The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Commercial Courts Act) seeks to set-up Commercial Courts at District level and Commercial Divisions in High Courts for fast track resolution of commercial disputes of the value of Rs.1,00,00,000/- and above. The statement of objects and reasons of the Act states that the proposal to establish the Commercial Court and Commercial Division of High Court shall:-
- accelerate economic growth;
- improve the international image of Indian justice delivery system; and
- improve the faith of investor world in the legal culture of the nation.
In the year 2003, the Law Commission of India suo motu took up for an in-depth study of the international practice of commercial courts and the need for such courts in India in the post-liberalised phase of the economy. The Law Commission in its 188th Report on Proposals for Constitution of Hi-Tech Fast – Track Commercial Divisions in High Courts (December 2003) felt the need for having efficient dispute resolution mechanism for commercial disputes. It had also felt that quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages are, absolutely critical to encourage investment and economic growth. In that Report it had recommended for setting up of fast track Commercial Divisions in all High Courts.
What is a commercial dispute?
Section 2(c) of the Commercial Courts Act defines commercial dispute as a dispute arising out of-
- ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
- export or import of merchandise or services;
- issues relating to admiralty and maritime law;
- transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
- carriage of goods;
- construction and infrastructure contracts, including tenders;
- agreements relating to immovable property used exclusively in trade or commerce;
- franchising agreements;
- distribution and licensing agreements;
- management and consultancy agreements;
- joint venture agreements;
- shareholders agreements;
- subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
- mercantile agency and mercantile usage;
- partnership agreements;
- technology development agreements;
- intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
- agreements for the sale of goods or provision of services;
- exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
- insurance and reinsurance;
- contracts of the agency relating to any of the above; and
- such other commercial disputes as may be notified by the Central Government.
The explanation to the subsection further provides that a commercial dispute shall not cease to be a commercial dispute merely because-
- it also involves action for recovery of immovable property or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
- one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions;
Salient features of the Commercial Courts Act
- Creation of Commercial Courts, Commercial Divisions and Commercial Appellate Courts
The Commercial Courts Act envisages the creation of Commercial Division in five High Courts having original jurisdiction (Calcutta, Bombay, Madras, Delhi and Himachal Pradesh) and Commercial Courts in such districts to be decided by the State Government, in consultation with jurisdictional High Court, to fast track commercial disputes.
The Act also provides for constitution of Commercial Appellate Division of High Courts to hear appeals against: (i) orders of commercial divisions of high courts; (ii) orders of commercial courts; and (iii) appeals arising from domestic and international arbitration matters that are filed before the High Courts.
- Jurisdiction in respect of arbitration matters
In arbitration under the Arbitration and Conciliation Act, 1996, other than international commercial arbitration, all applications or appeals that have been filed on the original side of the High Court shall be heard and disposed by the Commercial Division of High Courts and all applications or appeals that would ordinarily lie before any principal civil court in a district shall be filed, heard and disposed in the Commercial Court.
Applications or appeals in international commercial arbitrations, under the Arbitration and Conciliation Act, 1996, are to be heard and disposed of by the Commercial Division of High Court.
- Bar of jurisdiction on certain matters
Section 11 of the Commercial Courts Act bars Commercial Court or Commercial Division from entertaining or deciding any suit or application or proceedings relating to any commercial dispute in respect of which the jurisdiction of civil courts is either expressly or impliedly barred under any other law. By this provision, Commercial Court/Division are barred from entertaining cases which are exclusively dealt by a) Competition Commission; (b) Debts Recovery Tribunals; (c) Intellectual Property Board; (d) Company Law Board or the National Company Law Tribunal; (e) Securities Tribunal; (f) Telecom Disputes Settlement Tribunal and their Appellate Tribunals.
- Specified Value and valuation of commercial suits
The specified value of a commercial dispute that will be dealt with by Commercial Divisions and Commercial Courts will be an amount not less than Rs. 1,00,00,000/-, or such higher value as may be notified by the Central Government.
Specified Value of the subject-matter of the commercial dispute in a suit, appeal or application shall be determined in the following manner:
- In the case of suit for recovery of money, the money sought to be recovered in the suit or application inclusive of interest, if any, computed up to the date of filing of the suit or application, as the case may be, shall be taken into account for determining such Specified Value;
- In the case of movable property, the market value of the movable property as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining such Specified Value;
- In the case of immovable property, the market value of the movable property as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining such Specified Value;
- In the case of intangible property, the market value of the said rights as estimated by the plaintiff shall be taken into account for determining such Specified Value;
- The aggregate value of the claim and counterclaim, if any, as set out in the statement of claim and the counterclaim, in an arbitration of a commercial dispute shall be the basis for determining whether such arbitration is subject to the jurisdiction of a Commercial Division, Commercial Appellate Division or Commercial Court, as the case may be.
- Transfer of pending commercial suits to Commercial Courts
All pending commercial suits are to be transferred to Commercial Court/ Commercial Division from District or High Court of respective jurisdiction after the constitution of those courts. But those suits where the final judgment has been reserved by the court prior to the constitution of Commercial Division/ Commercial Court would not be transferred;
- Appeals against decrees of Commercial Court/Division
An appeal against the decision of the Commercial Court or Commercial Division shall lie to the Commercial Appellate Division of the High Court within a period of sixty days from the date of judgment or order.
It is also provided that the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within a period of six months from the date of filing of such appeal.
- Bar on Revision against interlocutory orders of Commercial Court
No civil revision application or petition shall be entertained against any interlocutory order of a Commercial Court, including an order on the issue of jurisdiction, and any such challenge shall be raised only in an appeal from the decree of the Commercial Court.
- Introduction of case management hearing and setting of time limits
The Commercial Courts Act by amending the Civil Procedure Code, 1908 has inter alia introduced provisions relating to case management, which provides for:
- fixing the date by which affidavit of evidence to be filed by parties;
- fixing the date on which evidence of the witnesses of the parties to be recorded;
- fixing the date by which written arguments are to be filed before the Court by the parties;
- fixing the date on which oral arguments are to be heard by the Court; and
- setting time limits for parties and their advocates to address oral arguments.
The court shall fix the dates or set time limits, in such a way to ensure that the arguments are closed not later than six months from the date of the first Case Management Hearing.
The Court shall also deliver judgement within ninety days from the conclusion of arguments.
- Judges to have experience in commercial law
Judges to a commercial court shall be appointed by the State Government with the concurrence of the Chief Justice of the jurisdictional High Court. These judges will be appointed from the cadre of the higher judicial service in the state, and having experience in dealing with commercial disputes.
The Chief Justice of the High Court shall nominate those High Court judges with experience in commercial matters to be judges of the Commercial Division and Appellate Division of that High Court. The Commercial Divisions will comprise of one or more Benches consisting of a single judge. The Commercial Appellate Divisions will comprise of one or more benches consisting of two judges.