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Doing Business in India – The Legal Environment – Part 1

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Did you know that it takes 35 days to start a business in India ? and India ranks a lowly 134th in the world when it comes to ease of starting a business.

Here is the 1st part of a 4 part article written by Sumeet Kachwaha of Kachwaha & Partners giving legal perspective of things if you plan on doing business in India. This aims to be an easy to read, yet comprehensive overview of legal issues involved in doing business in India.

LEGAL ENVIRONMENT

The Courts:

Though India has a quasi-federal structure, the judiciary is unified. Broadly, there is a three tier structure. First, each administrative district (there are over 600 districts) is headed by a District Court. Then each State has a High Court. Since some States share the same High Court, there are 21 High Courts in India.

At the apex is the Supreme Court of India situated at New Delhi. The various High Courts can have very diverse characteristics. For instance, the High Court for the small State of Sikkim has a strength of only two Judges, whereas the High Court for the State of Uttar Pradesh has about 100 Judges.

The Supreme Court of India has about 25 Judges who sit in several divisions of varying strengths. Matters of fundamental significance are decided by a bench comprising of 5 Judges.

Besides the broad three tier structure there are various specialized tribunals – the more prominent ones being the Company Law Board; Monopolies and Restrictive Trade Practices Commission; Consumer Protection Forum; Debts Recovery Tribunal; Tax Tribunal.

These Tribunals function under the supervisory jurisdiction of the High Court where they may be situated, though many of them (like the Monopolies Commission) allow an appeal directly to the Supreme Court.

Judiciary:

The Indian judiciary is known for its independence and extensive powers. The High Court or the Supreme Court in exercise of their Constitutionally conferred writ jurisdiction are empowered strike down legislation on the ground of unconstitutionality. They can and fairly routinely intervene with executive action as well on the ground of unreasonableness or unfairness or arbitrariness in State action.

Indeed Courts can even strike down an amendment to the Constitution on the ground that it violates the basic structure of the Constitution. Besides, the High Courts and the Supreme Court have adapted an activist mantle, which goes under the name of Public Interest Litigation, whereunder they can intervene with governmental policies if it may adversely impact the public at large or the public interest is such that it requires Court intervention.

The Bar:

India has a unified all India Bar which means that an advocate enrolled with any State Bar can practice and appear in any court in the length and breadth of the country, including the Supreme Court of India.

Foreign lawyers are not permitted to appear in courts and the entry of foreign law firms into India (for non – court matters) has not yet been permitted though it is currently being debated and considered. However, they can appear in arbitrations.

Court Practice And Procedure:

The influence of the British Judicial System which India imbibed, continues in significant aspects. The official language for court proceedings in the High Court & the Supreme Court is English. Lawyers don a gown and a band as part of their uniform and address Judges as – “My Lord”.

The procedural law of the land as well as most commercial and corporate laws are modeled on English laws. English case law is regularly referred to and relied upon in courts.

There is great emphasis on oral arguments. Almost all matters are heard extensively in open Court. Advocates are seldom restrained in oral arguments and complex hearings may well take days of arguments to conclude. Specialisation is relatively a new phenomenon and most lawyers have a wide-ranging practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Doing Business in India Series:

The Legal Environment
Investment and Trade
Company Incorporation
Intellectual Property Rights

"Doing Business in India - The Legal Environment - Part 1", 5 out of 5 based on 1 ratings.
  1. Business says

    it would be good if you can just link and point subsequent parts of this post …. as this only covers the legal part.

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