Commercial Courts, Commercial Division and Commercial Appellate
Division of High Courts Act, 2015.
On 23 October 2015, the President of India promulgated the
Commercial Courts, Commercial Division and Commercial Appellate Division of
High Courts Ordinance, 2015.
The Ordinance provides for the constitution of Commercial Courts,
and the establishment of Commercial Divisions and Commercial Appellate
Divisions within High Courts to adjudicate ‘Commercial Disputes’.
The Ordinance amends certain provisions of the Civil Procedure
Code, 1908, to the extent applicable to ‘Commercial Disputes’ and also
prescribes timelines to streamline the conduct of such ‘Commercial Disputes’.
"Commercial Court" means the Commercial Court constituted under
sub-sec (1) of section 3,
"Commercial Appellate Division" means
the Commercial Appellate Division in a High Court constituted under sub-section
(3) of section 3;
"Commercial
dispute" means a dispute arising out of—
(i)
Ordinary transactions of merchants, bankers, financiers and
traders such as those relating to mercantile documents, including enforcement
and interpretation of such documents;
(ii)
Export or import of merchandise or services;
(iii)
Issues relating to admiralty and maritime law;
(iv)
Transactions relating to aircraft, aircraft engines, aircraft
equipment and helicopters, including sales, leasing and financing of the same;
(v)
Carriage of goods;
(vi)
Construction and infrastructure contracts, including tenders;
(vii)
Agreements relating to immovable property used exclusively in
trade or commerce;
(viii)
Franchising agreements;
(ix)
distribution and licensing agreements;
(x)
management and consultancy agreements;
(xi)
joint venture agreements;
(xii)
shareholders agreements;
(xiii)
subscription and investment agreements pertaining to the services
industry including outsourcing services and financial services;
(xiv)
mercantile agency and mercantile usage;
(xv)
partnership agreements;
(xvi)
technology development agreements;
(xvii)
intellectual property rights relating to registered and
unregistered trademarks, copyright, patent, design, domain names, geographical
indications and semiconductor integrated circuits;
(xviii) agreements
for sale of goods or provision of services;
(xix)
exploitation of oil and gas reserves or other natural resources
including electromagnetic spectrum;
(xx)
insurance and re-insurance;
(xxi)
contracts of agency relating to any of the above, or relating to
such other commercial disputes as may be prescribed; and
Wide meaning of 'Commercial Dispute': The term ‘Commercial Dispute’ has been very broadly defined in the
Ordinance, to encompass almost every kind of transaction that gives rise to a
commercial relationship. The subject matter of such disputes could be as wide
ranging as commercial contracts relating to exploitation of natural resources,
intellectual property rights, insurance, construction and infrastructure
contracts, government contracts, immovable property, etc. Such commercial
disputes will now be adjudicated by Specialized Commercial Courts which will
comprise of judges specially trained to deal with Commercial Disputes.
Specialized
Commercial Courts at various levels: These will be
categorised as follows:
(a) Commercial
Courts will be constituted 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. At present, only five High
Courts exercise ordinary original civil jurisdiction – the High Courts of
Delhi, Bombay, Madras, Calcutta and Himachal Pradesh. Therefore, in all other
states and union territories, Commercial Courts will now adjudicate upon
Commercial Disputes.
(b) Commercial
Divisions will be set up within High Courts which do exercise ordinary original
civil jurisdiction. A Commercial Division in such states and union territories
will exercise jurisdiction over all cases and applications relating to Commercial
Disputes.
(c) Commercial
Appellate Divisions will be set up in every High Court to hear appeals against
(i) orders of Commercial Division of High Court; and (ii) orders of Commercial
Courts. Interestingly, the Ordinance does not provide for a statutory right to
appeal to the Supreme Court from an order of the Commercial Appellate Division.
Accordingly, the Ordinance limits the number of appeals allowed in Commercial
Disputes to only one.
At present, although there are no specialized designated
commercial courts which hear Commercial Disputes, certain judges at the
district court level predominantly hear Commercial Disputes. Similarly, in the
five High Courts which exercise ordinary original civil jurisdiction in India,
there are designated judges who hear Commercial Disputes. Such designated
judges at the district court level and the High Court level, however, do not
hear commercial matters exclusively. The Ordinance proposes to constitute and
establish Specialized Commercial Courts to hear only Commercial Disputes.
