INTRODUCTION
The Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Bill, 2015 was brought into force through the
promulgation of the ordinance on 23rd of October, 2015. The same has
been re-drafted in view of the recommendations made by the Law Commission of
India in its 253rd Report which provides for the constitution of
Commercial Courts, Commercial Division and Commercial Appellate Division in the
High Courts for adjudicating commercial disputes claiming a specified value of
not less than Rs 1 crore. The term “commercial dispute” has been given a very
wide scope in the definition clause. It includes ordinary transaction of
merchants, bankers, financier, traders, exports or imports of merchandise or
service, carriage of goods, transaction related to aircrafts, distribution and
licensing agreements, agreement for sale of goods, insurance, re-insurance, commercial
disputes as notified by Central Government, etc.
Appellate Division of High Courts Bill, 2015 was brought into force through the
promulgation of the ordinance on 23rd of October, 2015. The same has
been re-drafted in view of the recommendations made by the Law Commission of
India in its 253rd Report which provides for the constitution of
Commercial Courts, Commercial Division and Commercial Appellate Division in the
High Courts for adjudicating commercial disputes claiming a specified value of
not less than Rs 1 crore. The term “commercial dispute” has been given a very
wide scope in the definition clause. It includes ordinary transaction of
merchants, bankers, financier, traders, exports or imports of merchandise or
service, carriage of goods, transaction related to aircrafts, distribution and
licensing agreements, agreement for sale of goods, insurance, re-insurance, commercial
disputes as notified by Central Government, etc.
The Ordinance aims to promote economic growth by simplifying
procedure of redressal of commercial disputes and thereafter improving the
faith of investors and business houses in the India judicial system. The
establishment of Courts and benches solely for the adjudication of such
disputes will also reduce the time taken during litigation.
procedure of redressal of commercial disputes and thereafter improving the
faith of investors and business houses in the India judicial system. The
establishment of Courts and benches solely for the adjudication of such
disputes will also reduce the time taken during litigation.
KEY
PROVISIONS OF THE ORDINANCE
PROVISIONS OF THE ORDINANCE
I.
Definitions
The ordinance provides for various essential provisions
coupled with some important definitions.
coupled with some important definitions.
a.
Commercial dispute:
A commercial dispute is defined to include any dispute related to transactions
between merchants, bankers, financiers, traders, etc. Such transactions deal
with mercantile documents, partnership agreements, intellectual property
rights, insurance, etc.
Commercial dispute:
A commercial dispute is defined to include any dispute related to transactions
between merchants, bankers, financiers, traders, etc. Such transactions deal
with mercantile documents, partnership agreements, intellectual property
rights, insurance, etc.
b.
Commercial courts:
As per the Ordinance, Commercial courts, equivalent to district courts, may be
set up in all states and union territories, by the state governments after
consulting with their respective high courts.
Commercial courts:
As per the Ordinance, Commercial courts, equivalent to district courts, may be
set up in all states and union territories, by the state governments after
consulting with their respective high courts.
c.
Commercial Divisions in high courts: Commercial divisions may be set up in those high courts
which exercise ordinary original civil jurisdiction, that is, the High Courts
of Delhi, Bombay, Calcutta and Madras. They are to be set up by the respective
state governments after consulting with their high courts. Such bench shall
consist of a single judge, nominated by the Chief Justice of the High Court.
Commercial Divisions in high courts: Commercial divisions may be set up in those high courts
which exercise ordinary original civil jurisdiction, that is, the High Courts
of Delhi, Bombay, Calcutta and Madras. They are to be set up by the respective
state governments after consulting with their high courts. Such bench shall
consist of a single judge, nominated by the Chief Justice of the High Court.
d.
Commercial appellate divisions:
Commercial appellate divisions may be set up in all high courts to hear appeals
against: (i) orders of commercial divisions of high courts; (ii) orders of
commercial courts; and (iii) appeals arising from arbitration matters that are
filed before the high courts. The chief justice of the High Court shall
nominate such judges of the High Court who have prior experience in dealing
with commercial disputes to be appointed as judges in appellate divisions.
Commercial appellate divisions:
Commercial appellate divisions may be set up in all high courts to hear appeals
against: (i) orders of commercial divisions of high courts; (ii) orders of
commercial courts; and (iii) appeals arising from arbitration matters that are
filed before the high courts. The chief justice of the High Court shall
nominate such judges of the High Court who have prior experience in dealing
with commercial disputes to be appointed as judges in appellate divisions.
