Recently, there have been instances of certain collective investment schemes (CISs) attempting to circumvent regulatory oversight. In addition, some market participants have not complied with Securities and Exchange Board of India's (SEBI) orders of payment of penalty and refund to investors. In August, the Securities Laws (Amendment) Bill, 2013 was introduced in the Lok Sabha to amend the Securities and Exchange Board of India Act, 1992 (the SEBI Act, 1992), the Securities Contract (Regulation) Act, 1956 (SCRA, 1956) and the Depositories Act, 1996. The Bill replaced the Securities Laws (Amendments) Ordinance, 2013. The Bill makes the following key amendments: a) Definition of Collective Investment Schemes The SEBI Act, 1992 defines CISs as schemes in which the funds of investors are pooled, yield profits or income and are managed on behalf of investors. It also exempts certain types of investments which are regulated by other authorities. The Bill introduces a proviso to the definition of CIS. This proviso deems any scheme or arrangement to be a CIS if it meets all three of the following conditions: (a) funds are pooled, (b) it is not registered with SEBI, or it is not exempted by SEBI Act, 1992, and (c) it has a corpus of Rs 100 crore or more. These provisions could potentially lead to some schemes not conventionally defined as CIS to fall under the definition. For instance, partnership firms operating in the investment business or real estate developers accepting customer advances could be termed as CISs. SEBI has been given the power to specify conditions under which any scheme or arrangement can be defined as a CIS. This raises the question of whether this is excessive delegation of legislative powers - usually the parent act defines the entities to be regulated and the details are entrusted to the regulator. b) Disgorgement (repayment) of unfair gains/ averted losses SEBI has in the past issued orders directing market participants to refund i) profits made or ii) losses averted, through unfair actions. The Bill deems SEBI to have always had the power to direct a market participant to disgorge unfair gains made/losses averted, without approaching a court. This power to order disgorgement without approaching a court is in contrast with the provisions of the recently passed Companies Bill, 2011 and the draft Indian Financial Code (IFC) which require an order from a court/tribunal for disgorgement of unfair gains. Further, the Bill specifies that the disgorged amount shall be credited to the Investor Education and Protection Fund (IEPF), and shall be used in accordance with SEBI regulations. The Bill does not explicitly provide the first right on the disgorged funds to those who suffered wrongful losses due to the unfair actions, unlike the draft IFC. c) Investigation and prosecution The Bill empowers the SEBI chairman to authorise search and seizure operations on a suspect’s premises. This does away with the current requirement of permission from a Judicial Magistrate. This provision removes the usual safeguards regarding search and seizure as seen in the Code of Criminal Procedure, 1973, the recently passed Companies Bill, 2011 and the draft Indian Financial Code. The Bill also empowers an authorised SEBI officer to, without approaching a court, attach a person’s bank accounts and property and even arrest and detain the person in prison for non-compliance of a disgorgement order or penalty order. Most regulators and authorities, with the exception of the Department of Income Tax, do not have powers to such an extent. d) Other Provisions of the Bill The Bill retrospectively validates consent guidelines issued by SEBI in 2007 under which SEBI can settle non-criminal cases through consent orders, i.e., parties can make out-of-court settlements through payment of fine/compensation. The United States Securities and Exchange Commission settles over 90% of non-criminal cases by consent orders. The Bill retrospectively validates the exchange of information between SEBI and foreign securities regulators through MoUs. The Bill sets up special courts to try cases relating to offences under the SEBI Act, 1992. For a PRS summary of the Bill, here.
Recently, the Supreme Court collegium reiterated its recommendations for the appointment of 11 judges to certain High Courts. It had first recommended these names earlier this year and in August last year, but these appointments were not made. The Indian judiciary faces high vacancies across all levels (the Supreme Court, High Courts, and subordinate courts). Vacancy of judges in courts is one of the reasons for delays and a rising number of pending cases, as there are not enough judges to hear and decide cases. As of today, more than four crore cases are pending across all courts in India. In this blog post, we discuss vacancies across courts over the years, delays in appointment of judges, and methods to determine the adequate judge strength required to handle the caseload courts face.
High vacancy of judges across courts
Vacancies in courts keep on arising periodically due to retirement, resignation, demise, or elevation of judges. Over the years, the sanctioned strength of judges in both High Courts and subordinate courts has been increased gradually. However, vacancies persist due to insufficient appointments (see Figures 1 and 2). Between 2010 and 2020, vacancies increased from 18% to 21% across all levels of courts (from 6% to 12% in the Supreme Court, from 33% to 38% in High Courts, and from 18% to 20% in subordinate courts).
