Litigation

Court system

What is the structure of the civil court system?

The structure of civil courts in India is pyramidal. The Supreme Court of India is the apex court exercising appellate jurisdiction. Next in hierarchy are the high courts established in different states and union territories of India.

With the exception of five high courts (Mumbai, Delhi, Kolkata, Chennai and Himachal Pradesh) that exercise original jurisdiction, all other high courts exercise appellate jurisdiction over district courts and other subordinate courts established in different districts.

Jurisdiction of courts is based on several factors, including subject matter territorial and pecuniary factors. Specialised courts and tribunals have been constituted under certain special laws that alone have jurisdiction to decide matters pertaining to specific subject matter. For example, family courts have been established to entertain matrimonial and custodial disputes; consumer forums have been established at various levels to entertain complaints under the Consumer Protection Act 1986; the National Company Law Tribunal and the National Company Law Appellate Tribunal have been constituted to deal with all cases arising out of the Companies Act 2013 as well as the Insolvency and Bankruptcy Code 2016; the National Green Tribunal has been constituted to deal with all civil cases relating to environmental issues. Besides subject matter, there is further subdivision between courts on the basis of the territorial limits of jurisdiction and the value of the claim.

Ordinarily, appeals from district courts lie before the high court in the same state and appeals from the high courts lie before the Supreme Court of India.

A bench of judges in the Supreme Court of India usually comprises two judges in ordinary cases with the exception of larger benches being constituted for identified cases. In the high courts, the bench usually comprises a single judge or a division bench of two judges. All lower court benches comprise a single judge except for the Presidency Small Causes Court, where the division bench hears the appeal from the trial court.

In 2015, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 was enacted, under which commercial courts at the district and High Court levels were constituted to adjudicate disputes classified as ‘commercial disputes’.

Judges and juries

What is the role of the judge and the jury in civil proceedings?

Judges in Indian courts play an inquisitorial role in deciding cases as they actively conduct civil and criminal proceedings, consider arguments being advanced, appreciate oral and documentary evidence, apply and interpret applicable law and pass judgments. The jury system is not in practice in India except to adjudicate matrimonial disputes in the Parsi community.

Although the judiciary has seen improvement in terms of gender and regional diversity, the judicial system is still grappling with the problem of shortage of judges and the low number of female judges across the courts in India.

Judges of the Supreme Court and high courts are appointed by the President of India under articles 124(2) and 217 of the Constitution. The President is required to hold consultations with judges of the Supreme Court and of the high courts as he may deem necessary for this purpose.

All appointments of judges to courts lower than the high court are carried out under the provisions of articles 233 to 237 of the Constitution. The high court of a state may recommend an individual to be appointed as a judge of a district court. Alternatively, judges of the district and subordinate courts may also be appointed from the lower judiciary.

Limitation issues

What are the time limits for bringing civil claims?

The time limits for bringing civil claims is prescribed under the Indian Limitation Act 1963. Parties are not at liberty to suspend time limits prescribed under the Indian Limitation Act 1963.

Depending on the nature of relief being sought, different periods of limitation are prescribed for different kinds of civil actions. For example, the period of limitation for instituting civil suits for compensation for breach of contract is three years from the date when the contract was breached and the period of limitation for an action to recover possession of immovable property is 12 years. Besides providing a comprehensive schedule for the different periods of limitation prescribed for various civil actions, the Indian Limitation Act also contains specific provisions for exclusion of a certain period for calculating the period of limitation, such as time spent in pursuing proceedings in a wrong court, admission of liability giving rise to a fresh period of limitation, etc.

In addition to the Indian Limitation Act 1963, specialised statutes and procedural laws provide for the period of limitation for preferring an appeal or filing applications for review, revision, etc. Ordinarily, any delay in bringing an action under these statutes is condonable on sufficient cause being shown. However, any delay under the Indian Limitation Act 1963 in respect of suits cannot be condoned by courts.

