crime situation prevalent in the country.

Dynamics of crime

I would like to share with you some of the immediate concerns which I have been getting through the interaction with the people, e-mails and from other sources. The women in the country generally feel that they are not safe in certain localities in certain States. In addition, there are a number of incidences of violence against women in many forms. Kidnapping, abduction and extortion have become a frequently occurring serious problem in certain States. Inter-State gangs launch themselves and conduct daylight robbery and mercenary action. Problem of alienation has led to terrorism, and naxalism has spread to certain regions. Several methods are found by individuals and groups to create large-scale scams and frauds in different parts of the country. Even educational institutions and medical institutions are not spared, like leakage of question papers. Every election witnesses episodes of criminal attacks on candidates, booth-capturing, tampering with ballot boxes and methods to disturb the democratic election process. Of course, the situation is gradually improving. No one wants to be a witness due to the sense of insecurity and lack of confidence in the system. The jurisdiction issue many times results in not filing the FIR in time and gives the opportunity to the criminal to destroy all the evidence in the interim period. For ensuring timely filing of FIR and urgent action for apprehending the criminal, I would suggest the following action by the police.

Police station is the place of action

First of all every Station House Officer (SHO) of the police station should be instructed that he or she is bound to register the complaint immediately. Every police station should be provided with a computer for registration of complaints and e-mail address of the SHO should be published. In case nobody is registering the complaint, the complainant should have the option to send the complaint by e-mail to the officer concerned endorsing a copy of the complaint to the higher authorities whose e-mail id should also be widely published. Every complainant should get a receipt for the complaint launched with intimation to higher authorities. Procedures for registering of complaints should be widely publicised in leading newspapers and electronic media. The higher authorities should be apprised of the progress of the case by entering the status report in the police network. It must be made mandatory for all the police officers charged with filing of complaints to give an action-taken report periodically within ten days to the superior officers. All police officers should abstain from pressurising the complainant to withdraw or compromise the complaint. If such circumstances are found, the higher authorities should listen to the complainant and take action against the erring police officers.

Technology for transparency

Now, with the use of technology, we have to ensure that the investigation carried out by the police is fair and transparent. To ensure manipulation of evidence by some of the erring officials, it is necessary to bring all aspects of the crime as a visual data on a computer file so that continuous traceability of the person involved in the investigation process is available, so that any abnormal action can be traced to an individual. This will act as a deterrent for biased individuals to take wrong action. Also, the police have to be given a clear time-frame for filing of the charge-sheet. In spite of all these actions, if it is detected that the police had colluded with the criminal and had attempted to manipulate the evidence against the accused, three-pronged action is necessary to deal with the offence of the police. Firstly, there should be an impartial departmental enquiry with exemplary punishment if the manipulation is established. Secondly, there should be a parallel criminal court action against the erring officials and thirdly, the affected person who had suffered due to the collusion of the police should be compensated for inflicting additional suffering. Such exemplary actions against the erring individuals will be an important deterrent for other officials while dealing with similar situations. As an additional precaution and to create societal pressure, there should be a bar on the recruitment of even the relatives of the erring officials in the police force for a specific period.

Time-bound justice delivery system

Another element which contributes to the delay in criminal justice is the seeking of never-ending adjournments by both side lawyers and courts acceding to such requests. To deliver speedy criminal justice, it is essential to have a time-bound mechanism for hearing, arguing, deciding including appeals of the cases. A law can be enacted prescribing an upper limit of time by which a criminal case has to be finally decided. This could be a maximum of six months or one year depending upon the complexity of the crime. All the stakeholders namely the accused, police, lawyers, witnesses, judges at various levels have all got to become accountable for finalising the case before the prescribed time-limit. For any deviation from the limit, they must assign reasons for non-compliance in writing.

Hostile witnesses

One more issue which crops up frequently is the witnesses turning hostile. They declare the truth at the commencement of the case and later give opposite evidence in the court or they refuse to attend the court. This arises either due to the fear of the accused and the police or due to inducements of different types. A strict mechanism has to be evolved for preventing the witness turning hostile. Also, such action should attract exemplary punishment as a crime against society.

