Litigation Dispute Resolution

The Indian legal system is rooted in the common law, inherited from its British colonial past. This impacts on litigation in India as follows:

• English law: Most commercial courts are influenced by or based on English law.
• Stare decisis: Lower courts are bound by the rulings of higher courts in similar cases. This promotes consistency and predictability of legal outcomes. Lawyers often cite relevant precedents to support their arguments.
• Role of judges: Judges act as umpires in adversarial style litigation. Their role is to interpret laws and shape legal principles through their decisions.

The common law is increasingly being replaced with statutes (eg, in relation to insolvency).

Civil disputes are mostly governed by the Code of Civil Procedure, 1908. The rules on the taking of evidence are embodied in the Evidence Act, 1872, which is set to be replaced in July 2024 with the Bharaitya Sakshya Adhiniyam. Additionally, the high courts and the Supreme Court of India have formulated specific procedural rules.

While India has a quasi-federal structure, all significant rules – such as the Code of Civil Procedure, the Evidence Act and the Limitation Act – have pan-Indian application.

Under special laws, specialised tribunals and quasi-judicial bodies have been established to deal with specific claims. The aim is twofold:

• to combat the large backlog of cases before the traditional courts; and
• to have such cases heard by a mix of technical and judicial members.

These specialised tribunals include the following:

• the National Company Law Tribunal is primary adjudicatory body for all matters relating to the Companies Act, 2013.
• The Income Tax Appellate Tribunal was established under the Income Tax Act, 1961.
• The administrative tribunals were established under the Administrative Tribunals Act, 1985 to hear government-related service disputes.
• The Consumer Protection Act, 2019 established a three-tier structure to hear consumer complaints:
• • district commissions;
  • state commissions; and
  • national commissions.
• The National Commission is headed by a retired Supreme Court judge.
• The Recovery of Debts and Bankruptcy Act, 1993 for debts involving banks and lending institutions.
• The Competition Appellate Tribunal was established under the Competition Act, 2002.

Further, 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 have been designated to expeditiously adjudicate disputes classified as ‘commercial’.

India has signed and ratified many bilateral and multilateral instruments which are relevant to civil litigation. India is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. However, India is not a signatory to the Washington Convention for bilateral investment treaty disputes.

India is a member of the Hague Conference on Private International Law and a signatory to several conventions pertaining to private international law. These include:

• the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, 1961;
• the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 1965; and
• the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, 1965.

India’s judiciary is unified and broadly has a three-tier structure. Each administrative district (there are more than 600 districts in India) is headed by a district court which handles cases at the trial level, with subordinate courts such as chief metropolitan magistrates, metropolitan magistrates and civil judges under their jurisdiction.

Above the district courts are the high courts. There are 25 high courts in all (some states, such as Punjab and Haryana, share a high court). Most of the high courts only exercise appellate jurisdiction. However, a few high courts – such as Mumbai, Delhi and Kolkata – exercise original jurisdiction.

At the apex is the Supreme Court of India, situated in New Delhi. This is the country’s highest constitutional court and court of appeal. It hears appeals from high courts and appellate tribunals and has three types of jurisdiction:

• original jurisdiction (for the enforcement of fundamental rights or inter-state disputes);
• appellate jurisdiction; and
• advisory jurisdiction (at the request of the president of India).

For a brief description on quasi-judicial bodies, please see question 1.3.

Please see question 1.3.

While the Civil Procedure Code does not require the plaintiff to undertake any pre-filing steps for a regular civil lawsuit, it mandates a two-month notice for lawsuits concerning official acts by:

• the Indian government;
• a state government; or
• a public officer.

The court can waive this requirement for just cause. Further, any civil proceeding against a foreign state requires prior consent from the union government.

The Commercial Courts Act, 2015 mandates pre-institution mediation and settlement efforts as a pre-condition to the suit. However, this does not prevent the filing of applications for urgent interlocutory relief/injunctions.

Please see question 3.1.

Court delays and a lack of case management are unfortunate features of litigation in India. A regular civil suit can take up to 10 years to reach resolution. Therefore, arbitration and settlement options must be extensively explored and incorporated in the parties’ agreements. All commercial contracts must incorporate an arbitration clause.

Generally, the limitation period for civil disputes is three years and is governed by the Limitation Act, 1963. In certain circumstances, the commencement of the limitation period can be delayed – for example, if:

• the plaintiff has not reached the age of consent;
• the cause of action was not known due to fraud by the defendant; or
• there is a continuing cause of action.

Exceptions to the general rule of three years include the following:

• Tort: The limitation period varies between one and three years. For instance:
• • for defamation, the limitation period is one year;
  • for conversion, copyright infringement or other exclusive privilege, the limitation period is three years; and
  • for compensation for injury caused by an injunction wrongfully obtained, the limitation period is three years.
• Land disputes: The limitation period ranges from three to 30 years. For instance:
• • for an action by a mortgagor to redeem or recover possession, the limitation period is 30 years;
  • to enforce payment secured by a mortgage, the limitation period is 12 years;
  • for a mortgagee’s action for foreclosure, the limitation period is 30 years; and
  • to set up title by adverse possession the limitation period is 12 years.
• Writ petitions: Writ remedies are constitutional remedies which vest in the high court for violation of fundamental rights or arbitrary, whimsical or discriminatory state action. They lie against the state or its instrumentalities. There is no limitation period prescribed for recourse to a court for a writ remedy but there should be no undue delay or laxity in approaching the court.

For civil disputes, the rules on jurisdiction are primarily outlined in the Code of Civil Procedure. Jurisdiction typically falls in two categories:

• Territorial jurisdiction: This is determined on the basis of where:
• • the property is located or the defendant resides/works; or
  • the cause of action arises.
• A dispute relating to immovable property will lie in the jurisdiction where the property is located.
• Pecuniary jurisdiction: The courts have limits on the pecuniary value of the cases that they can hear. For example, the Delhi High Court has jurisdiction over cases with a value exceeding INR 20 million.

Additionally, specific statutes may designate particular courts or tribunals to hear certain types of cases.

Yes, Class action provisions exist under the Code of Civil Procedure. The key requirements are as follows:

• There must be numerous persons with the same interest but not necessarily the same cause of action. The Supreme Court has clarified that “either the interest must be common or they must have a common grievance which they seek to get redressed” (Tamil Nadu Housing Board v TN Ganapathy (1990)).
• A declaration of a suit as a ‘representative suit’ requires court permission, which can be sought by either the plaintiff or a person defending the suit.

In addition to the Code of Civil Procedure, a class action can be brought under a variety of special statutory instruments, such as:

• the Consumer Protection Act, 2019;
• the Competition Act, 2002;
• the Companies Act, 2013; and
• the Constitution of India (in the form of public interest litigation).

Please see question 3.1.

The procedural and substantive requirements for commencing litigation can be briefly summarised as follows:

• Initiation of proceedings: Civil proceedings start by filing a suit, setting out the claim in sufficient detail to enable the defendant to answer it. The prescribed court fees are payable upon filing of the petition.
• Notice to the defendant and defence: The defendant must file its written statement (reply) within 30 days of service of summons, extendable up to 90 days or more, if sufficient cause is shown.
• Subsequent stages: The next main stages are as follows:
• • filing of documents;
  • admission or denial of documents by the parties;
  • filing of affidavit by way of evidence; and
  • cross-examination of witnesses and oral arguments.

The Indian courts have broad powers in matters of interlocutory relief, which are readily exercised (as a full trial usually takes a long time due to court delays). Interlocutory relief is governed by Order 39 of the Code of Civil Procedure, which allows for the grant of such relief on a threefold consideration:

• a prima facie case;
• the balance of convenience; and
• the prevention of irreparable injury (ie, injury which cannot be compensated by damages).

Interim relief will not be granted where this would:

• amount to the grant of final relief; or
• render the suit redundant.

Further, interlocutory relief will not be granted in relation to a contract which cannot be specifically enforced (eg, a contract for service).

Prior notice/same-day: Except for relief which cannot be delayed, the power to grant interim remedies without hearing the defendant is generally not exercised. If interim relief is granted without notice, the court must record the reasons therefor and post the matter for hearing after due notice to the defendant within a specified timeframe.

Rights of appeal: An appeal lies (as a matter of right) against grant or refusal to grant interim relief.

Arbitration: In arbitrations, the parties can approach a court for interim measures before, during or after the arbitral award (but before its enforcement). The court will apply the same principles as are outlined above and require the applicant to initiate arbitration within 90 days. The courts will not normally exercise this power once the arbitral tribunal has been constituted.

Under Order 25 of the Code of Civil Procedure, provisions are made for security for costs. This provision is discretionary and hardly ever used (as the Indian courts do not award real costs).

The approach to discovery is conservative. Parties can be directed to disclose on oath relevant documents in their possession or power (save for privileged documents). Documents are relevant if they impact (favourably or otherwise) the claim or the defence. If a document is no longer with a party, the party must explain the circumstances under which the document ceased to be in its possession or power.

