Commercial Courts, Commercial Division and Commercial Division of High Courts (Amendment) Bill, 2018

March 8, 2018

 

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018 for introduction in the Parliament.

 Context:

  1. India still ranks at 130 in Ease of Doing Business Index of World Bank. As per experts, India have no business to rank more than 50.

High number of commercial disputes post Economic reforms and liberalisation of FDI has been a hindrance in increasing investment in the country. Judicial delay has further aggravated the situation.

Background:

  1. With a view to address the issue faster resolution of matters relating to commercial disputes and to create a positive image particularly among the foreign investors about the independent and responsive Indian legal system, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 was enacted and commercial courts were established at District Levels in all jurisdictions, except in the territories over which the High Courts have original ordinary civil jurisdiction. 

  2. These five High Courts i.e. the High Courts of Bombay, Delhi, Calcutta, Madras and of Himachal Pradesh, exercise ordinary original civil jurisdiction in regard to territories of cities of Mumbai, Delhi, Kolkata, Chennai and the territory of the State of Himachal Pradesh respectively. In such territories of these High Courts as per proviso to sub-section (1) of section 3 there are no commercial courts at district level and instead Commercial Divisions have been constituted in each of these High Courts.

  3.  The specified value of such commercial disputes to be adjudicated by the Commercial Courts or the Commercial Division of High Court, as the case may be is presently Rs. one Crore.

Important Features of the 2015 Act :

  1. 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, etc.

  2. Commercial Courts in Districts: These are instituted by State government in each district except those where High Courts enjoy original jurisdiction.

  3. Commercial Division in High Court: 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, Madras and Himachal Pradesh. They will be set up by the Chief Justice of that particular High Court.

  4. Commercial appellate divisions: Commercial appellate divisions may be set up in all high courts to hear appeals against:

    1. orders of commercial divisions of high courts;

    2. Orders of commercial courts; and

    3. Appeals arising from domestic and international arbitration matters that are filed before the high courts. 

  5. Appointment of commercial court judges: Judges to a commercial court will be appointed by the state government after concurring with the Chief Justice of the concerned high court. These judges will be appointed from the cadre of the higher judicial service in the state, and have experience in dealing with commercial disputes.

  6. Nomination of high court judges to the commercial divisions and appellate divisions: The Chief Justice of the High Court will nominate those high court judges with experience in commercial matters to be judges of the commercial division and appellate division of that High Court.

  7.  Timeframes: Appeals to the commercial appellate division must be made within a period of 60 days of the order of the lower court.  The commercial appellate division is to endeavour to dispose of appeals within a period of six months.

  8. Value: All suits of a value of Rs one crore or more that are pending in the high court shall be transferred to the commercial division, after it is constituted. 

Objectives of the 2018 Bill:

  1. The Bill brings down the specified value of a commercial dispute to 3 Lakhs from the present one Crore: Therefore, commercial disputes of a reasonable value can be decided by commercial courts.This would bring down the time taken (presently 1445 days) in resolution of commercial disputes of lesser value and thus further improve India's ranking in the Ease of Doing Business.

  2. Commercial courts at district level will be established for the territories over which respective High courts have original jurisdiction (given above). State Government of these states will notify pecuniary value (which need to be above 3 lakh) of commercial disputes, to be adjudicated at the district level.

  3. Pre-instituion meditation process will be provided in cases where no urgent, interim relief is needed so as to resolve the dispute outside the courts.

  4. Insertion of new section of 21A which enables the Central Government to make rules and procedures for Pre-Institution Meditation.

  5. It gives prospective effect to the amendment so as not to disturb the authority of the judicial forum presently adjudicating the commercial disputes as per the extant provisions of the Act.

 Benefits of the Amendment:

  1. India's Ease of Doing Business ranking will improve with quick resolution of Commercial disputes. 

  2. It will reduce the burden on Courts which will lead to faster resolution of other legal disputes.

  3. It will increase investment in India which will lead to faster growth, more employment and reduction in poverty.

  4. This will give boost to Governmental schemes like Make in India, Start Up India, Digital India etc.

  5. This will bring new technology to India by investors in the form of FDI which will lead to advancement of Indian manufacturing and service sector.

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