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Legislations, The Law

The Commercial Courts Act, 2015

Based on the recommendation of the Law Commission of India, the act came into force from October 2015. The primary aim of the Commercial Courts Act is to provide speedy disposal of high-value commercial disputes to reduce the pendency of cases. Further, the act introduces Commercial Courts, Commercial Divisions in High Courts, and Commercial Appellate Divisions as discussed in the article along with several important provisions.

By: Ankita Sharma, Faculty of Law, University of Delhi.

Introduction

The efficiency of our legal system or the pace of disposal of cases has an important role in the economic and social development of a country. Speedy justice is a far reached goal in our country. To curb this problem of delay in justice, steps are being taken. One of such major step taken was in the commercial division for the speedy disposal of cases of commercial disputes, which was one of the initiatives of the Make In India concept. The recommendation for the same was made by the Law Commission of India in its 253rd report. The bill for the commercial courts was passed in both the houses and got the assent of the President and the act came into force from October 2015.  The Act is expected to lighten the encumbrance of litigation on courts making it less cumbrous and more efficient.1

What is a Commercial Dispute?

The act covers a wide range of disputes. Section 2(c) of the act defines ‘commercial dispute’ as covering ordinary transactions and contractual enforcement issues, the provisions extend to myriad other commercial transactions, including shareholder agreements, insurance, and reinsurance issues, disputes emerging out of the infringement of intellectual property, etc.

Additional commercial disputes can be added to the list by the central government as given under section 2(c)(xxii).

Constitution of Commercial Courts

1. Commercial Courts

The act talks about the constitution of commercial courts in every state and union territory except in those states and union territories where the High Court has original jurisdiction.

The High Courts which exercise original jurisdiction concerning commercial disputes are only five: Delhi, Bombay, Calcutta, Himachal Pradesh, and Madras.

2. Commercial divisions in high courts

The High Courts which do not have original jurisdiction for the commercial disputes, with the coming of this act, now they will have a commercial division within itself, which is authorized to hear all the applications related to the commercial transactions. 

3. Commercial Appellate Division

The setup of these divisions will be in High Court which will hear appeals from:

  • the orders of the commercial courts
  • the orders of the commercial Division High Courts

From the date of the judgment, the appeal should be filed within sixty days.

Such appeals should be disposed of within six months from the date of filing of such appeal by the Commercial Appellate Division.

Some Important provisions 

Commercial Court Under Section 6 of the act exclusive jurisdiction to try such suits and applications which are concerning to a commercial dispute of a Specified Value which arises out of the whole territory of the State over which it has been vested with territorial jurisdiction
Commercial Division High Courts Under section 7 of the actAll suits and applications relating to commercial disputes of particular values filed in the High Court having original civil jurisdiction specified by an act to lie in a court (not inferior to a District court) and pending on the original side of High court.All suits and applications transferred to the High Court under Section 22(4) of the Design Act, 2000 or Section 104 of the Patents Act, 1970 shall be heard and resolved by the Commercial Division of the High Court.

Jurisdiction

In Samsung Leasing Ltd. v. Samsung Electronics Co. Ltd. & Anr2it was clearly stated that

the Commercial Division of the High Court has jurisdiction to hear and dispose of all suits and applications relating to commercial disputes of a specified value, having ordinary original civil jurisdiction. 

Bar on Revision Applications

Section 8 of the Act puts a bar on:

  • civil revision application or 
  • petition against an interlocutory order of a Commercial Court and the same is to be raised only in an appeal against the decree of the Commercial Court. 

The jurisdiction in case of Arbitration matters

Section 10 of the act states that in case of a commercial dispute of a specified value, if arbitration is an International arbitration matter or domestic arbitration matter, then the commercial courts can take the case. The commercial appellate Court will treat the appeal arising out of it in the same way.

