This article is in continuation to the series of earlier articles which deal with various aspects to bear in mind while seeking to litigate in India. In our past articles, we have discussed multiple key facets such as; the need to anticipate and strategize a dispute well in advance, the importance of facts in a dispute scenario, etc. While the above points are important, one cannot neglect another important aspect of litigation i.e., choosing the most appropriate forum for the proceedings. This plays a critical role to determine the course, cost, duration, direction etc., of the dispute.
Furthering commercial objective
While litigation in India is usually long drawn and cumbersome, choosing the correct judicial forum may allow a relatively shorter time frame for achieving the desired settlement. A party can analyze the forum which provides the fastest dispute resolution, as opposed to approaching a forum where cases could get delayed endlessly. Sometimes, it may be in the larger interest to have a litigation to linger on for the nuisance value to the other side. In other instances, an effective relief from a court may be desirable. In either case, choice of the forum will depend on the facts of the dispute and the commercial objective to be achieved.
Choice of forum
It can be a task to ascertain the most appropriate forum. However, focusing on the commercial objective helps in narrowing down on the judicial forum. An example would help for ease of understanding. If a person faces difficulties with a builder in relation to non-delivery of property or is defrauded by the builder under an attractive returns scheme, the aggrieved person has the option to approach 3 different judicial forums under different statutes. A person may approach: (i) RERA tribunal under the Real Estate (Regulation and Development) Act, 2016 (RERA), (ii) the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 (IBC) or (iii) one of the Consumer Disputes Redressal Commissions (Consumer Forums) under the Consumer Protection Act, 2019. This is where the decision-making essentially lies; to weigh out the options available and choose the better judicial forum to seek recourse. The main question here is whether the dispute revolves around building pressure on the builder to receive monetary compensation and/or to seek prompt delivery of the property.
A party must first assess the pros and cons of their dispute to decide the more effective forum. Continuing with the above example, firstly the IBC would be applicable if the builder entity is a registered company or incorporated partnership. Although proceedings under IBC are not recovery proceedings, but once a case is established, it puts tremendous pressure on the opponent. The opponent, fearful of losing control of their business, often choses to settle the matter. However, there is also a downside to the IBC. If a corporate insolvency resolution process (CIRP) is initiated against the opponent, the debts would be paid in accordance with the list of creditors or restructured with a write down as part of CIRP. Hence, once CIRP is initiated, a litigant may have no control over the amount it receives and may also probably recover an amount which is lower than the amount initially claimed. Therefore, the value of claim and the type of creditor (secured or unsecured) would play an important role in determining the strength of the party’s case for approaching the NCLT under IBC. Secondly, if the financial status of the builder is uncertain or where the entire dispute hinges on an improperly executed contract etc., the case may not succeed in the NCLT. In such situations, RERA tribunal would be the more appropriate forum to approach. Thirdly, approaching Consumer Forums may also be beneficial. But here, unlike IBC or RERA, the claiming party must meet a required threshold to fall within the purview of a ‘consumer’. Further, proceedings at Consumer Forums could be slightly delayed. But once successful; the pressure of compensation in monetary damages supplemented with the fear of similarly placed consumers approaching the Consumer Forums seeking parity, helps in negotiating with the defaulting party.
Arbitration is another dispute resolution mechanism that is often invoked by disputing parties. A contract most often contains an arbitration clause in the event of a dispute arising from that contract. Arbitration is slowly but surely becoming the preferred form of dispute resolution, over conventional courts. However, parties still hesitate to arbitrate even though it is a relatively quicker form of dispute resolution as opposed to courts. The reason being that arbitration is comparatively more expensive and the award (i.e., order) passed by the arbitrator, though final and binding, is appealable in nature. Therefore, some may consider arbitration to be futile because sooner or later one circles back to approaching a court in case of an appeal and eventually lands up incurring more costs in the bargain.
If a party’s intention is to settle and cleverly use the dispute to bring the opponent on the table for discussions, then court driven litigation is surely the way to go. Given the public nature of conventional court litigation, sometimes opponents are compelled to come forth to settle. On the other hand, if a party has a strong or favorable case and is seeking immediate reliefs, it might be more beneficial for the party to opt for arbitration for speedier and effective interim reliefs and dispute resolution.
One may also consider approaching criminal forums since they add tremendous pressure on the opponent, especially in cases of non-bailable offences such as fraud, cheating, criminal breach of trust etc. Such excessive pressure when placed on the opponent creates immense nuisance value, compelling him to settle the matter at the earliest. However, the process for initiating criminal proceedings is very different as opposed to a civil litigation. The litigant must have sufficient facts supported by law to justify their stance before the concerned police officials / criminal courts that the case falls within the criminal domain and is not a civil dispute garbed as a criminal one. In many disputes, there are clear elements of fraud, criminal breach of trust and misappropriation of property and hence, a litigant should carefully analyze the facts to determine these aspects.
One must appreciate the fact that there is no ‘one size fits all’. The choice of forum is a very integral step which is dependent on the facts of a party’s case. It is important to clearly understand the relief one wants to secure before approaching any of the judicial forum(s). As discussed earlier, in India, there are a vast range of overlapping legislations. Therefore, it is imperative for one to make a conscious and informed decision of which forum to approach; each being different from the other. However, given the fact that litigation itself is quite tedious and at times, indefinite in nature, one should always look towards settling the matter. In our next article, we will try and explain how one should strategize their approach with the opponent outside of court because what happens outside court is just as important.
Anshu Bhanot | Of Counsel, Veyrah Law; Priyanka Zaveri | Associate, Veyrah Law
Views expressed above are for information purposes only and should not be considered as a formal legal opinion or advice on any subject matter therein.