Free Press Journal

Sucheta Dalal: Justice crushed by long-drawn legal trials


If India wants to be counted as a developed nation, we will have to fix our judiciary to ensure that it delivers timely justice. Most of those who read the recent headline that some high profile businessmen and politicians would face trail in a ‘cobbler scam’ probably thought it was a misprint. The Cobbler Scam, which made front page news in the early ‘90s was about how a set of banks had colluded with businessmen and politicians to corner benefits running into crores of rupees that were meant for poor cobblers and artisans.

To readers born after India embarked on economic liberalisation around 1991-92, the very thought that a government scheme, aimed at benefitting cobblers and artisans would be perverted to benefit rich businessmen would seem like an extraordinary low level thievery. The pre-liberalisation era of India was land of slow growth where telephone and gas connections, scooters, foreign exchange and even job opportunities were scarce. The scam opportunities were primarily in grabbing subsidies, benefits and fertilisers meant for the poor.

But the wheels of justice turn so excruciatingly slowly in India, that the justice system is still examining it. India has changed drastically since then. It is not merely about poverty, low economic growth and our insular policies — it is also about how technology has transformed the world so much, that instead of access and transparency as before we worry about privacy and electronic invasion into our rights now. Some of the long-drawn judicial trails conducted today, do not even resonate with those who are arguing or hearing those cases. Allow me to explain what I mean.

On 12th March, which was also the 25th anniversary of the deadly serial blasts that rocked Mumbai, a Mumbai tabloid reported that the chief metropolitan magistrate’s court had rejected the discharge applications of some powerful accused in what was known as the Cobbler Scam including Sadruddin Daya, former Sheriff of Mumbai (owner of the famous Metro Shoes) and Baburao Mane, a former Shiv Sena legislator. They had formed cooperative societies of fictitious cobblers and artisans to divert funds meant for small individuals to these large cooperatives, which were controlled by politicians linked to glitzy, high-end shoe manufacturers with showrooms on every high street in Mumbai. Naturally, the funds were at low or negligible interest rates.

The scam rocked Mumbai and had led to high profile arrests and investigation into the role of very senior politicians and bankers with over 25 cases filed. I had followed the scam closely in the early 1990s and was shocked to know a few days ago that the trial into the scam has not even begun. Several of those who were investigated then, went on to become high profile ministers; some are dead after successful careers. Some of the accused wanted to be discharged because the scammed money had been repaid to banks with interest. The judge correctly rejected this argument, but it doesn’t make the process any less pointless.

Remember, we are still at the first level of the judicial process with at least two rounds of appeals before it reaches the Supreme Court. Is there any point to a trial where the economic context is lost, documents missing, witnesses dead and justice is nowhere in sight? A 23-year delay in even starting the trail is only about justice denied. Such as painfully slow judicial process allows the rich and powerful to escape punishment, grinds to dust the lives of the poor and powerless, who end spending decades as under trials in jail even if they are usually minor colluders or even scapegoats.

The high profile Harshad Mehta Scam of 1992, or what was known as the Securities Scam is no different. In fact, it is worse. The Special Court (Trial of Offences Relating to Transactions in Securities Act, 1992) Ordinance was promulgated on 6th June 1992 to ensure a fast and expeditious trial; it later became the Special Court (Torts) Act 1992 and was amended to hear civil matters in addition to criminal offences in 1994. Under this act, scam related cases were heard directly by a special court of the Bombay High Court and a Custodian appointed to ‘notify’ persons accused take charge of the assets of scamsters. Did that make a difference? Judge for yourself. The very fact that the court is still in existence and hearing dozens of pending litigation, long after the main accused — Harshad Mehta — is dead almost 20 years ago, tells its own story.

But worse, 26 years later, the biggest delay in prosecuting these cases is the income tax department, which has first claim over the assets. The problem started with the tax department making highly exaggerated claims (at one time it was Rs 30,000 crore in a Rs 5000 crore scam) and probably, its unwillingness to admit that there is no way they can be justified or recovered.

Similarly, Central Bureau of Investigation (CBI), which is prosecuting the case, has no pressure or compulsion to complete them in a timely manner, or even to justify the charges they have made. Those who were in charge when the trial began have retired more than a decade ago or passed away. In fact, the smartest people turned out to the foreign banks, which paid up a fine when penalised by the Reserve Bank of India (RBI) and decided to write off their losses rather than go to courts and spend decades in enriching lawyers. Indian nationalised banks had no choice in the matter and continue to do the rounds of courts with no end in sight.

If India wants to be counted as a developed nation, we will have to fix our judiciary to ensure that it delivers timely justice. Long trials that deny justice and the propensity of government to introduce backdated legislation are now serious worries for foreign investors, especially those seeking government contracts.  Investors want to sign iron clad international arbitration agreements that bypass Indian courts. This is probably one of the best-kept secrets of stalled investment in India, while the government keeps announcing newer projects.

Sucheta Dalal is the managing editor of Moneylife Magazine and a Founder Trustee of Moneylife Foundation. She was awarded a Padma Shri in 2006 for her investigative journalism.