Pertinently, as in the case of all civil actions in India, the Indian Limitation Act 1963 has also been made applicable to the Insolvency and Bankruptcy Code 2016. Therefore, a time-barred debt cannot form the basis for initiation of insolvency of a company, a firm or an individual.

Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

The most common pre-action consideration found in several laws in India is issuance of statutory notices as a mandatory requirement to be fulfilled prior to initiating proceedings. For example, under the Insolvency and Bankruptcy Code 2016, an operational creditor is required to serve a notice of demand on the debtor as a mandatory precondition to filing an application for insolvency; the Code of Civil Procedure 1908 contemplates mandatory notices to be served prior to initiating a suit against the government or a society.

As such, there is no mechanism in place for pre-action exchange of documents, pre-action disclosure orders, etc.

Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

Ordinarily, civil proceedings are deemed to commence on the day when claim documents are filed before a court or tribunal. Depending on the procedure of the concerned court or tribunal, an adverse party is either required to be intimated of the action by service of the claim documents prior to lodging of the claim; or after lodging of the claim but before a hearing. In certain exceptional circumstances, Courts and tribunals also conduct ex parte hearings. Particularly for suits, as a matter of procedure, after a suit has been instituted, summons are issued by the court to all the defendants.

As regards capacity to handle cases and timely listing of disputes, although various courts and tribunals have been set up to handle the ever-increasing caseload, the Indian judiciary continues to grapple with the problem of a high number of pending cases.

The legislature and government have attempted to enact several laws to ease the capacity issues being faced by courts in India, including encouraging alternate dispute resolution mechanism, increased appointment of judges, constitution of specialised tribunals, implementing fast-track mechanisms, etc.

Timetable

What is the typical procedure and timetable for a civil claim?

Under the Code of Civil Procedure 1908, the following procedure is applicable to all civil suits:

  • a suit is instituted by filing of a plaint by the plaintiff;
  • thereafter, summons are issued to the defendants. On receipt of summons, the defendant, if he or she desires to defend the suit, files a response by way of a written statement within 120 days of receipt of summons. In suits falling in the ‘commercial’ category, delay beyond 120 days in filing a written statement cannot be condoned by the court. In all other civil suits, such delay can be condoned on sufficient cause being shown;
  • after the written statement is filed, the parties enter into discovery and inspection of documents. On completion of discovery, the court frames issues or points for determination;
  • after framing of issues, trial in the suit commences where, inter alia, evidence, by way of documents and witnesses is led and witnesses are cross-examined. The trial of the suit is conducted in accordance with rules of civil procedure and evidence;
  • after conclusion of trial, a final hearing of the suit is conducted before the court, which then passes a judgment and subsequently a decree; and
  • a party aggrieved by the judgment of the court can challenge the same in appeal before a higher court. Usually, there are two levels of appeals available.

In addition to the above, civil procedure in India also provides for suits where summary judgments can be delivered by the court only on the basis of documents. Additionally, in suits falling in the ‘commercial’ category, the relevant rules provide for much shorter and rigid timelines for the aforementioned steps.

At the time of institution of the suit or any time thereafter, a party can also file an interim application seeking interim protection from the court. Such interim protections can be in the form of injunctions, attachment of property, and deposit of amounts in court, etc. An interim application can be filed along with the plaint. The adverse party is entitled to file its reply to such an interim application. After the filings are complete, the court conducts a hearing of the interim application and subsequently passes an order. Interim applications are heard simultaneously with the main suit. Interim orders passed by courts are typically appealable and, in most cases, there are two appeals available.

Case management

Can the parties control the procedure and the timetable?

The procedure and the timetable is as provided under the relevant laws and the parties cannot control the same.

Evidence - documents

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

Yes, during the pendency of trial, parties are required to preserve documentary and other evidence that they intend to rely upon. The general rule is that a party that intends to rely upon a document is bound to produce the same, share a copy with the adverse party and also make the original available for inspection.

