Overview of the Commercial Courts Act, 2015
This article ‘Overview of the Commercial Courts Act, 2015’ is a comprehensive analysis of the Commercial Courts Act, 2015. Overview of the Commercial Courts Act, 2015 The Commercial Courts Act was introduced in Rajya Sabha on April 29, 2015, and was commenced on 23rd October 2015 by the NDA government. The stated objective of the bill says that aims… Read More »
This article ‘Overview of the Commercial Courts Act, 2015’ is a comprehensive analysis of the Commercial Courts Act, 2015.
Overview of the Commercial Courts Act, 2015
The Commercial Courts Act was introduced in Rajya Sabha on April 29, 2015, and was commenced on 23rd October 2015 by the NDA government. The stated objective of the bill says that aims to expedite the disposal of high-value commercial litigation.
The bigger idea behind introducing it becomes abundantly clear when the focus is brought on to the parliamentary debates which were focused on this legislation. The law minister, Sadanand Gawda categorically says that the sole aim of this legislation is to boost India’s ranking in the ease of doing business. It will improve India’s image internationally as an investment destination and will fit into the large sector of economic reforms.[1]
Background
The Act in itself in 2015 brought a culmination of a decade-long debate on the issue of setting up exclusive Commercial Courts in India. There are two phases in the legislative history of the said act. The first phase if essentially prior to the NDA government and even before that in 2003, the law commission came forward with its 188th report.
This 188th report focused a lot on this growing spade of international criticism against the Indian judiciary where the judges particularly in the USA and UK were questioning the capacity for the Indian courts to deliver justice effectively.
One of the key reasons which were not unexpected was the inordinate delay that continuously plagues any litigation that ventures into the Indian legal system.[2]
Drawbacks and the need for the enactment of the act[3]
The Courts had started appropriating extraordinary jurisdiction and hearing civil cases which were typically supposed to come under Indian civil courts. They were justifying on the doctrine of “forum non convenes” which essentially states that the delay renders a litigant without an effective remedy and therefore makes the forums in India inconvenient to pursue justice.
The law commission in typical formats suggested setting up specialized commercial divisions in high courts which would expedite the process and deliver justice faster. It would also dispel its growing international perception against the Indian judiciary.
During 1980-1990, there had been a perception in the judiciary that specialized tribunals are some kind of a silver bullet that will remedy the ills in the system and expedite litigation. However, it didn’t really work out to be a successful experiment. There are serious questions about the necessity of these specialized courts.
From the law commission’s recommendation, the UPA government tabled the first iteration of the commercial courts built-in 2009 which solely proposed commercial divisions at the high court. This met strong opposition from both the left and the right parliamentarians. Building established 5 star or 7-star courts will prioritize richer litigants over poorer ones.
Further encumbering something which is the lowest rung of the Indian judiciary i.e. High Courts. They do not have either the means or the resources in terms of the manpower or the infrastructure to cope with this additional workload. Transferring cases from district courts to the high court proves to be ineffective and counterproductive when the larger systematic challenges are not tackled prior.
There are two key provisions that were introduced in the act namely
- Case management hearings: The court has to conduct before the process of the trial begins providing the schedule of how the amount of time it would take to complete oral hearings and evidence collection.[4]
- Insertion of new Order XIII-A (Summary judgments): It’s an application that can be filed in the court to avoid the process of getting remedy but the case can be decided in a summary manner. Perhaps the bench itself does not take the provisions of the action seriously and the summary judgment means that the provisions of the act are probably underutilized by the bar itself.[5]
Important amendments
Provisional jurisdiction of the high court available under section 115 of CPC is totally taken away from the commercial court’s act, 2015. If any suit is pending before the commercial courts if any interlocutory is filed or ordered, no revision power lies with the high court.
Expeditious disposal of the commercial disputes[6]
The Act provides for the appointment of experienced judges, with special training for judges and necessary infrastructural facilities for training of judges and a self-contained code for procedures. The commercial court need not borrow any of the provisions of the Evidence Act and CPC.
Important Amendments to Civil Procedure Code for Commercial Disputes
- Sections 26, 35, and 35A stand amended.
- Addition of Rule 3A under Order VI, which reads for forms of pleadings in Commercial Court.
- Order XI is replaced in its entirety as “Disclosure, Discovery, and Inspection of Documents in Suit before the Commercial Division of a High Court or a Commercial Court.