Interrogatories: A party can also apply to the court for an order to issue interrogatories (written questions which must be answered on affidavit) to narrow down the issues prior to the trial, by obtaining either admissions or fuller factual details (if the claim or defence does not provide them). However, this power is rarely exercised.

Third parties can be summoned as witnesses or required to produce documents through court orders. In arbitration, an application for court’s assistance seeking disclosure from third parties requires prior approval from the arbitral tribunal.

Some high courts have laid down rules regarding access to court documents by third parties. These rules typically require an application stating legitimate reasons for the information. Guidelines have been laid down by the Supreme Court in Chief Information Commissioner v High Court of Gujarat (2020).

Under the Right to Information Act, 2005, any citizen can request any information or document from public authorities, including state-controlled instrumentalities. Requested information can be refused on the grounds of:

• national security;
• national interest; or
• confidentiality.

The information obtained through this process can serve as secondary evidence under Section 63 of the Evidence Act (these documents must still meet the standards of the Evidence Act).

Privilege is attached to the following documents as per the Evidence Act:

• communications between a lawyer (or his or her clerk, employee or interpreter) and a client;
• communications made to public officers in their official capacity;
• unpublished official records relating to affairs of the state; and
• communications between husband and wife.

However, privilege does not apply in relation to communications relating to an illegal purpose.

In-house counsel cannot claim the status of an advocate, as the Bar Council Rules require advocates to surrender their practice during the course of their employment.

Technological advancements have significantly facilitated the disclosure process in the Indian jurisdiction. These can be briefly summarised as follows:

• Electronic filing of documents has streamlined the disclosure process and made it more efficient. Parties can share large volumes of data in a quick and secure manner, which helps save time and costs.
• Cloud storage software affords lawyers and parties alike easier access to disclosed documents. At the same time, it calls for a duty to protect against breach of confidentiality obligations.
• Specialised software allows lawyers to filter and analyse electronic data in a very short timeframe.

The Indian courts are conservative and do not allow for fishing or roving discovery requests. Each request must pass the test of materiality, relevance and proportionality.

The Evidence Act, 1872 (which will be renamed as the Bharaitya Sakshya Adhiniyam as of July 2024) governs the procedure for the taking of evidence and the admissibility of evidence.

Evidence is classified as:

• primary evidence – generally, original documents produced in court; and
• secondary evidence – that is, certified copies; photocopies.

All facts, except the contents of documents, may be proved by oral evidence. However, oral evidence must be direct – that is, the witness must have seen or heard or perceived the matter in question himself or herself. Hearsay evidence is therefore generally inadmissible, although Indian law recognises the principle of res gestae. Witnesses of fact generally cannot depose on the basis of their ‘opinions’, but expert witnesses can.

Section 45 of the Evidence Act provides that courts generally rely on experts for issues such as:

• foreign law;
• issues of science or art;
• handwriting; or
• fingerprint verification.

The court have laid down the following principles governing experts:

• Expert evidence must be deemed necessary – that is, it is required because the subject matter is beyond the understanding of a lay person (Ramesh Chandra Agrawal v Regency Hospital Ltd (2009)).
• The testimony should be restricted to the expert’s area of expertise and not transgress to factual aspects of the case. The role of an expert is to furnish the court with scientific testing criteria for evaluating conclusions (State of Karnataka v J Jayalalitha (2015)).
• Expert evidence cannot replace substantive evidence since it is only an opinion and not direct substantive evidence (S Gopal Reddy v State of AP (1996)).

Where a person is bound to prove the existence of any fact and, failing which, its case would fail, the burden of proof rests with it. However, the burden of proof can keep shifting.

Leading questions in examination-in-chief are generally disallowed. Exceptions include:

• when the witness is unable to answer without guidance;
• when dealing with a hostile witness; or
• in relation to an expert witness.

Moreover, the Evidence Act provides for certain factual presumptions that courts may make in the absence of any contradictory evidence. These include that:

• judicial and official acts have been regularly performed;
• the common course of business has been followed; or
• the evidence which could be and has not been produced would, if produced, be unfavourable to the person that withholds it.

Additionally, legislation concerning economic offences may permit a presumption of guilt upon prima facie evidence of a case against the accused. This creates a reverse burden of proof, requiring the accused to disprove the presumption of guilt to avoid conviction.

Further, the Evidence Act also includes provisions regarding judicial notice of fact, whereby certain facts are presumed to be known by the court. These include matters such as Indian law.