Protecting the rule of law

The rule of law is protected only when there is a predictable legal system that is readily accessible and responds to the needs and problems of the citizens in a fair and non-discriminatory manner. The police, the prosecution, the Prisons Department and the judiciary need to introspect and review their own processes to rectify ills in the system caused by their own malfunctioning. It would be a good idea to engage young law students to identify factors which impede efficient and effective administration of criminal justice. They could examine good practices of other countries and assess the feasibility, appropriateness and suitability of their application to Indian conditions. Use of modern technology to improve upon the efficiency of the investigative and prosecution wing needs to be given special attention. A competent team of prosecutors and specialised investigation can vastly improve the performance of our criminal justice machinery. Equally significant is the fact that there is little hope for justice when people who witness a crime do not co-operate with the investigation. Lawyers should also remember that while it is natural on their part to work towards winning their case, litigation should not be reduced to a mere trade at the cost of basic principles of ethics. This is an obligation that they owe to the society and they must live up to it.

Conclusion: Righteousness and peace

Now I would like to share with you a beautiful divine hymn about righteousness. It reads as follows:

“Where there is righteousness in the heart, there is beauty in the character.

When there is beauty in the character, there is harmony in the home.

When there is harmony in the home, there is order in the nation.

When there is order in the nation, there is peace in the world.”

It is a beautiful connectivity between heart, character, nation and the world. In a society we have to build righteousness among all its constituents. For the society as a whole to be righteous we need creation of righteousness in family, righteousness in education, righteousness in service, righteousness in career, righteousness in business and industry, righteousness in civil administration, righteousness in politics, righteousness in Government, righteousness in law and order, righteousness in justice. A righteous society will eventually become a crime free society. While we are working out several methods for administering speedy criminal justice, we have to eventually work for a crime free, peaceful, harmonious and happy society.

With these words, I inaugurate the National Seminar on Delay in Administration of Criminal Justice and my best wishes to all the participants of this seminar and success in their mission of reducing the delay in administration of criminal justice to the needy.

May God bless you.

*Address at the National Seminar on Delay in the Administration of Criminal Justice, organised by the Indian Law Institute, New Delhi.

Administration of Justice on Fast Track

By Dr. Manmohan Singh, His Excellency, The Prime Minister of India

02/07/2007

Administration of Justice on Fast Track*

(By Dr. Manmohan Singh, His Excellency, The Prime Minister of India)

I feel privileged to be once again at this very important conference of Chief Ministers and Chief Justices of our High Courts. These are important and useful opportunities for representatives of the executive, the legislature and the judiciary to interact, both formally and informally. Apart from discussing various issues on the agenda, I hope each one of you will use this opportunity to gain a better understanding and appreciation of the others’ concerns and preoccupations. In this way this conference would be an important asset in mutual comprehension. Unless the three wings of the State understand each other better, they will not be able to function effectively in the interests of our nation and our people at large. The three wings have well-defined roles and functions under our Constitution. However, all the wings have a common goal which is the fulfilment of the hopes of the Founding Fathers of our Republic and as spelt out so clearly in our magnificent Constitution. Therefore, conferences such as these give us an opportunity to discuss contemporary issues which have a bearing on the organs of the State, particularly those issues where the interface between the organs is large.

In last year’s conference I had an opportunity to share some of my views on judicial reforms and e-governance. Our Government accords high priority to judicial reforms. The National Common Minimum Programme envisages judicial and legal reforms as one of the thrust areas in promoting good governance. In that direction, my Government has already undertaken certain initiatives. It has amended the procedural laws with a view to improving the criminal justice system. Plea bargaining has been introduced in the Criminal Procedure Code. I must place on record here my very sincere appreciation of the fulsome support and co-operation our Government has received from the leadership of our judiciary in this regard. Both former Chief Justices of the Supreme Court and the present Chief Justice have shown great commitment to judicial reform and I thank them for this.

Our Government places special emphasis on professionalism in investigation and prosecution as well as providing protection to our citizens, particularly women, against arbitrary harassment from the police. There is a Bill now before Parliament that seeks to amend the Criminal Procedure Code to deal with the problem of witnesses turning hostile. It also seeks to provide legal rights and compensation to victims. It will also facilitate the use of modern techniques in investigation. The Bill will make summary trial mandatory in cases with imprisonment up to 3 years.

There are a few issues, which have been flagged for this conference. The most important issue is that of pendency and the growing backlog of cases in courts. In spite of efforts having been made and being made, and support provided by the Government, it is a matter of concern that there are huge arrears of more than 2 1/2 crores of cases in courts. Over 2/3rd of these are criminal cases. While there has been some progress in reducing pendency in superior courts, the position in subordinate courts has hardly shown any improvement. I have been told that the number of fresh cases is generally more than the number disposed of in a given period of time. Unless the rate of disposal improves, the backlog would keep mounting.

Therefore, there is an urgent need to improve the throughput of cases.

We are a country—we take pride in being governed by the rule of law. If the rule of law has to become a living reality, these delays and these arrears have to be effectively curbed.