Evidence - privilege

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

The concept of legal privilege is contained in sections 126 to 129 of the Indian Evidence Act 1872. Indian law primarily stipulates that no barrister, attorney or pleader shall (without his or her client’s express consent) disclose any communications made to him or her in the course of or for the purpose of his or her employment. The aforementioned obligation is also applicable in respect of the contents and conditions of the document that an attorney, barrister or pleader becomes acquainted with in the course of, or for the purpose of, his or her professional employment. In fact, these obligations continue even after the employment has ceased. Pertinently, the Bar Council of India Rules also specifically prohibit an advocate from breaching obligations of legal privilege as contained in the Indian Evidence Act 1872.

The only exception to the aforementioned obligation is in respect of communication made in furtherance of an illegal purpose or in respect of any communication pertaining to a fact noticed after commencement of employment that shows that any crime or fraud has been committed since the commencement of the employment of the attorney, pleader, etc.

The necessary corollary of the aforementioned obligation of an advocate can be found in section 129 of the Indian Evidence Act, which protects a client from being compelled to disclose to court any confidential communication with his or her legal adviser, unless such client offers to act as a witness .

Nevertheless, advice from an in-house lawyer (whether local or foreign) is not privileged. This is so because under the applicable provisions of the Bar Council of India rules, a person who is a full-time, salaried employee of an organisation cannot practise as an advocate in the courts of India; hence, the communication with the in-house lawyer cannot be termed to be confidential in nature.

Evidence - pretrial

Do parties exchange written evidence from witnesses and experts prior to trial?

Yes, parties exchange written evidence from witnesses and experts prior to trial. Such evidence is typically in the form of affidavits.

Evidence - trial

How is evidence presented at trial? Do witnesses and experts give oral evidence?

Evidence in trial can be presented both as oral and documentary evidence. Witnesses and experts do give oral evidence. Typically, examination in chief of a witness is filed by way of an affidavit, and thereafter oral cross-examination is conducted.

Interim remedies

What interim remedies are available?

Under Indian Law, interim remedies in the form of prohibitory or mandatory injunctions, attachment of property, appointment of receiver, furnishing of security etc, are available. Orders of interim freezing injunctions are very common in disputes relating to immovable property or intellectual property. Search orders are in the form of orders for inspection and are also capable of being passed in certain cases.

Foreign decrees of the countries having reciprocal arrangement with India are enforced in India under the provisions of the Code of Civil Procedure. While enforcing foreign decrees, the party seeking enforcement can also seek interim remedies in the form of prohibitory or mandatory injunctions, attachment of property, appointment of receiver, furnishing of security, etc, to ensure enforcement of the foreign decree. Foreign decrees of countries not having reciprocal arrangement cannot be enforced in India and the party is required to file a fresh suit in India against the defendant where the foreign decree will be considered in evidence while deciding the claims on merits.

Remedies

What substantive remedies are available?

Substantive remedies available under Indian Law in civil cases typically include damages or specific performance of a contract, recession of contracts, cancellation of instruments, declarations and perpetual injunctions. While granting of punitive damages is within the power of civil courts in India, in practice, punitive damages are rarely awarded.

Indian courts have the power to award interest at such rate as they deem reasonable, varying from 8 per cent to 18 per cent per annum.

Enforcement

What means of enforcement are available?

In India, a decree is enforced by execution proceedings. Typically, modes of execution of a decree depend upon the subject matter of the decree and can range from attachment or sale of immovable property, delivery of movable property, injunctions and in very rare cases, detention in a civil prison.

In addition to this, wilful disobedience of and order of the court is punishable under the Contempt of Courts Act 1971, for which separate proceedings are required to be initiated.

Public access

Are court hearings held in public? Are court documents available to the public?

Yes, generally, hearings in court are held in public except when there is cause to hold such proceedings in camera. Further, while court orders and judgments are part of public record, pleadings, documents relied upon parties to a proceeding, witness statements, etc, are not made available to the general public.

Costs

Does the court have power to order costs?

Yes, courts have the power to award costs and the quantum is left to the discretion of the courts. Typically, in India, the costs awarded are usually on the lower side. However, there is a change in this trend in recent times as courts in India have been seeking to award exemplary costs particularly in cases of repeated breach by a party.

Funding arrangements

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

No, the bar council of India rules prohibit an advocate from accepting fees on contingency or success.

As far as third-party funding of litigation is concerned, the Bar Council of India Rules prohibit an advocate from funding his or her client’s litigation. However, no such prohibition exists for third-party litigation funding by a non-lawyer. This has been recognised by the Supreme Court of India in the case of Bar Council of India v AK Balaji & Ors (Civil Appeal No. 7875-7879 of 2015, Judgment delivered on 13 March 2018).

Insurance

Is insurance available to cover all or part of a party’s legal costs?

Yes, the cost of litigation may be covered wholly or in part as per the terms of the policy availed by a party.

Class action

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

The Indian law of civil procedure makes a provision for representative suits wherein various persons having similar interest can institute a single suit. Additionally, class action suits can also be instituted by shareholders in respect of disputes pertaining to management of affairs of a company and reliefs of compensation payable by the company to the shareholders.

Additionally, the Supreme Court or a High Court may be moved by a class of persons seeking writ remedies against the state or instrumentality of the state. A common form of such class actions is public interest litigation.

Appeal

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

In respect of orders passed by a civil court, the civil law of procedure in India provides for specific orders that are appealable. Except those provided for specifically, all other orders of the court are not appealable.

As far as a decree of a civil court is concerned, the same is appealable by way of a first appeal unless barred by a specific statute. For a second appeal to lie, a substantial question of law should be involved.

Additionally, under article 136 of the Constitution of India, the Supreme Court may grant special leave to appeal against any order, decree or judgment passed by the high court or statutory tribunals as the case may be. In a petition filed under article 136 of the Constitution, the Supreme Court of India only deals with the question of law involved in the dispute.

Foreign judgments

What procedures exist for recognition and enforcement of foreign judgments?

The Indian Code of Civil Procedure 1908, under sections 13 and 44A, contains the provisions as regards enforcement of a foreign judgment.

Only those judgments or decrees passed by a foreign court of a country having a reciprocal arrangement with India are enforceable. In cases where such reciprocating arrangement exists, a foreign judgment is capable of being enforced in the same manner as a decree of an India court.

Execution of a foreign judgment for reciprocating territories can be refused on the following grounds, being that such judgment: (i) has not been pronounced by a court of competent jurisdiction; (ii) has not been pronounced on the merits of the case; (iii) appears on the face of the proceedings to be founded on an incorrect view of international law or refusal to recognise the law of India in cases in which such law is applicable; (iv) is passed in proceedings opposed to natural justice; (v) has been obtained by fraud; or (vi) sustains a claim founded on breach of any law in force in India.

In case of a foreign judgment by non-reciprocating countries, there is no provision for its enforcement, and such foreign judgment can only be executed by way of filing a fresh suit on the basis of the foreign judgment.

Foreign proceedings

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

Order 25 of the Indian Civil Procedure Code, 1908 provides for cases when a high court of a particular state may issue commissions to examine witnesses at the instance of foreign courts. If the concerned high court is satisfied that the foreign court situated in a foreign country wishes to obtain the evidence of a witness in any proceeding before it, and that the proceeding is civil in nature and that the witness resides within the limits of the high court’s territorial jurisdiction, the said high court may issue a commission for examination of the witness.

The Indian Civil Procedure Code 1908 further provides that a commission can be issued by a high court upon an application by a party to the proceeding before a foreign court or by an application by a law officer of the state government acting on instructions of the state government.

Arbitration

UNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

Yes, the Indian arbitration law is based on the UNCITRAL Model Law.