Commercial
Dispute value threshold: Under the
Ordinance, only those Commercial Disputes where the value of the subject matter
in respect of the said Commercial Dispute is more than Rs 1,00,00,000 (defined
as Specified Value in the Ordinance), will be adjudicated by the Specialized
Commercial Courts. Further, the Ordinance has also prescribed the manner in
which the Specified Value of a commercial dispute is to be determined.
Given that the objective of the Ordinance is to fast track the
resolution of Commercial Disputes, the threshold of Rs. 1,00,00,000 can be
considered to be low. As a result, larger Commercial Disputes may not receive
the focus that may have been intended through the Ordinance.
Existing
Commercial Disputes to be transferred: Under the
Ordinance, all suits and/or applications relating to a Commercial Dispute of a
Specified Value pending before any civil court where a Commercial Court has
been constituted will be transferred to such Commercial Court. Similarly, where
a Commercial Division has been constituted (in the five High Courts exercising
ordinary original civil jurisdiction), such pending suits and applications will
be transferred to the new Commercial Divisions of such High Courts.
Jurisdiction
over arbitrations: In line with
the terms of the arbitration ordinance, 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 [1], except
matters relating to the appointment of arbitrators in international commercial
arbitrations[2].
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), shall
now lie before a Commercial Court (where constituted) exercising territorial
jurisdiction over such arbitration.
Consequent
amendments to CPC: The
provisions of the Code of Civil Procedure, 1908 (CPC), to the extent of its
application to any suit in respect of a Commercial Dispute of a specified
value, has been amended by the Ordinance to streamline the conduct of
Commercial Disputes. Key amendments to the CPC are as follows:
(a) The Ordinance has introduced a new provision in the CPC, which
prescribes that a Commercial Court or a Commercial Division will hold a ‘case
management hearing’ to frame issues and fix timelines, as noted below, 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 ordinance 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 Specialized Commercial Courts 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 [3] (which
continue to apply to matters other than Commercial Disputes).
Fixed
Timelines: The Ordinance, while amending the provisions of the CPC, has also
introduced strict timelines to ensure prompt resolution of disputes, in the
following manner:
a) The maximum
period for filing a written statement has been set at 120 days upon the expiry
of which the defendant’s right to file a written statement shall stand
forfeited.
b) All appeals
to the Commercial Appellate Division must be made within a period of 60 days
from the date of the impugned judgement and the appellate division must
endeavour to dispose of the same within 6 months from when it is filed.
c) A plaintiff
seeking to adduce additional documents must make an application for the same
within 30 days of filing the suit.
d) All
applications seeking leave to deliver interrogatories must be decided within 7
days from the date on which they are filed.
e) Interrogatories
shall be answered by affidavit to be filed within 10 days, however such period
is extendable by the court.
f) All parties
must complete inspection of all documents disclosed within 30 days of the
filing of the written statement.
g) Any
directions sought by parties for inspection of documents must be disposed of
within 30 days of filing an application for such directions.
h) Inspection of
documents must be completed within 5 days of the passing of an order allowing
inspection.
i)
Parties must submit their statements of admission/denial of all
disclosed documents within 15 days of completion of the inspection. The court
however has the discretion to fix any other such time as it deems fit for
submission of these statements.
j)
Any party served with a notice to produce documents may be given
up to 15 days to submit the relevant documents.
k) The first
case management hearing is to be held within four weeks from the submission of
admission/denial of documents by all parties to the suit.
l)
Arguments must be concluded within 6 months from the date of the
first case management hearing
m) Written
arguments under distinct heads are to be submitted by the parties within 4
weeks of the commencement of oral arguments. Thereafter, the court may allow
revised written arguments to be filed within one week after conclusion of oral
arguments.
n) The court
must pronounce judgement within 90 days of conclusion of arguments.
The Commercial Court shall have jurisdiction to try all suits and
applications relating to a commercial dispute of a Specified Value arising out
of the entire territory of the State over which it has been vested territorial
jurisdiction.
Notwithstanding anything contained in any other law for the time
being in force, no civil revision application or petition shall be entertained
against any interlocutory order of a Commercial Court, including an order on
the issue of jurisdiction, and any such challenge, subject to the provisions of
section 13, shall be raised only in an appeal against the decree of the
Commercial Court.
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