Evidence cannot be introduced on matters not pleaded. Cross-examination need not be confined to pleaded facts. Re-examination can only relate to what was deposed by the witness during examination-in-chief.

Under the Commercial Courts Act, 2015, the courts must hold a case management hearing within four weeks of completion of pleadings. However, this does not translate into reality, as the courts are liberal in allowing indulgences and find it difficult to find time to hold hearings even when fixed.

Court proceedings are open to the public at large. There are few exceptions (including rape and matrimonial disputes and child custody cases) where the courts are empowered to hold proceedings in camera to protect privacy rights.

However, for security reasons and due to space constraints, only litigants and advocates are allowed in courtrooms in the high courts and the Supreme Court. At the same time, all Supreme Court proceedings are live streamed and remotely accessible to the public at large.

Generally, Indian law is the applicable law for all civil disputes seated in the country, unless an agreement provides otherwise. This presumption is rebuttable. In case of a conflict of laws, the courts can apply foreign laws. In the absence of a contract providing to the contrary, the court can consider the jurisdiction which has the most intimate connection with the dispute.

Under the Code of Civil Procedure (Order 1, Rule 10), the court can add any person as a party at any stage of the proceeding if that person’s impleadment is necessary in order to enable the court to effectively and completely adjudicate upon and settle all questions involved in the suit.

Please see question 4.5.

Specific timelines are stipulated for most commercial suits. For instance, in civil suits, upon receiving summons, the defendant must submit a written statement (defence) within 120 days. Moreover, there are certain guidelines from the Supreme Court requiring the civil courts to pronounce judgment within six months of reserving it. However, in reality, the courts are unable to adhere to specific timelines because of the severe backlog of cases. A civil suit can typically take 10 years or more to reach conclusion.

The courts have broad powers to award substantive relief, including:

• specific performance;
• declaration;
• injunction; and
• damages.

Damages are compensatory in nature. Punitive damages cannot be awarded, save in environmental damage cases.

Please see question 4.6.

A first appeal can be filed on questions of fact or law. A second appeal is not always available and is confined to issues of law only.

The appeals process differs based on the nature of the case. Under the Code of Civil Procedure, an appeal can be filed as per Section 96 of the code before the higher authority designated for this purpose.

The judgment is not automatically stayed while the appeal is pending. Order 41, Rule 5(1) of the Code of Civil Procedure specifically provides that the mere filing of an appeal will not operate as an automatic stay of the impugned order unless the appellate court passes a stay order.

Parties involved in the appeal process should keep in mind the following.

Courts: An appeal is available only where permitted by statute. A first appeal in civil suits is available as a matter of right. The relevant court depends on the court hierarchy in the jurisdiction. For instance, in Delhi, a decision of a single judge of the High Court can be appealed to a two-judge bench of the High Court.

A decision can be appealed to the Supreme Court if the high court certifies that there is a question of law of general importance requiring a decision of the Supreme Court. Alternatively, a request for ‘special leave to appeal’ can be submitted to the Supreme Court where an important question of law or of public importance is involved.

Grounds for appeal: The first appeal can be on questions of fact or law. The second appeal is confined to issues of law.

Limitation period: The limitation period for bringing an appeal varies from 30 to 90 days, condonable if just cause is shown.

Judgments are enforced through a court process. Money decrees are executed by attachment and sale of the judgment debtor’s property. In exceptional circumstances, money decrees can be executed by the arrest and detention in civil prison of the judgment debtor.

All questions relating to the execution, discharge or satisfaction of a judgment are determined by the court executing the decree; a separate suit for determination of these questions is expressly barred (Section 47 of the Code of Civil Procedure). Execution of a judgment can be challenged on the grounds that it is barred by:

• limitation (12 years); or
• an inherent lack of jurisdiction.

A party can file an application (Order 21, Rule 29 of the Code of Civil Procedure) seeking a stay of execution of a judgment if an action is pending in any court between the decree holder and the judgment debtor.

A foreign judgment may emanate from a ‘reciprocating’ territory or a ‘non-reciprocating’ territory. If it was issued in a reciprocating territory, it is immediately enforceable as a decree, subject to six defences that are available to the defending party.

