India's Top Court Split as Spotlight Falls on Chief Justice

Updated on
  • Judicial dispute has hit investment sentiment on key gauges
  • Case involving death of fellow judge one reason for the rift

India’s Supreme Court in New Delhi.

Photographer: Sajjad Hussain/AFP via Getty Images

A unprecedented rift has opened in India’s supreme court, with four senior judges speaking out against the chief justice in a move that could hinder Prime Minister Narendra Modi’s move to sell Asia’s third-largest economy as a transparent investment destination.

India’s key equity gauges -- the Sensex and Nifty 50 -- dropped as much as 0.5 percent after the judges addressed the media in New Delhi in a dramatic public airing of their long-standing dispute. They said the Supreme Court is "not in order" and alleged senior judges were not being properly allocated matters.

Justice J. Chelameswar said he along with the other three judges met the Chief Justice of India, Dipak Misra, over the allocation of sensitive cases, including the death of a lower court judge. That judge was trying Amit Shah, president of the ruling Bharatiya Janata Party, in a criminal case. 

The chief justice could not be reached for comment. The Supreme Court’s Deputy Registrar and public relations officer Rakesh Sharma said there was no response from the court as of now.

Jagdish Thakkar, a spokesman in the Prime Minister’s Office, didn’t respond to a call seeking comment.

"We thought we owed a responsibility to the institution, to the nation," Chelameswar said. "We tried to collectively persuade the chief justice that certain things are not in order, therefore he should take remedial measures." The chief justice declined, he said.

A divided house in India’s top court raises broader questions about the quality of the Indian legal system as it regularly rules on significant business and economic matters such as Vodafone Group PLC’s years-long tax case. Despite jumping 30 spots on the World Bank ease of doing business ranking, India remains 164th in the world for "enforcing contracts," in part because of the subjective allotment of judges to cases.

"This is quite unprecedented and rather extraordinary for senior Supreme Court judges in the collegium to publicly raise procedural lapses in how recent cases have been assigned," said Pratyush Rao, a Singapore-based analyst at Control Risks. "Foreign investors are likely to closely follow how this development plays out, including its potential to trigger legal reforms, considering the implications this has for rule of law in India."

Investigation of Judges

Chelameswar and the present chief justice have sparred in recent months over allocating cases that could have ended in investigation of some of the sitting judges.

"It is with no pleasure in our hearts that we were compelled to take this decision to call a press conference," he said. "For sometime, the administration of the Supreme Court is not in order, many things that are less than desirable have happened in the last few months."

"It’s an extraordinary event in the history of any nation," Chelameswar said. "An extraordinary event in the history of this institution."

Any uncertainty related to the federal government is a “sentimental negative” for the markets, Ajay Srivastava, managing director at Dimensions Consulting Pvt. in New Delhi said.

An independent judiciary is one of the fundamentals of economic growth and the comments made by judges might raise question about its credibility, Srivastava said.

The judges made their remarks from wicker chairs set on the back lawns of a faded colonial-era government bungalow, which are allotted to senior officials in New Delhi.

— With assistance by Ameya Karve

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE