The Commercial Court Act,2015 was enacted by the Parliament with a sole objective of formation of commercial divisions in the different high courts and commercial courts at the district level. The act aims for speedy execution of commercial disputes and disagreements. Considering the pendency of unresolved litigation in India, there is a requirement for the swift mechanism for recovery of claims and the compensation for damages. By the enactment of Commercial Courts, Commercial Division and Commercial Appellate Division the objective could be achieved. The Act is expected to lighten the encumbrance of litigation on courts making it less cumbrous and more efficient. The President of India gave his assent to the act on 31st December 2015 and subsequently, it came into force on 23rd October 2015.
HIGHLIGHTS OF THE ACT
- Mandates the setting up of specialized courts or divisions of courts, comprised of judges experienced in commercial matters, to hear commercial disputes with a value of Rs. 1 crore (10 million) or more.
- Applies to a very wide range of disputes, including disputes about all commercial agreements such as the sale of goods and services, corporate agreements, such as shareholders, joint venture and partnership agreements, all commercial property matters, and all intellectual property matters.
- Also applies to arbitration applications and appeals.
- Seeks to speed up the hearing of these commercial disputes by introducing procedural innovations
Definition of Commercial Dispute
Section 2(c) of the act defines Commercial Dispute. The Act applies exclusively to commercial disputes and defines these widely as including disputes arising out of the ordinary transactions of merchants, bankers, financiers and traders, agreements for the sale of goods or provision of services, partnership and joint venture agreements, shareholders agreements, franchising and licensing agreements, construction and infrastructure contracts, commercial property agreements, insurance, subscription and investment agreements, intellectual property rights etc. This includes commercial disputes with the government and government agencies commercial dispute as arising out of the following:
Definition of Specified Value
Section 2(i) speaks about the specified value that means that the commercial dispute or the value of the subject-matter of a suit shall not be less than One Crore Rupees or such higher value which may be notified by the Central Government in this regard.
Determination Of Specified Value:
According to Section 12 of the act, the Specified Value concerning the commercial dispute will be established in the following manner.
- when the relief prayed is for recovery of any money, the money which is sought to be recovered inclusive of any underlying interest shall be calculated up to the date of filing of such suit or application and will be taken in consideration for regulating the Specified Value;
- when the relief prayed narrates to movable property or any right accruing therein, the market value of such movable property as on the date of filing will be taken into consideration for regulating such Specified Value;
- when the relief prayed is related to immovable property or any right accruing therein, the market value of the immovable property, as on the date of filing will be taken into consideration for determining such Specified Value;
- when the relief prayed relates to any intangible right the market value of the rights that will be assessed by the plaintiff will be taken into consideration for considering the Specified Value; and
- when the counterclaim is preferred, the total value of the subject-matter of the dispute in such counterclaim as specified on the date of the counterclaim will be taken into consideration.
Procedural changes Brought by the Act
Other than the establishment of dedicated commercial courts, the most interesting aspect of the Act is the new procedure for hearing matters that it prescribes:
- Strict deadlines
The new Act contains strict deadlines for the conduct of cases, such as for filing written statements, filing all documents relevant to the matter and filing written arguments. A failure to comply with these deadlines has serious adverse consequences such as the forfeiture of the right to make a filing or to rely on a document. The Act even imposes a deadline on judges, requiring that judges pronounce judgment within 90 days of the conclusion of final arguments.
- Innovations in procedure
The Act also adopts several new procedures intended to expedite hearings. The Act mandates that, in line with the practice in other countries, Commercial Courts and Commercial Divisions will hold case management hearings as part of each matter. A case management hearing is a preliminary hearing at which the court will hear all the parties and then frame the issues to be decided in the matter. The court can also fix specific dates for the various steps involved in a matter, such as the filing of evidence, the cross-examination of witnesses and the date for hearing arguments. The court may also fix time limits for arguments during the case management hearing. Another change in the process adopted by the Act is that parties are required to file written arguments in each case well in advance of the oral hearing, in order to allow parties to prepare in advance to counter the other side’s arguments.
