The two-volume report, presented by commission chairman PC Jain to cabinet secretary Prabhat Kumar on Wednesday, pointed out that 166 central acts, 315 amendment acts, 12 British statutes, 17 war-time permanent ordinances, 115 central acts relating to state subjects and 700 appropriation acts be repealed because they have, "either become irrelevant or dysfunctional".

The cabinet secretary assured the three-member commission which included HD Shourie, S Ramaiah and PSA Sundaram, that government would examine thereport in a time-bound manner and take appropriate action.

Referring to company law provisions, the commission wanted the government to refer the draft Companies Bill to a select committee for taking note of the proposed improvements from government agencies, industry, consumer groups and "then enact the bill in the next six months."

It pointed out that the present procedures for winding up companies should be comprehensively revised, as suggested by user groups, and fast-track tribunals be set up. The Company Law Board needed to be streamlined in terms of procedures and infrastructure to handle the new responsibilities. Also the confusion over the roles of RBI, Sebi and department of company affairs should be removed.

On the issue of investor protection and NBFC regulation, the commission urged the government to "clearly vest the responsibility in the RBI for strictly and effectively enforcing the regulatory mechanism", and give wide publicity to various measures which were proposed to be taken by thecentral and state governments for registration and regulation of NBFCs, protection of depositors, action against erring companies and easily accessible and effective avenues for grievance redressal.

It says that the mechanism should be to aim at not only on prosecuting offenders but also in arranging for early payment of deposits. The immediate introduction of the proposed insurance scheme would be helpful in this regard.

With regard to problems of FDI, the commission pointed out that inflows were being adversely influenced by "state level delays in approvals, confusion over the role of regulatory authorities in power, telecom and other sectors, red tap, inconsistent guidelines, cumbersome documentation, apprehensions over the delays in dispute resolution and contract enforcement. The commission suggested that these apprehensions and impressions needed to be detailed and reduced to actionable issues at the level of different authorities, and harmoniously resolved by inter-ministerial groups.

Noting withconcern the persistence of the inspector raj, the commission called for an urgent review of the rationale for inspections and documentation under different central and state departments, the laws and practices governing inspections, and the need for adoption of more efficient and transparent surveillance.

It also urged the central ministries in charge of industry, labour, environment, power and other departments to interact with state governments for widespread adoption of various good practices.

The commission wanted the government to process various recommendations of the working group set up for comprehensive revision of income tax. The steps for simplification of forms and procedures, shortening dispute settlement period and compounding of offences should be carried forward vigorously.

With regard to indirect taxes, the commission urged the department of revenue to consider the report submitted by a working group on amendments to excise rules and regulations, and introduce the new rules,regulations, procedures as soon as possible. Similar exercise, it said, should be taken in case of customs.

The commission noted with concern that both in case of imports and exports, the problems arise from continuous changes in the handbook of procedures, circulars and notifications issued in the period between successive budgets. It has suggested that, "since excise and customs are indirect taxes, simplicity, certainty and early finalisation of taxes are more important than a rule-based attitude." The changes in rules and inter agency coordination and procedures should be directed towards this objective.

The commission has also suggested imaginative handling of the issues in WTO and encouragement to advance rulings.

On the issue of labour laws, the commission wanted the labour ministry to introduce amendments to the Contract Labour (Regulation and Abolition) Act 1970 on the lines of the report of the committee of officials and after the study of the Supreme Court judgments. This will enableengagement of contract labour in all peripheral and seasonal activities.

The other important suggestion of the commission was with regard to encouraging the alternate dispute resolution mechanism. It wanted more effective utilisation of the arbitration and conciliation act and greater use of mediation process. The commission suggested that state governments should give special attention to the strengthening of legal authorities and to promote and encourage the establishment of Lok Adalats in districts and talukas.

There is also scope for encouraging and facilitating voluntary arbitration and settlement of disputes particularly relating with employees, contractors, builders, consumers, businessmen, discrimination against women and weaker sections with involvement of retired judges and lawyers.

INSIGHT
A society choked by its laws

Perhaps the easiest recommendation to implement is the repeal of 1300 redundant central laws. There are two other recommendations that do not need legalreform: the establishment of fast-track tribunals for winding up companies; and accelerated use of alternative dispute resolution mechanism, including voluntary arbitration of disputes relating to employees, contractors, builders, discrimination against women and weaker sections.

The Commission's report deserves serious attention of the Reserve Bank which has been lackadaisical about goings on in NBFCs. The finance companies are able to shortchange the depositor with impunity. Likewise, the Foreign Investment Promotion Board must look at the report to find out about "state-level delays in approvals, confusion over the role of regulatory authorities in power, telecom and other sectors, red tape, inconsistent guidelines and cumbersome documentation".