II.
Constitution and Jurisdiction of Commercial Courts
a.
Constitution- The state
government may, in consultation with the High Court constitute such number of
commercial courts at a district level as it may deem necessary. However, no
commercial court shall be constituted where the High Court has ordinary
original civil jurisdiction. The judges of commercial courts shall also be
appointed by the State Government after consultation with the Chief justice of
the High Court from the cadre of Higher judicial services in the state.
Constitution- The state
government may, in consultation with the High Court constitute such number of
commercial courts at a district level as it may deem necessary. However, no
commercial court shall be constituted where the High Court has ordinary
original civil jurisdiction. The judges of commercial courts shall also be
appointed by the State Government after consultation with the Chief justice of
the High Court from the cadre of Higher judicial services in the state.
b.
Jurisdiction of commercial courts and commercial division of
high courts: The commercial courts shall entertain
all suits related to commercial disputes wherein the value of the subject
matter shall not be less than 1 crore or such higher value as may be notified
by the Central Government.
Jurisdiction of commercial courts and commercial division of
high courts: The commercial courts shall entertain
all suits related to commercial disputes wherein the value of the subject
matter shall not be less than 1 crore or such higher value as may be notified
by the Central Government.
c.
Jurisdiction in case of Arbitration Matters: In case the subject matter of an arbitration is a commercial
dispute of specified value (i.e. Rs 1 crore or above) and any application or
appeal has been filed in the High Court, the same shall be heard and disposed
by the Commercial Appellate Division of such High Court. This shall also
include any application or appeal that has been filed at the original side of
the High Court. This provision applies to all arbitration proceedings
irrespective of if it is an international commercial arbitration or not.
However, if any appeal or application arising out an arbitration which would
ordinarily lie before the principal civil court of original jurisdiction in a
district shall now be filed before the commercial court in the district having
jurisdiction over such arbitration.
Jurisdiction in case of Arbitration Matters: In case the subject matter of an arbitration is a commercial
dispute of specified value (i.e. Rs 1 crore or above) and any application or
appeal has been filed in the High Court, the same shall be heard and disposed
by the Commercial Appellate Division of such High Court. This shall also
include any application or appeal that has been filed at the original side of
the High Court. This provision applies to all arbitration proceedings
irrespective of if it is an international commercial arbitration or not.
However, if any appeal or application arising out an arbitration which would
ordinarily lie before the principal civil court of original jurisdiction in a
district shall now be filed before the commercial court in the district having
jurisdiction over such arbitration.
d.
No such suit, application or petition
shall be entertained by the commercial court or the commercial division in
respect of which the jurisdiction of the civil court is expressly or impliedly
barred under any other for the time being in force.
No such suit, application or petition
shall be entertained by the commercial court or the commercial division in
respect of which the jurisdiction of the civil court is expressly or impliedly
barred under any other for the time being in force.
III.
Calculation of Specified Value (i.e Valuation of the subject
matter)
Calculation of Specified Value (i.e Valuation of the subject
matter)
a.
In case the relief sought is for
recovery of money, the money sought to be recovered including the amount of
interest shall be taken into account for determining such Specified Value.
In case the relief sought is for
recovery of money, the money sought to be recovered including the amount of
interest shall be taken into account for determining such Specified Value.
b.
In case the relief sought relates to
movable property or to a right therein, the market value of the property as on
the date of filing the suit shall be taken into account for determining such
Specified Value.
In case the relief sought relates to
movable property or to a right therein, the market value of the property as on
the date of filing the suit shall be taken into account for determining such
Specified Value.
c.
In case the relief sought pertains to
immovable property or to a right therein, the market value of the property as
on the date of filing the suit shall be taken into account for determining such
Specified Value.
In case the relief sought pertains to
immovable property or to a right therein, the market value of the property as
on the date of filing the suit shall be taken into account for determining such
Specified Value.
d.
In case the relief sought pertains an
intangible right, the market value of the said rights as estimated by the
Plaintiff shall be taken into account for determining such Specified Value.
In case the relief sought pertains an
intangible right, the market value of the said rights as estimated by the
Plaintiff shall be taken into account for determining such Specified Value.
e.
In case any counter claim is raised in
any suit, the value of the subject matter of the commercial dispute in such
counter claim as on the date of the counter claim, shall be taken into account.
