ED summoning lawyers is a direct hit on the judicial delivery system: Former ASG Balbir Singh

Senior Advocate Balbir Singh is a former Additional Solicitor General (ASG) of India..In this wide-ranging interview with Bar & Bench's SN Thyagarajan, Singh speaks about the entry of foreign law firms into India, the future of arbitration reform and digital market regulation.Calling the Bar Council of India’s fly-in, fly-out framework a “step in the forward direction,” Singh dismisses fears that foreign firms would displace Indian practitioners.He also touches upon the recent Enforcement Directorate summons issued to lawyers advising clients under investigation, calling it “a direct hit on the judicial delivery system.”.Edited excerpts follow..What are your views on the Bar Council of India's framework permitting foreign law firms, including the fly-in fly-out model and registration system? Is this a step towards liberalisation or could it harm Indian law firms?.This is a step in the forward direction towards liberalisation. Foreign lawyers were never involved in court practice or the structuring of domestic transactions. The new regulation prevents them from advising on Indian law. The fear that they will displace Indian lawyers is not well-founded. Only a narrow band, mainly law firms, might see some competition. But the benefits like access to technical expertise, cross-border structuring knowledge and regulatory oversight, far outweigh the risks..Recently, there have been controversial instances where senior lawyers were summoned by the ED for advising clients. What is your view on this development?.First of all, I am absolutely against any agency or authority calling a lawyer who, in his professional capacity, is advising any client who is under a cloud. Lawyers are not representative of these clients, who may be involved in any good or bad businesses. They are representatives in the capacity of court officers. They are an extension of the judicial delivery system in India and one can't threaten the judicial delivery system in the country.We can talk of the Indian Evidence Act (now replaced by The Bharatiya Sakshya Adhiniyam) where there is a protection given to attorney-client privilege. This privilege protects communication between lawyers and clients. That's the legal side of it.But my concern is slightly different, that if these agencies start thinking on these lines - that we can call a lawyer advising a client - that will hit the true, ethical and fair representation for a client in the court. And that is the dangerous part I see in the whole process, because unless there is a full-fledged fair representation in the court, there is going to be failure of justice delivery. I have seen the recent circular being issued, which is a step in the right direction, but in the first place, it should not have been required. Principally, the very thought that a lawyer can be called in the investigation is problematic. These companies have in-house lawyers who can be contacted if the agencies have specific questions. However, when protection is given in law, such as client-attorney privilege, I think it's a direct hit on the judicial delivery system and should certainly not be permitted at all..How does the Supreme Court’s ruling in the Gayatri Balaswamy case affect the scope of judicial intervention in arbitration proceedings?.The objective was to allow courts to sever problematic parts of an arbitral award rather than setting aside the whole award. The concern is that courts might now overreach, using this to interfere more than necessary. The test will lie in how lower courts interpret it under Sections 34 and 37 of the Arbitration Act..The Independent Sugar Corporation judgment is currently under review. What were the core legal issues involved in the case and what is your position on them?.There were two key issues: whether a prima facie Competition Commission of India (CCI) finding mandates a Director General (DG) investigation, and whether all parties must be notified in M&A filings. I argued that investigations should remain discretionary, and that notice isn’t always mandatory, particularly in hostile acquisitions. That flexibility must remain with the regulator..With digital markets and AI growing rapidly, do you think India urgently needs an ex-ante regulatory framework like the Digital Competition Bill?.A major role of a regulator is required in the digital space. There should be a regulatory law to govern and regulate various aspects and participants in the digital world. In my view, ex-ante laws are needed beyond competition law, especially around data sharing and privacy concerns. Whether such a law should be part of the Competition Act or made separately is for Parliament to decide. I am certainly in favour of a regulatory mechanism for digital space. Today, the digital space affects democracies and society at large. There must be a framework in place to ensure that digital entities function in line with national policy..How was your experience as Additional Solicitor General and what prompted you to resign?.My experience was indeed excellent. I can say that this gave me the chance to step outside my comfort zone in commercial laws and tax law, which I had been practising. I was exposed to laws that a commercial lawyer is typically not exposed to, which gave me the opportunity to understand specific areas that I would not have otherwise been familiar with. So I can say with certainty it was a great experience.Secondly, it provided learning on how to manage a large volume of work, which is often thrust upon you, particularly in critical areas such as constitutional matters and critical appointments. As a private lawyer, you don't get these opportunities to appear in 20 matters in a day. Whereas, as a law officer, your skillset and ability unknowingly improve.Third, I think with being a law officer, there is a responsibility to be fair and transparent in the court. It gives you a chance to be fair and not constantly adversarial. Whereas, for a private client, you can't take a stand because