The Need for Commercial Courts
The concept of commercial courts – a dedicated fora aimed at resolving complex commercial disputes between parties – is an idea that has merit in its own right. This can be seen from the fact that around the world, many nations have adopted commercial courts as a means to ensure speedy delivery of justice in commercial cases.
The following are the justifications for commercial courts in India:
(i) Economic growth;
(ii) Improving the international image of the Indian justice delivery system;
(iii) Improving legal culture;
(iv) Improving the ease of doing business;
The LAW
The Indian Government has paved the way for the establishment of Commercial courts in India, when it notified The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015, with effect from October 23, 2015 “the Ordinance”. The Gazette notification can be found at http://lawmin.nic.in/la/commercial.pdf
Comparison of Timelines StageTimelines Under The Current SystemTimelines Under The Commercial CourtsIssuance of summonsNo specific time limit1 to 10 daysCompletion of pleadingsWithin 90 days30 – 120 days
(+ time taken for completion of service)Inspection of documents
No specific time limit30 – 60 days
(from date of filing written statement)Admission-denial (though affidavit)No specific time limit15 days
(from date of inspection – can be extended by court)First Case Management HearingNo specific time limit4 weeks
(from date of filing affidavit of admission-denial)Framing of IssuesNo specific time limitDuring the first case management hearing or within 6 months thereafter.Conclusion of trial and final argumentsNo specific time limit6 months
(from date of first case management hearing)Pronouncement of JudgmentNo specific time limit90 days
(from conclusion of arguments)TOTALNo specific time limit375 Days To 505 Days
What is a Commercial dispute?
A commercial dispute is any dispute related to transactions between merchants, bankers, financiers, traders, etc. Such transactions deal with mercantile documents, partnership agreements, Intellectual Property Rights (IPR), insurance, etc.
Commercial courts at the district level
The Ordinance enables the State governments to set up commercial courts, equivalent to district courts, after consulting with their respective High courts. However, a commercial court must not be set up in an area where the High court exercises ordinary original civil jurisdiction.
Commercial divisions in High courts
Commercial divisions may be set up in those High courts which exercise ordinary original civil jurisdiction (i.e. the High Courts of Delhi, Bombay, Calcutta, Madras and Himachal Pradesh).
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 at district level; and (iii) appeals arising from domestic and international arbitration matters that are filed before the high courts.
Specified Value Of A Commercial Dispute
The specified value of a commercial dispute that will be dealt with by commercial divisions in High courts and commercial courts will be an amount not below 1 crore rupees.
Filing and disposal of appeals
Appeals to the commercial appellate division in a High court 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.
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.
Conclusion
The Ordinance shall have the same force and effect as an Act of Parliament. However the Ordinance would cease to operate at the expiration of six weeks from the reassemble of Parliament, or, if before the expiration of that period, resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions.
Therefore it remains to be seen whether the Modi Government would succeed in getting resolutions approving the ordinance, passed in both the houses of Parliament.
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