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Commercial Courts Act, 2015 – A Gargantuan Move!

Commercial Courts Act, 2015 – A Gargantuan Move!

The President of India on 31st December, 2015 gave assent to the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. The Act came into force on 23rd October, 2015. The establishment of Commercial Courts in India is widely seen as a stepping stone to bring about reform in the civil justice system in India. The Law Commission of India in its report 1categorically stressed out the need for setting up of separate court for Commercial Disputes to make the Indian Judicial System less burdensome and bring in efficiency in rendering Justice in a time bound manner.

An end to India’s litigation woes:

The Act, throws light on the way Commercial Disputes above a specified value can be adjudicated and disposed off. It’s a two tier judicial system wherein an appeal lies to an higher court from the orders of the lower court. The court can adjudicate only Commercial Disputes, which is an exhaustive definition but an inclusive definition. The Act, emphasizes to dispose of high value cases in a short span of time albeit rescuing the parties from spending exorbitant time in litigation within the court rooms. The Act, provides a procedure for trial of Commercial Disputes which will override the existing Civil Procedure Code. In a lump sum the Act, focuses on to setting up of Commercial Courts and Appellate Courts for rendering of justice in a fast track route bringing the Indian Judicial system in line with other countries judicial system. A statistical report on the number of pending cases in various High Courts is given below.

Pendency of “Commercial Disputes” in High Courts with Original Jurisdiction 2

S. No

High Courts

Total No: of Civil Suits pending

Total No: of Commercial Disputes pending

% of Commercial Disputes

1. Madras 6326 5865 92.71%
2. Calcutta 6932 5352 77.20%
3. Bombay 6081 1997 32.83%
4. Delhi 12963 3582 27.63%
5. Himachal Pradesh 354 88 24.8%
6. Total 32656 16884 51.7%

 

Bird’s eye view on the Act:

 

 Meaning: “Commercial Dispute”

  •  The Act encapsulates a wide and inclusive definition to define the term Commercial Dispute 3. The Act embraces a whole lot of Commercial Dispute that arises in day to day commercial transactions like intellectual property rights, export and import, maritime disputes, contractual disputes and the like.

 

Territorial and Pecuniary jurisdiction of the Courts:

  • The Act applies only to Commercial Disputes were the Subject matter of dispute is valued one crore rupees or more (“Specified Value”).
  • The Commercial Courts shall have jurisdiction to try all suits and applications relating to a Commercial Dispute of a Specified Value arising in the state which has been vested with territorial jurisdiction.
  • All suits and applications relating to Commercial Disputes of a Specified Value filed in a High Court having ordinary original civil jurisdiction shall be heard and disposed of by the Commercial Division of that High Court.

 

Constitution and appointment of Judges:

  • The state government, may after consultation with the concerned High Court, constitute such number of Commercial Courts at District level, as it may deem necessary and also specify the local limits to which the jurisdiction of a Commercial Court shall extend and also appoint the judges of these courts in concurrence with the Chief Justice of the High Court.
  • In all High Courts, having ordinary original civil jurisdiction, the Chief Justice of the High Court may, constitute and appoint judges for Commercial Division and Commercial Appellate Division having one or more benches consisting of a single judge and a division bench as the case may be.

 

Transfer of Suits:

  • In the event that a counterclaim filed in a suit before a civil court relating to a Commercial Dispute is of Specified Value, such suit shall be transferred by the civil court to the Commercial Division or Commercial Court, as the case may be.
  • All suits and applications, including applications under the Arbitration and Conciliation Act, 1996, relating to a Commercial Dispute of a Specified Value pending in a High Court or a Civil Court of any district shall stand transferred to the Commercial Division or Commercial Court, as the case may be.

 

Trespass in to the Arbitration and Conciliation Act, 1996:

Where the subject matter of an arbitration is a Commercial Dispute of a Specified Value and;

  • If such arbitration is international commercial arbitration, all applications or appeals arising out of such arbitration, that have been filed in a High Court, shall be heard and disposed of by the Commercial Division of the High Court.
  • If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration, that have been filed on the original side of the High Court, shall be heard and disposed by the Commercial Division of the High Court.
  • If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration, that would ordinarily lie before any principal civil court of original jurisdiction in a district shall be filed in and heard and disposed of by the Commercial Court exercising territorial jurisdiction.

 

Overriding power:

  • In case of conflict between the Code of Civil Procedure, 1908 as amended by this Act and the rules of the jurisdictional High Court or any state amendment to the Code, the Code of Civil Procedure, 1908 as amended by this Act shall prevail.

 

Modus Operandi:

C1

Appeals:

C2

Bar on Jurisdiction:

The Act, bars the Commercial Court or a Commercial Division from entertaining any suit, application or proceedings relating to any Commercial Dispute is respect of which the jurisdiction of the civil court is either expressly or implicitly barred under any other law for the time being in force.

Conclusion:

The Act is a step in the right direction to render timely and effective adjudication of Commercial Disputes. It is a move  that will per-se relieve the High Courts of various States from trial of Commercial Courts. At present state of Gujarat, Himachal Pradesh, Mumbai and Union Territory – New Delhi have established Commercial Courts in India. The statute does not prescribe whether a person aggrieved from the orders of the Commercial Appellate Division Court can appeal to the Supreme Court. The right to appeal is not a fundamental right, it is the statute which provides us the right to appeal. Considering the endless litigation in court rooms, at present, the formation of Commercial Courts will put an end to litigation of high value cases (one crore rupees or more). The Commercial Courts be a blessing in disguise for Indian judicial system.

Notes:

  1. Law Commission of India Report No:253
  2. Parliamentary standing Committee 78th report
  3. Section 2(c)

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