If a judgment was issued in a non-reciprocating territory, it is not immediately enforceable; instead, a fresh suit must be instituted in India on the basis of the foreign judgment. Here too, six specified defences are available to the defending party. The six grounds available to the defendant in each case are as follows:

• The judgment was not pronounced by a court of competent jurisdiction;
• The judgment was not issued on the merits (ie, it is a default judgment);
• The judgment is founded on an incorrect view of international law or a refusal to recognise Indian law (if applicable);
• The proceedings were opposed to natural justice;
• The judgment was obtained by fraud; or
• The judgment sustains a claim founded on breach of Indian law.

Major jurisdictions that have been notified as reciprocating territories include the United Kingdom, the United Arab Emirates, Singapore and Hong Kong.

Please see questions 10.1 and 10.2.

In addition to attorneys’ fees, court fees are payable. In many courts (including Delhi), the court fees are ad valorem and unlimited.

Generally, the Indian courts are not inclined to impose costs on the losing party and where costs are imposed, they are nominal (and nowhere close to the actual costs). However, in arbitration, the arbitral tribunal may impose actual costs on the losing party.

No, the Bar Council of India Rules, 1975 (Part VI, Chapter II, Section II, Rule 20) prohibit lawyers from charging contingency fees or any fees that depend on the outcome of a matter.

Yes – there is no bar to third-party funding in India. The Supreme Court in Bar Council of India v AK Balaji (2018) clarified that there is nothing to prevent third parties (non-lawyers) from funding litigation and getting repaid from the proceeds of the litigation. However, the funding of litigation by advocates on behalf of their clients is not permissible.

Some states in India – including Gujarat, Madhya Pradesh and Uttar Pradesh – have given statutory recognition to third-party funding by amending provisions of the Code of Civil Procedure to allow financers to become a party to the lawsuit, subject to safeguards.

In arbitration, some leading construction companies have entered into agreements with investor consortia to monetise an identified pool of awards and claims for consideration. However, professional funders are not yet active in India, largely due to the nascent stage of the market and grey areas with regard to the permissible boundaries.

Parties involved in litigation can consider several strategies to mitigate costs:

• Early case assessment by a professional: A thorough early assessment of the case by a professional can help to identify strengths, weaknesses and potential outcomes, allowing parties to make informed decisions about litigation strategy.
• Alternative dispute resolution and settlement: Exploring alternatives to traditional litigation, such as mediation or arbitration, can often be more cost-effective and efficient in resolving disputes. Engaging in negotiation and settlement discussions with the opposing party can help to avoid prolonged litigation and reduce legal costs.
• Fee arrangements: Exploring alternative fee arrangements with legal counsel, such as flat fees or capped fees, can provide cost certainty.

The Indian litigation landscape has witnessed notable reforms. A new code on evidence – the Bharatiya Sakshya Adhiniyam – is set to replace the Evidence Act from July 2024. The new law was enacted to:

• update and address the shortcomings of the old law; and
• facilitate the use of technology in court proceedings.

In May 2023, the government introduced the contractual dispute scheme to settle contractual disputes. The scheme provides a voluntary settlement process for business entities to resolve their disputes with the government of India and other qualifying agencies/instrumentalities. As per a survey published in December 2023, since the inception of this scheme, the government has successfully resolved disputes across various sectors amounting to INR 23 billion. The survey further revealed that claims amounting to INR 200 billion are under scrutiny by various departments and ministries. The scheme is still in its infancy and its wider success remains to be seen.

To promote alternative dispute resolution mechanisms, Parliament enacted the Mediation Act, 2023. This aims to encourage and support mediation, particularly institutional mediation, both commercial and non-commercial. It seeks to:

• enforce settlement agreements reached through mediation;
• establish a mediator registration body;
• promote community mediation; and
• enhance the acceptance and cost-effectiveness of online mediation.

For recommendations, please see question 11.4.

The potential pitfalls that one might face while litigating in India include the following:

• Procedural delays: The Indian courts are overburdened, leading to delays in dispute resolution. There is also an absence of case management. Parties should be prepared for potential delays and should actively manage their cases accordingly.
• Excessive burden of case law: There are a plethora of judgments. Case law should be carefully marshalled to save judicial time.
• Complex legal procedures: The Indian legal system can be complex and procedurally intensive. Procedural missteps should be carefully guarded against.
• Costs of litigation: Litigation costs in India can escalate quickly due to multiple hearings and appeals. In addition, realistic costs are never awarded.
• Enforcement challenges: Even if successful in obtaining a favourable judgment, parties may encounter challenges in enforcement, particularly against well-resourced opponents.

Overall, parties facing litigation in India should approach the process with careful planning, effective communication and a proactive mindset to navigate potential pitfalls and maximise their chances of a favourable outcome.