Transforming Justice: Government’s Groundbreaking Litigation Policy to Slash Costly PSU Disputes
Efforts to resolve litigation between Public Sector Undertakings (PSUs) and the central government have long been in play. As far back as 1991, the Supreme Court remarked that PSUs and government bodies should refrain from court battles, referencing a case between state-run oil producer ONGC and the Collector of Central Excise.
A recent push by the law ministry aims to curb escalating legal costs associated with government litigations. Law and Justice Minister Arjun Ram Meghwal endorsed the policy in June, part of a broader initiative to manage these expenses. This policy is particularly relevant for cases where two government-owned PSUs are embroiled in disputes, such as tender disagreements.
The move comes as India’s judiciary faces a massive backlog, with over 50 million cases pending, including nearly 5.6 million civil suits and 27.2 million criminal cases in district courts. High courts are similarly congested with more than 2.5 million unresolved cases.
PSU profitability is often jeopardized in these litigations. For instance, in March 2024, Indian Oil Corporation Ltd. (IOCL) won a freight charge dispute against Indian Railways worth over ₹1.5 crore, following a legal battle that reached the Supreme Court. The case invoked precedents from similar disputes, highlighting the financial stakes involved.
This is not a novel effort. Previous attempts to manage legal liabilities date back to 2010 and 2015 when the government tried to establish national litigation policies. However, implementation across states has been inconsistent. Some states like Madhya Pradesh have adopted specific guidelines to discourage frivolous litigation, aiming to transform the government’s legal approach.
The renewed policy is currently under inter-ministerial review, seeking to finally ease the government’s litigation burden. However, as of late September, an inquiry to the law ministry about the new policy remains unanswered.
The latest efforts underscore the high financial stakes and the urgency of legal reforms, especially concerning arbitration disputes. The ministry has requested comprehensive data spanning the last 24 years to amend the Arbitration and Conciliation Act.
Original Story https://www.livemint.com/news/india/litigation-policy-psu-disputes-psu-vs-psu-central-government-legal-battles-litigation-cost-11727846507458.html
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