Bar of Jurisdiction

A Commercial Court or any Commercial Division is not empowered to accommodate or resolve any specified suit, application, or proceedings linking to a commercial dispute in reverence of which the jurisdiction of any such civil court in express or implied manner barred by any other law for the time being in force in the territory as according to the section 11 of the act.

The maximum prescribed period for the disposal of the appeal

Section 14 of the act provides 6 months as the maximum time for disposal of an appeal.

Transfer of pending suits

According to Section 15

  • all suits of a value of Rs 1 crore or more than that pending in the high court will be transferred to the commercial division of the court. 
  • all suits which are of the value of more than 1 crore, and are pending in district court, will be transferred to the commercial court.
Amendments to The Code of Civil Procedure, 1908 

When applied to any suit of a commercial dispute of a specified value, The Code of Civil Procedure, 1908 shall be amended in a manner as described in the schedule of the act. Some key points are mentioned herein:

  • A strict timeline of 120 days is prescribed, after the service of summoning, to file the written statement failing which the right to file statement will be forfeited.

Further, there is a prescribed way that is to be followed in case of denial in the written statement, it should include details of the allegation that the defendant denies but requires the plaintiff to prove and the ones he admits.

The defendant should also give reasons in support of the denial and state his version of the same.

  • Any party can submit an application for a summary of the judgment, of a claim (or part thereof) which can be decided without recording oral evidence, at any time before the issues being framed.
  • A timely procedure has been prescribed for disclosures, discovery, and inspection of documents.
  • Within 15 days from completion of inspections, or any further date as fixed by the court, the statement of admission and denial of all documents is to be completed.
  • Against any frivolous suits and counterclaims, a provision of imposing costs has been provided.

2018 Amendment

  • This amendment aims to decrease the specified value of a commercial dispute, from the current value of 1 crore to 3 lakhs. Hence, commercial courts will now be deciding commercial disputes of reasonable value, and the time taken in deciding commercial disputes of lesser value would come down.
  • In the cities such as Delhi, Mumbai, Kolkata, Chennai, and State of Himachal Pradesh, where the respective High Courts have ordinary Civil Jurisdiction, this amendment paves the way for the establishment of Commercial Courts at the District Judge level in such territories. The State Governments may, by the issue of a notice, specify such pecuniary value of commercial disputes to be adjudicated at the district level. This value shall not be more than the pecuniary jurisdiction of the district court and at the same time shall not be less than Rs. Three lakhs. Under the jurisdiction of High Courts, except those exercising ordinary original jurisdiction, a forum of Appeal in a commercial dispute is provided, decided by commercial courts that are below the level of District judge, in the form of Commercial Appellate Courts to be at district judge level.
  • The clause of the introduction of the pre-institution mediation process in cases where no urgent, interim relief is intended will provide a chance to the parties that they can resolve the commercial disputes outside the confines of the courts through the authorities established under the Legal Services Authorities Act, 1987 and will, thus, ultimately strengthen investor’s confidence in the resolution of commercial disputes.
  • Section 17 of this bill aims at amending Section 21 of the principal act to add a clause that allows the Central Government to make rules and regulations for pre-institution mediation.
  • Another clause has been added to give probable effect to the amendment so as not to disturb the authority of the judicial forum currently adjudicating the commercial disputes according to the existent provisions of the Act.

Conclusion

This Act is of great importance as it provides separate courts to deal with the matter of commercial disputes. This act tries to lower down the burden of the courts and is a speedy tool for the disposal of cases and justice. This not only helps in disposing of cases at speed but also it will improve the economic growth and this will be a vision for the investors in our country.

End Notes:

  1. Galatea Ltd v. Diyora and Bhanderi Corporation, 2018 SCC Online Guj 1886.
  2. 2017 SCC Online Del 9374.
  3. Rajani Associates, Legally India, What does the Commercial Courts Act, 2015 do? 08 January 2016 at https://www.legallyindia.com/views/entry/commercial-courts-act-2015f.
  4. The Commercial Courts Act, 2005 (bare act)

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