]
In case any counter claim is raised in
any suit, the value of the subject matter of the commercial dispute in such
counter claim as on the date of the counter claim, shall be taken into account.
]
f.
In case of Arbitration: The
total value of the claim and counter claim shall be the basis of determining if
such arbitration is subject to the jurisdiction of a Commercial court or commercial division.
In case of Arbitration: The
total value of the claim and counter claim shall be the basis of determining if
such arbitration is subject to the jurisdiction of a Commercial court or commercial division.
IV.
Appeals and Transfer of Pending Suits
Appeals and Transfer of Pending Suits
a.
Appeals to the commercial appellate division
must be made within a period of 60 days of the order of the Commercial Division
or Commercial Court. The commercial appellate division shall dispose of such
appeals within a period of 6 months from the date of filing of the appeal.
Appeals to the commercial appellate division
must be made within a period of 60 days of the order of the Commercial Division
or Commercial Court. The commercial appellate division shall dispose of such
appeals within a period of 6 months from the date of filing of the appeal.
b.
Transfer of pending suits:
All suits of a value of Rs 1 crore or more that are pending in the high court
shall be transferred to the commercial division after it is constituted.
Similarly, suits currently pending in the district courts, with a value of Rs.
1 crore or more would be transferred to the commercial court. However, a suit
will not be transferred if a final judgment on the matter is pending.
Transfer of pending suits:
All suits of a value of Rs 1 crore or more that are pending in the high court
shall be transferred to the commercial division after it is constituted.
Similarly, suits currently pending in the district courts, with a value of Rs.
1 crore or more would be transferred to the commercial court. However, a suit
will not be transferred if a final judgment on the matter is pending.
V.
Amendments to the provisions in Code of Civil Procedure for
the purpose of this ordinance.
The Schedule to the Ordinance provides for certain
amendments to the provisions of the CPC for the purpose of trial of a suit in
respect of a commercial dispute. Following are some of the amendments:-
amendments to the provisions of the CPC for the purpose of trial of a suit in
respect of a commercial dispute. Following are some of the amendments:-
·
At the time of institution of suits
under Section 26 of CPC, affidavit has to be filed under Order VI, Rule 15A so
as to keep a record of the various commercial disputes filed.
At the time of institution of suits
under Section 26 of CPC, affidavit has to be filed under Order VI, Rule 15A so
as to keep a record of the various commercial disputes filed.
·
The Court has the discretion to
determine cost under Section 35 of CPC to decide which party will be liable to
pay the cost, the quantum of cost and when the cost has to be paid. The term
“costs” has also been widened to include fees and expenses incurred by
witnesses, legal fees and any other expense incurred in connection with the
proceeding.
The Court has the discretion to
determine cost under Section 35 of CPC to decide which party will be liable to
pay the cost, the quantum of cost and when the cost has to be paid. The term
“costs” has also been widened to include fees and expenses incurred by
witnesses, legal fees and any other expense incurred in connection with the
proceeding.
·
Section 35A (2) has been omitted.
Section 35A (2) has been omitted.
·
After the expiry of the first 30 days
provided to the defendant to submit written statement, the court has the
discretion to grant to the defendant a maximum extension of one hundred and
twenty days from the date of service of summons to file their written statement
in Order V, Rule 2 and also in Order VIII, Rule 1.
After the expiry of the first 30 days
provided to the defendant to submit written statement, the court has the
discretion to grant to the defendant a maximum extension of one hundred and
twenty days from the date of service of summons to file their written statement
in Order V, Rule 2 and also in Order VIII, Rule 1.
·
A separate form has been provided in
Rule 3A of Order VI for pleading in Commercial Courts. Further Rule 15A has
been added for the verification of pleadings in such courts.
· Rule 2A has been added to Order VII
which provides for seeking of interest under Section 34 in commercial disputes.
which provides for seeking of interest under Section 34 in commercial disputes.
CONCLUSION
The Commercial Courts, Commercial Division and
Commercial Appellate Division of High Court Ordinance, 2015 has created a
separate section in the Indian Judicial system for the adjudication of
commercial disputes falling within its ambit. The primary objective of the
Ordinance is the speedy disposal of matters which are commercial in nature.
Procedural law has also been amended as well as created to cater solely to
commercial disputes in order to facilitate the smooth functioning of Commercial
Courts. The Ordinance is a boon for those investors and businessmen who have
been stuck in litigation due to the long pendency of matters before courts
which deal with matters related to diverse fields of civil law.
