Frivolous and Vexatious Litigation: An overview

Vexatious and frivolous litigation killsIndian courts face a big challenge of pendency of cases filed therein. The common man does not want to involve himself in legal proceedings. However, being aggrieved, he has no other option but to seek reliefs in the courts. In such situation, initiation of huge amount of litigation and the resultant pendency of cases in courts is a natural consequence.

The Report no. 221 of the Law Commission of India, submitted in April 2009 is dedicated to the “Need of Speedy Justice”.  Forwarding this report to the Union Minister of Law and Justice, the Government of India, Dr. Justice A.R. Lakshmanan, Hon’ble Chairman of the Commission observed that “Mounting of arrears of cases in courts, particularly in High Court and District Courts, has been a cause of great concern for litigants as well as for the State.

Undoubtedly, there are many factors responsible for huge pendency of litigation in courts, including the fact that the courts lacking sufficient resources and man power to handle the quantum of litigation that is initiated therein. It is true that frivolous and vexatious litigation also plays an important role in creating backlog. Looking at the gravity of the situation, the Law Commission of India has made credible efforts to prepare its 192nd Report on Prevention of Vexatious Litigation in June 2005 (hereinafter “the 192nd Report”). Till date, the essential recommendations of the Law Commission made in the said Report have not been complied with. The 192nd Report refers to worldwide legislations and judicial precedents on the subject and recommends enacting an effective statute at the central level to curb the problem of vexatious litigation.

It is pertinent to mention that in the early years of independence, the Madras Vexatious Litigation (Prevention) Act, 1949 was passed. In 1971, the state of Maharashtra passed the Maharashtra Vexatious Litigation (Prevention) Act, 1971. In the year 2005, though the state legislature of Madhya Pradesh passed the Madhya Pradesh Vexatious Litigation (Prevention) Act, the same has not yet come into force because the Government of M.P. has not issued any notification in this regard. In Rajasthan, the Rajasthan Vexatious Litigation (Prevention) Bill, 2015 has been recently introduced, which bill awaits the nod of the assembly.

It is also relevant that the word ‘frivolous’ should not be equated with the word ‘vexatious’. The concepts of the legal terms in the 192nd Report are well described in the following words:

“The concepts are also quite different. As will be seen in the ensuing chapter, ‘vexatious’ litigation means habitually or persistently filing cases on the issues in which have already been decided once or more then once or against the same parties or their successors in interest or different parties. But as for as ‘frivolous’ litigation is concerned, a litigation may be frivolous, – without the need for persistent filing of similar case, – even if it has no merits whatsoever and is intended to harass the defendant or is an abuse of the process of the Court.”

Though the Government of India has not introduced any bill in the Indian Parliament on the subject, but the supreme court and high courts of the country have taken this issue seriously and it is noted that in many cases, heavy costs have been imposed on the finding of ‘frivolous’ and ‘vexatious’ litigation. Some instances are below:

  1. In the case of Pradip Nanjee Gala v. STO, (2015) 13 SCC 149, the Hon’ble Supreme Court imposed the cost of Rs. 5,00,000.00 on the appellant for filing a frivolous appeal.
  2. In the case of Vijay Malya v. Enforcement Directorate, AIR 2015 SC 2726, the Hon’ble Supreme Court imposed the cost of Rs. 10,00,000.00 on the appellant for abuse of process of law.
  3. In the case of PGF Lit. v. Union of India, AIR 2013 SC 3702, the Hon’ble Supreme Court imposed the cost of Rs. 50,00,000.00 on the petitioner for abuse of process of law.

Even though the 192nd Report proposes statutory remedies to deter vexatious litigants from initiating futile legal proceedings, it does not suggest any measures to control litigants who are habitually abusing due process of law.

It is ironic that in our parliamentary setup, we still do not have a regulation that effectively deals with the issue relating to frivolous and vexatious litigation. Having said that, there are provisions in the Code of Civil Procedure, 1908, and Code of Criminal Procedure, 1974 that provide some legislative remedies on the issue. The said provisions are summed up herein below:

  1. In the Code of Civil Procedure, 1908, Order VII Rule 11 gives powers to courts in certain circumstances to reject the plaint. If courts exercise these powers strictly, the frivolous petitions may be thrown out at the threshold.
  2. In the Code of Civil Procedure, 1908, Section 35-A provides for compensatory costs in respect of false or vexatious claims or defenses. The maximum limit of the costs is Rs. 3000 or not exceeding the limits of its pecuniary jurisdiction, whichever amount is less. Though, this maximum limit of the cost must be increased and fixed up to two lakhs. In this regard, the necessary legislative amendments must be done by the legislature.
  3. In the Code of Criminal Procedure, 1974, Section 250 provides that in case of discharge or acquittal, the Magistrate may pass an order to pay such amount by way of compensation, not exceeding the amount of fine he is empowered to impose. This statutory provision still needs amendments in these manners:
    • It should be mandatory in each criminal case to award compensation if the Learned Magistrate records acquittal or discharge of the accused.
    • The amount of compensation must be fixed minimum Rs. 5000 and maximum Rs. 50000 in appropriate cases and the powers to award such compensation must be in addition to imposition of fine.

It is pertinent to note that the problem of vexatious litigation has persisted since the ancient age. During Mahabharata, Lord Krishna had killed Shishupal on being aggrieved with frivolous accusations. In 1795, Lord Macaulay, who was the chairman of the Law Commission of pre-independent India, had observed that It is undoubtedly a great evil that frivolous and vexatious actions should be instituted. But it is an evil for which the Government has only itself and its agents to blame, and for which it has the power of providing a most sufficient remedy.” It is indeed an essential requirement that the Indian Government soon sets forth an effective legislation to curb the menace.

Advocate protection ordinance: A proposed statute

The Apex Court had observed that the Advocates are Court Officers, but there is no statute has been passed for the safeguard of the Advocates appearing before the Courts, Tribunals and Quasi Judicial Authorities.In Madhya Pradesh, the Hon’ble Chief Minister, while addressing the Advocate Panchayat on 12 August 2012, had announced that the Advocate Protection Act shall be introduced in the State. Unfortunately, Till today, no Act or Ordinance has been promulgated in the State of Madhya Pradesh.

In the wake of criminal attacks on Advocates and malicious prosecutions against Advocates, it’s necessary to pass an ordinance under Article 213 of the Constitution of India regarding to provide statutory protection to the Advocates from such unlawful activities. some of important provisions must incorporated in this Ordinance:

  • There is should be specific bar from Civil, Criminal and other proceedings against Advocates for the acts done in good faith during the course of Judicial and Quasi Judicial proceedings.
  • There should be specific provision that no court shall take cognizance of any offence alleged to have committed by any Advocate while acting or purporting to act in the discharge of his duty as prescribed by any Statute, without the previous sanction of State Bar Council defined under Section 2(1)(K) of the Advocate Act,1961.
  • It is common experience that Litigants in the Judicial Proceedings use absurd language and imposes allegations without sufficient reasons against the Advocate. To avoid this situations it is necessary to make such provision that use of derogatory language in the Judicial and Quasi Judicial Proceeding against the Advocates appearing on behalf of the either party shall be cognizable, Non-bailable offence.

Unauthorized detention of trains and it’s remedies

rails-train-path-straightUnauthorized detention of trains in the contravention of Railway Act, 1989 is not only offence under the aforesaid statute but it is the gross violation of Fundamental Rights of the people of India. It also amounts the infringement of Human Rights of the persons. Certainly, the Railway is a service provider in terms of Consumer Protection Act, 1986. If train is detained by some protesters and root is diverted due to that reason, railway administration may be held responsible for deficiency of service but State Government and Central Government are also responsible for smooth running of trains. Because the Governments are responsible for maintenance of Law and Orders. Such function of the States comes under Sovereign Powers of the State. The Authority under the Consumer Protection Act can not take cognizance in such cases. The High courts under Article 226 and Supreme Court under Article 32 of the constitution of India may issue Writs against the State and other Instrumentality of the State.

Registration of decrees and orders of Civil Courts under Registration Act

A ‘decree’ is a formal expression of an adjudication which as far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in a suit. Both judicial order and decree are public documents.

In this regard, some important provisions of the Registration Act, 1908, herein after called “The Act” must be taken into account. The Act is a central legislation, which is applicable to whole of India except the State of Jammu and Kashmir. Section 17 of the Act specifies the documents for which registration is compulsory. Sub-Section (1)(e) of the Act is replicated below –

“non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested of contingent, of the value of one hundred rupees and upwards, to or in immovable property:

Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any lease executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.”

The cumulative effect of the above provision is that every decree, whether it is primary or final, if it relates to any immovable property valued rupees 100 or more, requires compulsory registration. Even a temporary Injunction order passed relating to immovable property passed under Order 39, Rule (1) and (2) requires registration under Registration Act, 1908.