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

The formal requirements of an enforceable arbitration agreement are contained in section 7 of the Indian Arbitration Act, which provides that an arbitration agreement is an agreement to submit to arbitration all or certain disputes that may arise in respect of a defined legal relationship, whether contractual or not. Pertinently, an arbitration agreement is required to be in writing and the same may be in the form of an arbitration clause in a contract or a separate agreement.

Choice of arbitrator

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

If an arbitration agreement and relevant rules are silent on the matter, the arbitral tribunal would consist of a sole arbitrator to be appointed by mutual consent of the parties. On failure of consensus, parties can approach the court having jurisdiction for appointment of a sole arbitrator.

The right to challenge appointment of an arbitrator is fairly restricted as the same is available only in the following scenarios:

In a case of appointment of an arbitrator by the court, appointment can only be challenged on the ground that there is no arbitration agreement between the parties. Extending the scope of this challenge, the Supreme Court of India, in a recent judgment, has held that an arbitration agreement cannot be enforced if it is contained in a contract that is not stamped or insufficiently stamped under the extant provisions for payment of stamp duty.

In the case of a challenge to appointment to be made before the arbitrator so appointed, such challenge is required to be made within a period of 15 days from becoming aware of the appointment. The only grounds for such challenge are existence of circumstances giving rise to justifiable doubts as to independence and impartiality of the arbitrator; or the arbitrator not possessing the required qualification.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

In ad hoc arbitrations, generally retired judges of the Supreme Court or high courts are chosen as the arbitrator or arbitrators. In some cases, particularly when the claim amount is less, even practising counsels are appointed by the parties. In arbitrations involving technical or complex subject matter, technical experts are often chosen to be part of the arbitral tribunal. In the case of institutional arbitration, the tribunal comprises arbitrators from the panel of arbitrators of the relevant institutions. The arbitrators can be appointed by mutual consent of the parties depending on the technical expertise required in the matter at hand.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Under the Indian Arbitration law, the parties are free to decide upon the procedure of arbitration. However, although strict rules of evidence and civil procedure are not applicable; however, generally these principles act as a guiding light for determining procedure.

Court intervention

On what grounds can the court intervene during an arbitration?

The Indian Arbitration Law contemplates minimal intervention by courts; however, it provides for specific situations where courts can intervene in the arbitration proceeding, which includes: (i) appointment of an arbitrator (when the agreed-upon procedure fails); (ii) for grant of interim reliefs; (iii) termination of the mandate of an arbitrator or the panel as the case may be; (iv) appeals against the interim orders passed by arbitrator; and (v) setting aside of an arbitral and enforcement of the arbitral award.

The parties to the arbitration agreement cannot contract to exclude the powers of the court.

Interim relief

Do arbitrators have powers to grant interim relief?

Yes, under section 17 of the Indian Arbitration Act, an arbitrator has powers akin to a civil court in India to grant interim reliefs in the nature of injunctions, attachment of assets, furnishing of securities and appointment of a receiver in respect of immovable properties.

Award

When and in what form must the award be delivered?

After the recent amendment to the Indian Arbitration Act in 2015, an arbitral award must be passed within a period of 12 months from the date on which the tribunal enters upon the reference. This period of 12 months is extendable by a further six months by consent of the parties. For any further extension, an application is required to be made to the court.

The Indian Arbitration Law provides that an award must be in writing and signed by the members of the tribunal. Further, the award must state the reasons upon which it is based unless otherwise agreed between the parties or the award itself is a settlement. The award must specify the date on which it is made and the seat of arbitration. The tribunal may also pass interim or partial awards on the issues pursuant to which it may pass the final award.

Appeal

On what grounds can an award be appealed to the court?

