Another Special Court: The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015

The President of India promulgated the ordinance to bring into force The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 (“Ordinance”) on October 23, 2015, which would enable the expeditious settlement of commercial disputes that would give impetus to the ease of doing business in India. With the ordinance coming into force “at once”, all pending suits and applications relating to commercial disputes involving claims of Rs.1,00,00,000 (Rs. One Crore only) or more in the high courts and civil courts will be transferred to the relevant commercial division (“Commercial Division”) or commercial court (“Commercial Court”) as the case may be. However, a suit will not be transferred if a final judgment on the matter has been reserved prior to the constitution of the relevant Commercial Division or Commercial Court.

The salient features of the Ordinance are as follows:

Commercial Dispute

A commercial dispute as defined under the Ordinance shall include all transactions entered into by merchants, bankers, financiers and traders pertaining to their commercial arrangements with each other or third parties. The disputes with respect to documents like distributions agreements, franchising agreement, investment agreements etc. shall be referred to the relevant Commercial Division or Commercial Court. The definition of commercial dispute under the Ordinance is very wide and covers within its ambit every plausible commercial dispute. Considering the current high rate of vacancy in our courts there is an imminent need to expedite the process of appointment of judges so that there are adequate number of judges available for the Commercial Divisions and Commercial Courts.

Specified Value

The pecuniary jurisdiction for the Commercial Division and the Commercial Court shall be all commercial disputes involving claims of Rs.1, 00, 00,000 (Rs. One Crore only) or more.

Commercial Divisions and Commercial Courts

The Commercial Divisions will be set up in those high courts which are already exercising ordinary original civil jurisdiction, that is, the High Courts of Delhi, Bombay, Calcutta and Madras. The Commercial Divisions shall have territorial jurisdiction over such area on which it has original jurisdiction. The Commercial Courts which will be equivalent to district courts will be set up in states and Union territories where the high courts do not have ordinary original civil jurisdiction.

Appointment of Judges to the Commercial Divisions

The Chief Justice of the concerned high court shall decide on the requisite number of Commercial Divisions. The appointed judges must have experience in dealing with commercial disputes and the nomination would be for a period of 2 (two) years, or as determined by the Chief Justice of the concerned high court. However, the qualification for the judges as provided under the Ordinance is subjective in nature and fails to provide guidelines on what would be considered as a suitable experience/expertise in commercial disputes.

Appointment of Judges to the Commercial Courts

Judges to a Commercial Court will be appointed by the Chief Justice of the concerned high court, in a manner to be prescribed.  The senior most judge would be the Principal Judge, and would have the same powers as that of a Principal District Judge of a District Court.

Commercial Appellate Division

Commercial Appellate Division will be set up in all the high courts to hear appeal against orders of the Commercial Divisions and the Commercial Courts. Further, any appeal filed in a high court against the orders of certain tribunals like: (i) Competition Appellate Tribunal; (ii) Debt Recovery Appellate Tribunal; (iii) Intellectual Property Appellate Board; (iv) Company Law Board or the National Company Law Tribunal; (v) Securities Appellate Tribunal; and (vi) Telecom Dispute Settlement and Appellate tribunal may be heard by the commercial appellate division of the high court if it relates to a commercial dispute

Time period for filing appeals

All appeals must be made within a period of 60 (sixty) days from the date of the judgement or order of the lower court. The Commercial Appellate division shall endeavour to dispose of appeals within a period of 6 (six) months from the date of filing of such appeal.

Amendments to the Code of Civil Procedure, 1908

The Code of Civil Procedure, 1908 shall in its application to any suit in respect of a commercial dispute, to which the Commercial Division or the Commercial Court has jurisdiction shall also stand amended as per the Schedule of the Ordinance.

Exception to jurisdiction

However, the Commercial Divisions or Commercial Courts will not have jurisdiction in matters relating to commercial dispute, where the jurisdiction of the civil court has been either expressly or impliedly barred under law.

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill has been pending for a long time. The hurried promulgation of the Ordinance has come amidst keenness of the government to attract the greater foreign investment. Through the promulgation of this Ordinance the government wishes to mitigate the fears of certain foreign companies who are reluctant to do business in India because of the long-drawn litigations. However the Ordinance will have to receive an approval from the Parliament within 42 (forty two) days/6 (six) weeks or else it will lapse. In the event the same doesn’t receive an approval within the stipulated time, the Government at its discretion may have to extend the Ordinance. The Ordinance is likely to be introduced in the winter session of the Parliament.

See text of The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Ordinance).

– Archana Balasubramanian and Rashmi Raveendran