How much does the Government Litigate

The judicial system in India is clogged with around 5.2 crore cases - around 4.47 crore cases pending before the district/taluk courts; 60.64 lakh cases pending before the high courts (HCs); and around 69,000 matters pending before the Supreme Court. There is clearly an urgent need to decongest the system. An important contributing factor is that the government (both central and state) and state-related agencies are major litigators, as observed by several Law Commission reports.

It is commonly quoted that government and related agencies account for over 40% of total cases in the judicial system. We were unable to confirm this number from available databases but government-related litigation undoubtedly contributes a significant proportion. This article surveys the landscape of central government-related cases using the Legal Information Management & Briefing System (LIMBS) database.

LIMBS is an online database of court cases where the central government is a party; it currently has information on 6,45,000 live cases. Since case details are updated unevenly by different ministries, it is far from perfect, but the database offers a bird’s eye view of the nature of the problem.

The first striking finding is that the problem is concentrated in a few ministries. The top five ministries/entities (Ministries of Finance, Railways, Defense, Labour and the CAG) account for around 75% of the total pending litigation involving the central government. The Ministry of Finance has the highest number of pending cases - around 27%. It is followed by the Ministry of Railways (17%); Ministry of Defence (13%); Ministry of Labour and Employment (12%) and Comptroller and Auditor General (3%).

Around 42% of cases of Ministry of Finance and Defence are more than five years old; 55% in Railways; 49% in Labour and Employment; 36% in CAG.

LIMBS categorizes cases into 12 different types including service-related matters, tax matters, compensation matters and so on. Tax related matters (that includes income tax, property tax, GST etc.) account for 28% of the total. Service matters (that include cases related to transfers, promotions, suspensions, appointment/recruitment) account for 22%; followed by miscellaneous cases including Special Leave Petitions (17%), labour matters (10%) and land matters (8%).

Looking at the main types of cases within ministries: 84% of the cases in the Ministry of Finance are, not surprisingly, tax-related matters; 70% of cases in Defence and CAG are service-related matters; 58% pending cases in Home Affairs are service-related matters; 31% of cases in Railways are compensation matters; 65% of cases in Labour are labour related matters.

Where in the pipeline are these cases pending? Out of the 6,45,000 live cases in the database, around 9% are pending before district and sessions courts; 37% before the high courts; 40% with various tribunals; over 9% before other courts (like revenue courts); and over 2% in the Supreme Court

It is interesting to note that litigation related to the central government pending with various tribunals stands at a whopping 40% and those at HCs at 37%. Thus, tribunals and HCs account for the bulk of the government-related logjam. For instance, 55% of the cases of Ministry of Finance are pending before tribunals and 37% before various HCs. For Railways, 48% of cases are pending before various tribunals and 23% before HCs.  For Defence, 65% of cases are pending before tribunals.

Economic Survey 2017-18 (Chapter 9) had analysed the success rate of tax departments’ appeals at the tribunal, HCs and SC. It stated: “As of March 2017, there were approximately 1,37,176 direct tax cases under consideration at the level of ITAT, High Courts and Supreme Court. Just 0.2% of these cases constituted nearly 56% of the total demand value; and 66% of pending cases, each less than Rs. 10 lakh in claim amount, added up to a mere 1.8% of the total locked-up value of pending cases”. In other words, most of the appeals jamming up the system had little economic value. A updated analysis should be done of current cases.

Economic Survey 2017-18 had further noted that the success rate of the department concerned for direct and indirect tax litigation at the levels of tribunals, HCs and the SC was under 30% and that department unambiguously lost 65% of its cases. In May this year, a Supreme Court bench orally observed that at least 40% of the litigation filed by the government (both central and states) were “frivolous”.

This issue is not new. The Law Commission of India in its 100th report (1984), 126th report (1988), and 230th report (2009) stressed the need to reduce government litigation. The Second Administrative Reforms Commission in its Fourth Report (2007) had also discussed this issue. 

The LIMBS database provides a sense of the landscape of central government cases. An analysis of other levels of government would be needed if we are to resolve the issue. The good news is that the problem seems to be concentrated and de-clogging a few areas would resolve a large part of the problem.

Sanjeev Sanyal is Member, Economic Advisory Council to the Prime Minister (EAC to PM); Jayasimha K R is Consultant, EAC to PM.