Constitution of Commercial Court
Section 3 states that State Government after consultation with the High Court shall constitute an adequate number of Commercial Courts at the district level, for the perseverance of exerting the jurisdiction and powers which are conferred by this act. Providing that no such Commercial Court will be established over the territory on which the High Court has ordained with original civil jurisdiction.
The State Government has been devolved with the power after due consultation with the concerned High Court to specify the local limits within which the Commercial Court shall exercise jurisdiction and such jurisdiction may be extended, reduced or altered from time to time. The State Government after with the correspondence with the Chief Justice of the concerned High Court may appoint one or more persons having knowledge in dispensing with commercial disputes to be the Judge or Judges, of the said Commercial Court, amid the unit of Higher Judicial Service in the concerned State.
Constitution Of Commercial Appellate Division:
Section 5 states that after notification is issued under sub-section (1) of section 3 of the act or any order under sub-section (1) of section 4 of the act, the Chief Justice of the High Court will constitute Commercial Appellate Division having one or more than one Division Benches for the determination of applying the jurisdiction and powers conferred by this act.
The Chief Justice of the High Court is empowered to nominate such Judges of the High Court who have knowledge in apportioning with such commercial disputes to be appointed as Judges of such Commercial Appellate Division in the High Court.
Jurisdiction Of Commercial Court:
Section 6 states that the Commercial Court is conferred with the exclusive jurisdiction to try such suits and applications which are concerning to a commercial dispute of a Specified Value which arises out of the whole territory of the State over which it has been bestowed with territorial jurisdiction.
EFFECT ON PENDING MATTERS
Pending matters will also be transferred to the new commercial court system, where they relate to commercial disputes of Rs. 1 crore or more unless final judgment has been reserved in the matters. Where such matters are pending in a High Court, they are to be transferred to the Commercial Bench in that High Court; where they are pending in any other civil court, they are to be transferred to the corresponding Commercial Court.
NO OVERLAP WITH TRIBUNALS
Matters which do not fall within the jurisdiction of civil courts (such as those within the jurisdiction of specialized tribunals such as the Debt Recovery Tribunals or Company Law Board) will not be transferred to the new Commercial Courts and Commercial Divisions even if they relate to
Arbitration Applications and Appeals
Arbitration appeals and applications relating to commercial disputes of Rs. 1 crore or more are also to be heard by the specialized courts or divisions created under the Act, and pending arbitration applications are to be transferred to these courts
APPEALS FROM DECREES OF COMMERCIAL COURTS AND COMMERCIAL DIVISIONS
Under Section 13 any party that is aggrieved by the pronouncement of the order or judgments by the Commercial Court or Commercial Division of a High Court as the case may be an appeal to the Commercial Appellate Division of that concerned High Court within a stipulated period of sixty days from the date of such judgment.
Providing that an appeal shall lie be preferred from any such orders or judgments conceded by a Commercial Division or a Commercial Court as the case may be which are unambiguously detailed under the Order XLIII of the Code of Civil Procedure, 1908 and section 37 of the Arbitration and Conciliation Act, 1996.
Amendments To The Code Of Civil Procedure, 1908 Vis-A-Vis Commercial Disputes
The Code of Civil Procedure, 1908 shall, in its application to any suit related to the commercial dispute of a Specified Value, will stand amended in the manner as enumerated in the Schedule of the act. The Commercial Division and Commercial Court will be following the provisions of the Code of Civil Procedure, 1908, as amended by this Act, in the respect of a suit which is connected to a commercial dispute of a Specified Value. Whereby any concerning provision of the Rules of the jurisdictional of High Court or any such amendment to the Code of Civil Procedure, 1908, by the concerned State Government is in divergence to the provisions of the Code of Civil Procedure, 1908, the provisions of the Code of Civil Procedure will prevail.