The Law Ministry has asked states to set up special courts to settle disputes related to infrastructure project contracts under a law which was amended two years ago, saying it is very important in improving the ‘Ease of Doing Business’ ranking of both India and states. Citing the examples of the high courts of Allahabad, Karnataka and Madhya Pradesh, it has suggested other high courts to allocate a special day to make already functioning designated special courts for dealing with infrastructure project litigation as dedicated courts.
Section 20 B of the Specific Relief (Amendment) Act, 2018, provides for designated courts. But the Law Ministry wants a designated court to function as a dedicated court on special days. In a letter to the registrars general of all high courts last week, the secretary (Justice) in the Law Ministry said that the Karnataka, Allahabad and Madhya Pradesh high courts have set up Designated Special Courts instead of Dedicated Special Courts under the Specific Relief Act.
The high courts have dedicated special days every week to enable exclusive handling of Specific Relief matters pertaining to infrastructure project contracts. “This arrangement could be considered for adoption in your high court as an alternative measure until Dedicated Special Courts are set up. This could be helpful in the enforceability of contract both from the perspective of time and cost, thereby stimulating investors’ confidence and creating conducive business climate," the letter said.
In October, Law Minister Ravi Shankar Prasad had written to all chief ministers pressing for special courts under the Specific Relief (Amendment) Act, 2018. He had pointed out that a new section 20A has been included in the Act for infrastructure project contracts which provides that the court shall not grant injunction in any suit where it appears to it that granting injunction would cause hindrance or delay in the continuance or completion of the infrastructure project.
“The foreign investors are of the view that presence of special courts will ensure enforceability of contracts both from the perspective of time and cost and provide the much-needed impetus for creating an investor friendly ecosystem. Therefore, establishment of special courts will circumvent unnecessary hindrance or delay in the continuance or completion of the infrastructure projects," Prasad wrote. This, the minister said, is very important in improving the ‘Ease of Doing Business’ ranking of both India as also states.
According to Section 20B of the amended law, the state government, in consultation with the chief justice of the high court, will designate one or more civil courts as special designated courts, within the local limits of the area to exercise jurisdiction and to try a suit under the Specific Relief (Amendment) Act in respect of contracts relating to infrastructure projects.