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Figure 1: Vacancy of judges in High Courts |
Figure 2: Vacancy of judges in subordinate courts |
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Sources: Court News 2010-2018; Vacancy Statement, and Rajya Sabha replies, Part I, Budget Session (2021), Department of Justice; PRS. |
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As on November 1, 2021, the Supreme Court had a vacancy of one judge (out of a sanctioned strength of 34). Vacancy in High Courts stood at 37% (406 posts vacant out of a sanctioned strength of 1,098). Since May, 2021, the Supreme Court collegium has recommended more than 130 names for appointment as High Court judges. In three High Courts (Telangana, Patna, and Calcutta), at least half of the posts are vacant (see Figure 3). The Standing Committee on Personnel, Public Grievances, Law and Justice (2020) noted that every year, 35-40% of posts of High Court judges remain unfilled.
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Figure 3: Vacancy of judges across High Courts (in %) (as on November 1, 2021)
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Source: Vacancy Statement, Department of Justice; PRS. |
Appointments of High Court judges are guided by a memorandum of procedure. As per this memorandum, the appointment process is to be initiated by the concerned High Court at least six months before a vacancy occurs. However, the Standing Committee (2021) noted that this timeline is rarely adhered to by High Courts. Further, in the final stage of the process, after receiving recommendations from the Supreme Court collegium, the executive appoints judges to the High Court. No timeline is prescribed for this stage of the appointment process. In 2018 and 2019, the average time taken to appoint High Court judges after receiving the collegium’s recommendations was five to seven months.
As of today, over 3.6 crore cases are pending before subordinate courts in India. As on February 20, 2020, 21% posts for judges were vacant (5,146 posts out of the sanctioned strength of 24,018) in subordinate courts. Subordinate courts in Bihar, Haryana, and Jharkhand (among the states with high population) had a high proportion of vacancies of judges (see Figure 4). Note that the Supreme Court is monitoring the procedure for appointment of judges to subordinate courts.
For an analysis of the data on pendency and vacancies in the Indian judiciary, see here.
Figure 4: Vacancy of judges across subordinate courts (in %) (as on February 20, 2020)
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Source: Report No. 101, Standing Committee on Personnel, Public Grievances, Law and Justice (2020); PRS. |
How many judges do we need?
The Law Commission of India (1987) had noted the importance of manpower planning for the judiciary. Lack of adequate number of judges means a greater workload per judge. Thus, it becomes essential to arrive at an optimal judge strength to deal with pending and new cases in courts. Over the years, different methods of calculating the required judge strength for subordinate courts (where the backlog of cases in the Indian judiciary is concentrated) have been recommended (see Table 1).
Table 1: Methods recommended for calculating the required number of judges for subordinate courts
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Method of calculation |
Recommendation and its status |
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Judge-to-population ratio: optimum number of judges per million population |
The Law Commission of India (1987) had recommended increasing this ratio to 50 judges per million people. This was reiterated by the Supreme Court (2001) and the Standing Committee on Home Affairs (2002). For 2020, the judge-to-population ratio was 21 judges per million population. Note that this figure is calculated based on the sanctioned strength of judges in the Supreme Court, High Courts and subordinate courts. |
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Rate of disposal: number of additional judges required (to clear the existing backlog of cases and ensure that new backlog is not created) based on the average number of cases disposed per judge |
The Law Commission of India (2014) proposed this method. It rejected the judge-to-population ratio method, observing that filing of cases per capita varies substantially across geographic units depending on socio-economic conditions. |
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Weighted case load method: calculating judge strength based on the disposal by judges, taking into account the nature and complexity of cases in local conditions |
The National Court Management Systems Committee (NCMS) (2016) critiqued the rate of disposal method. It proposed, as an interim measure, the weighted case load method, which addresses the existing backlog of cases as well as the new flow of cases every year in subordinate courts. In 2017, the Supreme Court accepted this model. |
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Time-based weighted case load method: calculating the required judge strength taking into account the actual time spent by judges in different types of cases at varying stages based on an empirical study |
Used widely in the United States, this was the long-term method recommended by the NCMS (2016) to assess the required judge strength for subordinate courts. It involves determining the total number of ‘judicial hours’ required for disposing of the case load of each court. The Delhi High Court used this approach in a pilot project (January 2017- December 2018) to calculate the ideal judge strength for disposing of pending cases in certain courts in Delhi. |
Sources: Reports No. 120 (1987) and 245 (2014), Law Commission of India; Report No. 85, Standing Committee on Home Affairs (2002); Note for Calculating Required Judge Strength for Subordinate Courts, National Court Management Systems Committee (NCMS) (2016); Imtiyaz Ahmad vs. State of Uttar Pradesh, Supreme Court (2017); PRS.
