23 July 2020 11:56 AM GMT
The object of the Commercial Courts Act, 2015 is to improve India's image as an attractive investment destination. The ease of doing Business index is assessed by the World Bank based on 10 parameters and "Contract enforcement "is one of them. India is known for its judicial delays and backlogs. In order to erase that image and to encourage foreign investments, the Commercial Courts...
The object of the Commercial Courts Act, 2015 is to improve India's image as an attractive investment destination. The ease of doing Business index is assessed by the World Bank based on 10 parameters and "Contract enforcement "is one of them. India is known for its judicial delays and backlogs. In order to erase that image and to encourage foreign investments, the Commercial Courts Act came to be enacted. The Act envisages early disposal of Commercial disputes involving a particular specified value as notified by the State. The State is a stake holder in major infrastructural projects. There may arise many contractual commercial disputes where State is a party. The legal recourse that are normally available to an aggrieved party in those commercial disputes where State is a party is to invoke both Public Law and Private law remedies. Public law remedies are initiated through Writ Petitions under Article 226 of the Constitution. Whenever the State acts arbitrarily, irrationally or without authority under law, writs under Article 226 of the constitution are maintainable. Under the Commercial Courts Act, the criteria to be satisfied for approaching either the Commercial Court in the Districts or the Commercial division in a High Court is that the dispute must be a Commercial dispute as defined under the Act and the value of the commercial dispute should satisfy the Specified value criteria as notified by the State in consultation with the High Court. We can cite innumerable instances involving commercial contracts where state is a stake holder when parties take recourse to writ remedies for violating the constitutional principles. If writs are totally excluded from the purview of the Commercial Courts Act, the object of the Commercial Courts Act for early disposal of Commercial disputes to a great extent will be defeated. There will be two parallel proceedings, one for public law remedy before the regular writ courts having no timelines and the other for private law remedy before the Commercial Division of the High Court or the Commercial Courts as the case may be having strict timelines for disposal. If this is allowed to happen, the very purpose of the Act to resolve all commercial disputes expeditiously will get defeated. But under the Commercial Courts Act due to certain provisions contained therein there is always a doubt as to whether Writs involving a Commercial dispute can be filed before a Commercial division of the High Court.
Section 17 of the Commercial Courts Act has added to the confusion with regard to the applicability of Writs before the Commercial divisions of the High Courts. Section 17 of the Act requires collection and disclosure of data by Commercial Courts, Commercial Divisions and Commercial Appellate Division of High Courts with regard to Suits, applications, appeals or writ petitions filed before the respective Commercial Courts. The rules framed by the Central Government in 2018 pursuant to Section 17 of the Act adds to the uncertainty as the rules require statistical data of matters which includes Writ Petitions before the Commercial courts to be published in the High court Website. Explanation (b) to Section 2(c) which defines a Commercial dispute also makes it clear that a Commercial dispute shall not cease to be a commercial dispute merely because one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions. The need for such an explanation is also puzzling and it raises doubts as to whether the Commercial Division in a High Court is a Standalone specialized Court empowered to hear Writs involving Commercial disputes as well. Section 7 of the Act which deals with jurisdiction of Commercial Divisions in High Courts enables the filing of suits and applications involving a commercial dispute of a specified value. The word "Application" has not been defined under the Act . Whether Application can be construed to include Writs considering the object of the Act is a moot question which is yet to be interpreted by the Constitutional Courts. As of now there is no judicial precedent as to why statistics regarding filing of Writs before Commercial Divisions is called for under Section 17 of the Act. The law makers have also not clarified till date the necessity for including Writs for statistical purposes under the Commercial Courts Act.
It is well settled that a) The jurisdiction of the High Court under Article 226 of the constitution is equitable and discretionary. b) The power under Article 226 can be exercised by the High Court" to prevent injustice wherever found". c) Writ jurisdiction cannot be excluded by a statute. High courts day in and day out exercises its power under Article 226 of the Constitution against the State involving a Commercial disputes. If Commercial divisions of the High Courts are barred from entertaining Writ Petitions of commercial nature involving the State, it may lead to multiplicity of proceedings which may defeat the very object of the Act which is to resolve commercial disputes expeditiously.
The Law Commissions report number 253 recommended the constitution of Commercial Courts to Central Government which led to the passage of the Commercial Courts Act, 2015. In Paragraphs 3.24.5(b) and 3.24.7 of its report, it has recommended that in addition to the jurisdiction vested with the Commercial Appellate Division, writ petitions challenging the order of a Tribunal in a commercial dispute shall also be heard by the Commercial Appellate Division. The Commission has however clarified that not all writ petitions under Article 226 and/or 227 which relate in some manner to a commercial dispute should automatically be referred to the Commercial Appellate division. After observing that a public interest litigation may on some occasions, refer to a commercial agreement, the Commission felt that such a dispute should not automatically be placed before the Commercial Appellate Division since the issues involved are likely to be wider and may require different considerations. Nevertheless, the Commission left it open to the Chief Justice of the concerned High Court to place such public interest litigation and other writ petitions which may involve commercial disputes to an extent to be heard and decided by the Commercial Appellate division. The Law Commissions recommendations further adds to the ambiguity as to whether writs can be filed before the Commercial divisions of High courts. In the interest of improving the ease of doing business index for India, this ambiguity with regard to applicability of Writs before Commercial Division of High Court has to be clarified sooner than later either through judicial interpretation of Constitutional Courts or by the Law makers themselves at the earliest.
Views are personal only.
(Author is a Judge at Madras High Court)