- (Pecuniary Jurisdiction) Minimum limit of the Specified Value reduced:
- A. Prior Amendment: 1 crore. B. Post Amendment: Rs. 3 lakhs.
Appointment of Judges:
- Prior Amendment: State Government was bound by the concurrence of the Chief Justice of the High Court.
- Post Amendment: State Government is no more bound by the concurrence of the Chief Justice of the High Court.
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- Alternate Remedy: a. Prior Amendment: No Provision. b. Post Amendment: Mandatory Pre-Institution Mediation.
- Courts: Prior Amendment: Commercial Court II, Commercial Division of High Court, III. Commercial Appellate Division of High Court; Post Amendment: In addition to the above three Courts: IV. Commercial Appellate Court headed by District Judge.
Important sections
Section 2(1)(c) defines the scope of the term “Commercial Dispute”, which includes but is not limited to disputes arising out of ordinary physical transactions of merchants, bankers, and the like, issues relating to admiralty and maritime law, agreements of the franchise, license, joint venture, shareholders, etc. and also intellectual property rights.
Section 2(1) (I) defines “Specified Value” in relation to a commercial dispute (which means the value of the subject matter of the dispute which is determined in accordance with Section 12 of the Act). The Specified Value shall not be less than Rs. 3, 00,000/-.
Section 3 states the constitution of the commercial courts and commercial appellate court and section 3(A) added by the amendment states designation of judges for the commercial appellate court.
Section 8 states Bar on provisional jurisdiction as mentioned under Section 115 of Civil procedural code or any other act against an interlocutory order of the courts constituted under the commercial courts’ act and even Article 226 and 227 of the Indian constitution are not supposed to be exercised easily.
Section 12 refers to the determination of the specific value. When the act was enacted in the year 2015, the specific value or the pecuniary jurisdiction was Rs 1 crore and as per the amended section 12(3) of the 2015 act, the specific value is the pecuniary jurisdiction of the commercial courts is Rs 3 lakhs and above. Section 12 (A) states that pre-institution mediation settlement (amended in 2018) will be made mandatory.
Section 14 signifies the expeditious disposal of the appeal i.e. 6 months. It does not speak about any timeline of the suit that is governed by table 2 of the commercial disputes act.
Section 16 states the amendment of the Code of civil procedure in its application to commercial disputes. Table 1 speaks of the amended CPC as applicable to the commercial court’s act.
Section 23 states the repeals and savings.
Conclusion
The act was introduced because of the absence of a variety of technical and important provisions in the earlier legislation. Section 17 data would have provided greater evidence on what the need was all about. An earlier Act doesn’t prove to be an evidence-based law at all.
Reform needs to be brought out on the basis of evidence. Case management hearings and the number of courts that have been dispersed around India depict that there is the absence of core implementation of the act itself, both in terms of the number of courts that have been notified and the provisions being utilized. Procedural reforms need to be introduced for which only the Act cannot provide a remedy.
There are obviously certain progressions, for example, commercial courts being established for instances of lower worth and presentation of pre-institution mediation. Notwithstanding, in specific regions like the jurisdiction of the commercial divisions opposite the purview of the commercial courts further clearness is required. Further, the public authority’s capacity to name commercial courts judges might cause a stir. The public authority’s attention has been on working on the simplicity of carrying on with work in India, however, as examined the law is all the more a mishmash.
In this way one might say that the Act would, over the long haul, decrease the pending suits and the weight on existing courts choosing commercial matters.
With the constitution of Commercial Courts managing Commercial Disputes, the speed of discarding such debates is probably going to increment along these lines making such long-drawn process less awkward and proficient. While the requirement for commercial courts is a must in India, the foundation of such courts ought to be viewed as a positive advance in improving the civil justice system of India.
Thus, it can be summed up as the need of great importance is that the said Act should be carried out by every one of the states and the High Courts of the country in its actual soul and structure to achieve its actual targets.
References
[1] Combined discussion on the Statutory Resolution regarding disapproval of Commercial Courts, Available Here
[2] Commercial Courts Act, 2015, Available Here
[3]Commercial Courts Act, 2015, Available Here
[4] Commercial Courts Act, 2015(NALSA), Available Here
[5] Chauhanjmu, Summary Judgment: A Robust Tool to Curb Unnecessary Trial, Available Here
[6] Speedy Resolution of Commercial Dispute, Available Here