The Act also prescribes the procedure for registration of a decree. Sub-Section (1) of Section 89-A provides that –

Every Court passing –

  • Any decree or order creating, declaring, transferring, limiting or extinguishing any right, title or interest to or in immovable property in favour of any person, or
  • An order for interim attachment or attachment of immovable property or for the release of any immovable property from such property from such attachment,

shall, in accordance with the rules made in this behalf, send a copy of such decree or order together with a memorandum describing the property as far as may be practicable, in the manner required by Section 21, to the Registering Officer within the local limits of whose jurisdiction the whole or any part of immovable property comprised in such decree or order is situate, and such officer shall file the copy of the memorandum in his Book No. 1.

Section 49 of the Act clarifies the effects of non-registration of document required to be registered. The provision lays down that if a document that requires registration under Section 17 of the Act or under any provision of the Transfer of Property Act, 1882, till the time has not been registered, it shall not:

  • Affect any immovable property comprised therein,
  • Confer any power to adopt, or
  • Be received as evidence of any transaction affecting such property or conferring such power.

The proviso to the said rule says that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 or as evidence of any collateral transaction not required to be effected by registered instrument.

Now the important question for consideration is whether an unregistered decree or judicial order which requires compulsory registration under Section 17 of the Act is executable or not. The simple answer is that Section 49 does not come in the way of execution of such decree or order. In this context, it is pertinent to cite two judgements.

  1. In the case of Ramavtar Kedarnath Gupta versus Ramgopal since deceased through Legal Representative, Reported in 2002(3) MP Law Journal 118, the Madhya Pradesh High Court held that an Arbitral award, although not registered as required under Section 17 of the Registration Act, 1908, could not be thrown out as a waste paper even if the same was not made a rule of Court. Likewise, judicial orders and decrees cannot be overlooked if they are not registered under the Registration Act, 1908.
  1. In the recent case of Suraj Lamp and Industries Pvt. Ltd. versus State of Haryana, reported in 2012(4) MP Law Journal (SC) 315, the Supreme Court observed that registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries in regard to transactions and execution of the documents.

The importance of the registration of court decrees and orders could also be understood by the following two illustrations—

  • X has a registered will in his favour. Mr. Y challenged the will in a civil court. The court declares that the will was suspicious and void. Accordingly, the court issued decree in favour of Mr. Y. But the court does not send the decree for registration to the Registrar. If Mr. X sells the property comprised in the will to Mr. Z, without disclosing this fact that the will has been declared void, the sale would amount to fraud. This fraud could have been prevented, if the decree was registered in time under the Act.
  • A purchases a property from Mr. B, which property does not belong to Mr. B. Mr. C challenges the sale deed in a civil court and obtains the decree in his favour and declaration that he is the owner of the property. The copy of decree is not registered as per Section 17 of the Act. If Mr. A, representing himself to be the owner of the property, sells the property to Mr. D, Mr. C will have to file a fresh suit against Mr. D. In the suit, Mr. D may take the defence that he is a bona fide purchaser who has paid the consideration.

To avoid such unpleasant situations, it is strongly recommended that every decree and judicial order, even if passed by way of an interim injunction, that affects the rights in respect of and/or obligations toward an immovable property, is registered under the Registration Act, 1908.

Latest amendments in VAT rules in Madhya Pradesh

On 15 May 2015, the Department of Commercial Tax, Government of Madhya Pradesh, issued Notification No. F-A-3-24-2015-I-IV-(23) while exercising powers conferred under Section 71 of the Madhya Pradesh VAT Act, 2002. By way of this Notification, new provisions have been introduced in the Madhya Pradesh VAT Rules, 2006. Salient features of the amendments are here below:

  1. A businessman intending Registration Certificate under the Madhya Pradesh VAT Act, 2002, is under obligation to furnish the self-attested copy of his Permanent Account Number i.e. PAN, issued under the Income Tax Act, 1961.
  2. Likewise, if the Department of the State or Central Government wants to obtain Registration Certificate under the Madhya Pradesh VAT Act, 2002, the same is also required to file self-attested copy of its Tax Deduction and Collection Account number i.e. TAN.
  3. Further, Dealers who have obtained Registration Certificate at an early point of time, are also required to file self-attested copies of their PAN.

The amendments are anticipated to help the Commercial Tax Department to also cross-check Books of Accounts of old Dealers.

If Departmental Authorities seek to requisite certain information from the Income Tax Authorities, then the details of PAN will be the basic requirement. This is alarming for those who do not show real business transactions in there VAT Returns.