An important factor causing pendency is the number of vacancies that presently remain unfilled in the subordinate judiciary. This is one area where the States and the High Courts have to come forward and execute and implement a time-bound exercise for filling up vacancies. I am sure once the unfilled vacancies are filled up there would definitely be reduction in the arrears.

I would also like the learned judges to consider another suggestion for increasing the disposal of cases. Courts may consider having more than one shift. You are also aware of the Government’s interest in speeding up the process of computerisation and e-enabling our courts. A massive exercise has been taken up to computerise all the district and subordinate courts of the country, linking them with the highest court. The first phase of this exercise is to be implemented very soon. I sincerely hope computerisation will help our courts reduce pendency.

Fast Track Courts are another answer to dealing with the problem of arrears. Though the initial scheme of fast track courts was to end in the year 2005, our Government has extended it to the year 2010, providing Central support to the States. The Government has provided Rs. 509 crores for this purpose. I have been, however, informed that receipt of utilisation reports from the States in this regard is not very satisfactory and hence, there are delays in disbursal. I sincerely hope the State Governments will take note of this and speed up procedures to ensure smooth flow of Central assistance for this very important purpose.

Fast Track Courts have reportedly established a good track record. Your conference theme is Administration of Justice on a Fast Track. I hope your deliberations will help further strengthen this track in our justice delivery system. I look forward to learning about your deliberations. I am sure that under the leadership of the Hon’ble Chief Justice of India, Justice Shri K.G. Balakrishnan, we will see the issues raised at this conference being addressed by our highest judiciary. I know that Justice Balakrishnan is committed to the reform and modernisation of our judiciary. During his term of office, I sincerely hope and trust, many new initiatives will undoubtedly be taken to provide relief to the litigants and the faith of the people in judiciary will be reinforced and strengthened.

I am happy to say that our Government has been able to extend support to the judiciary by investing more in the development of judicial infrastructure. As my colleague Shri Bhardwaj mentioned, a ten-year perspective plan has also been drawn up for construction of court buildings and residential accommodation for judges. This plan is based on inputs provided by the State Governments. We are also discussing this matter with the Planning Commission for deciding the outlays for this purpose during the Eleventh Plan.

Another important issue that requires your attention is the setting up of Family Courts. I am informed that in a number of States, Family Courts have not yet been set up in accordance with the provisions of the Family Courts Act, 1984. I sincerely hope these Family Courts will be set up at the earliest.

I do sincerely believe that the judiciary, the executive and the legislature have an obligation both to our Constitution and to our people, to work in harmony. Each one of these organs of the State have an important and vital role to play in improving the welfare and well-being of our people. Each one of the organs have their constitutionally assigned roles and responsibilities, and these must be discharged in all honesty. Each organ must respect the roles and functions of the other. Powers accorded to each organ must be exercised cautiously.

In the context of judicial reform, the primary obligation is to enforce the rule of law, uphold the Constitution and enforce the discharge of obligations by any authority of the State. This confers enormous powers on our judiciary, rightly so. But at the same time it also involves enormous responsibility—in the exercise of these powers. Courts have played a salutary and corrective role in innumerable instances. They are highly respected by our people for that. At the same time, the dividing line between judicial activism and judicial overreach is a thin one. As an example, compelling action by authorities of the State through the power of mandamus is an inherent power vested in the judiciary. However, substituting mandamus with a takeover of the functions of another organ may, at times, become a case of overreach. These are all delicate issues which need to be addressed cautiously. All organs, including the judiciary, must ensure that the dividing lines between them are not breached. This makes for a harmonious functioning.

So is the case with public interest litigation. PILs have great utility in initiating corrective action. At the same time, PILs cannot become vehicles for settling political or other scores. We need standards and benchmarks for screening PILs so that only genuine PILs with a justiciable cause of action based on judicially manageable standards are taken up. This will also ensure consistency in judicial pronouncements. The Supreme Court could take the lead in framing rules in this regard.

Conferences like these can play a very important role in helping us understand each other better and work together in the discharge of our respective duties. I hope it is in this spirit that these proceedings will be conducted. I wish you all success in your endeavour. I thank you.

* The Prime Minister, inaugurated the Conference of Chief Ministers and Chief Justices of High Courts on Administration of Justice on Fast Track on 8-4-2007. The Chief Justice of India, Hon’ble Mr. Justice K.G. Balakrishnan, Justices of the Supreme Court, the Union Minister for Law and Justice, Mr. H.R. Bhardwaj, Minister of State for Law and Justice, Mr. Venkatapathy, Chief Justices of the High Courts, Chief Ministers of the States were among the dignitaries who participated in the function.