In order to take forward and accelerate the agenda of the “Ease of Doing Business” and “Make in India”, the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Court’s Act, 2015 (the “Act”) has been promulgated, which provides for the constitution of Commercial Courts and the establishment of Commercial Divisions and Commercial Appellate Divisions in the High Courts to adjudicate Commercial Disputes for achieving the motive of swift and speedy enforcement of contracts, recovery of monetary claims and compensation for damages suffered to increase investment and economic activity in our country.
The key features of the Act are as follows:
1. Wide meaning of “Commercial Dispute”:The term “Commercial Dispute” has been very broadly defined in the Act to encompass almost every kind of transaction that gives rise to a commercial relationship. The subject matter of disputes is very wide including but not limited to issues relating to maritime law, construction and infrastructure contracts, ordinary commercial transactions, intellectual property rights disputes, disputes involving exploitation of natural resources, insurance and re-insurance disputes. Such Commercial Disputes shall now be adjudicated upon by these Commercial Courts/Divisions.
2. Commercial Courts/Divisions at various levels:
a) The Act provides for the constitution of “Commercial Courts” in every district in all states and union territories where the High Court of that state or union territory does not have/exercise ordinary original civil jurisdiction and “Commercial Divisions” within High Courts exercising ordinary original civil jurisdiction.
b) Further, Commercial Appellate Divisions are being set up in every High Court to hear appeals against, (i) orders of Commercial Division of High Court, (ii) orders of Commercial Courts and (iii) appeals arising from domestic and international arbitration matters that are filed before the High Courts.
3. “Specified Value” of Commercial Disputes:The Act provides for the adjudication of Commercial Disputes of more than INR 1,00,00,000 (defined as “Specified Value” in the Act), by the Commercial Courts/Divisions. Further, it also prescribes the manner in which the Specified Value of a Commercial Dispute is to be determined.
4. Transfer of Commercial Disputes: All suits and/or applications relating to a Commercial Dispute of a Specified Value pending before any civil court are required to be transferred to constituted Commercial Courts/Divisions for fast and speedy disposal of cases.
5. Jurisdiction over arbitrations: In line with the Arbitration and Conciliation (Amendment) Act, 2015, all matters pertaining to international commercial arbitrations have been brought within the purview of the High Court, whether or not such High Court exercises original jurisdiction, except matters relating to the appointment of arbitrators in international commercial arbitrations. Applications and appeals arising out of domestic arbitrations involving purely local Indian parties, which would ordinarily lie before any principal civil court of original jurisdiction (not being a High Court), will now lie before a Commercial Court (where constituted) exercising territorial jurisdiction over such arbitration.
6. Amendments to the Civil Procedure Code, 1908 (“CPC”): The provisions of the CPC, to the extent of its application to any suit in respect of a Commercial Dispute have been amended by the Act to streamline the conduct of Commercial Disputes. Key amendments to the CPC are as follows:
a) The Act has introduced a new provision in the CPC, which prescribes that a Commercial Court/Division shall hold a ‘case management hearing’ to frame issues and fix timelines to ensure that the case is concluded in an expeditious and efficient manner.
b) The amended provisions of the CPC allow parties to apply for summary judgement where the court could arrive at a decision solely on the basis of written pleadings.
c) The Act has also introduced comprehensive provisions in the CPC dealing with award of actual costs and interest. The amended provisions of the CPC also provide the issues that Commercial Courts/Divisions may consider while imposing costs on parties. The earlier provisions under the CPC dealing with costs and interest, provided for imposition of only nominal costs (which continue to apply to matters other than Commercial Disputes).
7. Fixed Timelines: The Act has also introduced strict timelines to ensure prompt resolution of disputes including but not limited to all appeals to the Commercial Appellate Division must be filed within 60 days from the impugned judgement and the Commercial Appellate Division must endeavour to dispose of the case within a period of 6 months. But, there is nothing prescribed with regard to any penalty or punishment being imposed on the parties if they delay the disposal of the case.
8. Appointment of judges: The Act recognizes that competent judges having experience in dealing with Commercial Disputes are important for expeditious disposal and therefore, requires appointment of persons having such experience to be judges of the Commercial Courts/Divisions.
9. Measures to curb procedural delays:The Act acknowledges that piece by piece production of documents by parties at different stages tends to delay proceedings and therefore, requires filing of all documents relevant to the dispute at the time of filing of the suit itself or at the time of filing of the defense, as the case may be. Detailed procedures for discovery and inspection of documents of the opposite party and admission and denial of documents have been provided to shorten the scope of trial. The Act sets an outer limit of 120 days for filing defense beyond which the right to file the defense is forfeited and the Court would be bound to not take such a delayed submission on record.
In light of the key features stated above it is evident that the Act is a laudable piece of legislation and a step in the right direction but there are issues unaddressed/unclear in it, which are highlighted below:
“Justice delayed is justice denied”- The Act is inarguably a big step to curb this inefficiency of Indian judicial system. The Delhi High Court was the first off the blocks designating four of its benches as Commercial Divisions. It added two more benches to the Division followed by the High Court of Bombay designating judges for the Commercial Divisions. Despite the drawbacks, setting up of Commercial Courts/Divisions will accelerate economic growth, improve the image of the Indian justice system and enhance investors’ confidence in the country’s dispute resolution culture.
Saumya Kakar, is an Associate and Sohini Mandal is a Junior Partner at NovoJuris Legal.