Section 34 of the Indian Arbitration Act sets out the ground on which the court may set aside an arbitral award, being that:

  • a party to the arbitration was under some incapacity;
  • the arbitration agreement was not valid under the law to which the parties have subjected it or, failing any indication thereon, the law in force;
  • the applicant party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his or her case;
  • the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. If, however, the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award containing decisions on matters not submitted to arbitration may be set aside;
  • the composition of the tribunal or the procedure followed was different from that agreed by the parties or, in the absence of agreement, as per Part I of the Act;
  • the subject matter of the dispute was incapable of resolution or settlement by arbitration under law for the time being in force; or
  • the award is in conflict with the public policy of India.

Any party aggrieved by the decision of the court may prefer an appeal under section 37 of the Indian Arbitration Act. An order passed under section 37 is not appealable. However, the same does not restrict the right of a party to approach the Supreme Court of India by way of a special leave to appeal under article 136 of the Indian Constitution.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

A domestic arbitral award is enforceable in the same manner as if it were a decree of a civil court in India. Therefore, all modes of execution, including attachment, sale delivery of property, furnishing of security, etc, are available.

Subject to the conditions for enforcement prescribed under section 48 of the Indian Arbitration Act, a foreign arbitral award (only of the signatory countries to the New York Convention) is enforceable as a decree of the Indian court enforcing the same. Thus, once enforced by an Indian court, a foreign award can be executed as per the provisions of the civil procedure code in India.

Costs

Can a successful party recover its costs?

Yes, very often legal costs in full are awarded in favour of the successful party. The court or the arbitral tribunal, as the case may be, has the discretion to determine: (i) whether costs are payable by one party to another; (ii) the quantum of such costs; and (iii) when such costs are to be paid.

As per section 31-A of the Indian Arbitration Act, a successful party can generally recover reasonable costs relating to:

  • fees and expenses of the arbitrators, courts and witnesses;
  • legal fees and expenses;
  • any administration fees of the institution supervising the arbitration; and
  • any other expense incurred in connection with the arbitral or the court proceeding or arbitral award.

Because third-party funding of litigation and arbitration is not a common occurrence in India, the issue of whether third-party funding costs can be recovered as costs of arbitration remains undecided.

Alternative dispute resolution

Types of ADR

What types of ADR process are commonly used? Is a particular ADR process popular?

The common forms of ADR recognised in India are arbitration, conciliation, mediation and judicial settlement or lok adalat.

Arbitration is one of the most commonly used ADR processes in India and the recent trend is that all commercial contracts provide for this form of ADR.

Requirements for ADR

Is there a requirement for the parties to litigation or arbitration to consider ADR before or during proceedings? Can the court or tribunal compel the parties to participate in an ADR process?

No, as a general rule, there is no requirement under Indian law for parties to consider ADR before or during proceedings. Further, courts in India do not have the power to compel parties to participate in an ADR process. However, where it appears to the court that there exists the prospect of amicable settlement of disputes, the court can formulate terms of settlement and after receiving observations of the parties on these terms, the court may refer the same for arbitration, conciliation, judicial settlement, including settlement by lok adalat or mediation.

Having said the above, as per a recent amendment, if a suit falls under the category of a ‘commercial suit’ and the plaintiff has not sought any interim reliefs, the parties are required to mandatorily resort to mediation before instituting such suit. The mediation pre-litigation is a time-sensitive process and in the event of no settlement within a period of 90 days from the commencement of the mediation process, the parties can institute court proceedings.

Miscellaneous

Interesting features

Are there any particularly interesting features of the dispute resolution system not addressed in any of the previous questions?

Recent legislation such as the Commercial Courts Act and the amendment in the Indian Arbitration Act provide for strict timelines to conclude the proceedings expeditiously. The Indian Arbitration Act also provides for a fast-track process where the parties can agree to not lead oral evidence and the disputes are resolved on the basis of the documents on record. These legislations have ensured speedy disposal of cases in India.

Update and trends

Recent developments

Are there any proposals for dispute resolution reform? When will any reforms take effect? (Please also mention any ground-breaking recent cases, etc.)

Legislation in India is constantly being amended; however, we have, in our assessment, not come across any proposal for reform in the dispute resolution process, which is currently being debated in the parliament.