of obvious reasons. This space gives you a chance to be fair and at the same time contribute to making some positive change. For example, in tax cases, filings were time-barred. And I remember the then Chief Justice said that 50–60% of all the matters are time-barred. What are you doing? The Court kept the matter back and decided to monitor the delay in filing tax cases. It gave me a chance to interact with the officials in the Ministry of Finance, and a common portal was created for all direct and indirect tax departments, where judgments starting from the tribunal started loading to that portal. As a result, that brought in efficiency.So I certainly see a role law officer can play in a positive aspect to see that it can be of any assistance to the institution per se..With the Central and state governments responsible for a large volume of litigation, what role can law officers play in curbing frivolous cases and reducing the burden on the judiciary?.Law officers are, generally, often consulted before matters reach the Supreme Court. That’s where they can be fair and advise against filing weak appeals. In my experience, the Supreme Court appreciates when a government lawyer concedes that a matter should not have been pursued. That input can help departments avoid unnecessary litigation..It has been almost a decade since the IBC came into force. Has it meaningfully changed India’s insolvency regime? What issues continue to persist?.IBC was needed and brought in a resolution-oriented mindset. Some significant cases have been resolved. However, inefficiencies in the NCLT/NCLAT persist, and the misuse of IBC as a recovery tool is on the rise. Small creditors are dragging solvent companies into insolvency. Structural reforms are needed. Complex insolvencies can’t be left to a single individual in the capacity of a resolution professional. The process needs institutional capacity to ensure fair outcomes..As a former ASG, what is your opinion on the 2024 Office Memorandum issued by the Central government restricting arbitration in government contracts below ₹10 crore?.Arbitration is fundamentally a choice between parties to resolve disputes in a particular way. It reflects party autonomy and is not something that can be imposed in all situations. Except for certain statutory arbitration, such as those under the Electricity Act or land acquisition laws, arbitration cannot be mandated by default.The Office Memorandum appears to be a policy decision. If the government has decided that disputes below ₹10 crore should be resolved through other means, such as conciliation or departmental adjudication, I do not see any serious issue with that approach.What is important is that the policy should not restrict arbitration entirely for disputes above ₹10 crore. Public sector undertakings and government departments should have the flexibility to decide based on the nature of the contract, the contracting parties and the specific context. If the policy simply provides a framework for choosing between arbitration and court proceedings without removing that choice, then it is not problematic.India's experience with arbitration, especially in high-value government contracts and international disputes, has been mixed. That experience may have influenced the decision to limit arbitration in lower-value matters. However, it is essential that the option to arbitrate remains open when appropriate..The draft Arbitration and Conciliation (Amendment) Bill, 2024 proposes extending ‘patent illegality’ as a ground for challenge even in international commercial arbitrations. What are your thoughts?.It is a very tricky slope. Patent illegality has been interpreted by courts and used as a route to set aside genuine awards, going against the principle of least judicial intervention.At the same time, ad hoc arbitration in India has often lacked procedural integrity. The decision-making process has also come under a cloud. In such situations, patent illegality under Section 34 has proven to be a useful tool. But extending that to international arbitration, I have serious reservations about that. It opens up scope for interpretation by domestic courts under Section 34 to go after the international awards. That tool should not be given.The public policy argument has already been interpreted in decisions like Ssangyong. Courts have held that if an award violates the terms of the contract, the laws of India, or notions of morality, it may be set aside. So those safeguards are already there. Extending patent illegality now could be a risky proposition..What are the key issues the 2024 Bill should have addressed, and what reforms do you recommend?.Two or three things could have been done. First, recognising what recently came from the Supreme Court on whether a part of an award can be set aside, should be addressed. Section 34 now contains that aspect. The freedom to set aside part of an award should be recognised, so you don’t have to re-arbitrate the entire matter every time.Second, appointments take too long. Section 11 proceedings can drag on for years. That defeats the purpose of arbitration. In Section 9, once you seek interim relief, you must kick-start arbitration within 60 days, that’s a good step. A similar mechanism under Section 11 would help. If a party refuses or delays an appointment, there should be established timelines. Currently, we only consider limitations, but implementing deadlines would improve efficiency.Third, on the international side, Section 48, which deals with the enforcement of foreign awards, still allows intervention at the execution stage. Courts often start re-evaluating the matter. Guidance from various court rulings should be incorporated directly into Section 48. Courts should be told that in some cases, there can be no interference, especially where the foreign award has already been tested on merits in its home jurisdiction. At the execution stage in India, it should not be reopened.These two or three measures, if properly addressed, would go a long way in strengthening India’s arbitration framework.