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--------------- Print Magazine --------------
 
  May 2016
 
  April 2016
 
 
 
 
Cover Story
COMMERCIAL COURTS IN INDIA

Better Late Then Never
Hemant Kumar, Contributing Editor
hemantkumar.mallb@gmail.com
Notwithstanding that a legislation for constitution of commercial courts in the country was being examined by a parliamentary committee, the incumbent “Modi Sarkar”all of a sudden decided to expedite its enforcement via promulgation of an Ordinance for the reasons best known to it. Although the same resulted in immediate operationalization of requisite course of action, it remains to be seen how sooner this would translate into a duly enacted Act of Parliament and more significantly, how effectively and efficiently it works in the Indian context.

On October 23, the President of India promulgated two Ordinances viz. Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015 (hereinafter referred as Commercial Courts' et al ) and Arbitration and Conciliation (Amendment) Ordinance, 2015 . Pertinent to mention that a Bill relating to the former was introduced in the Rajya Sabha by the Union Minister of Law & Justice, DV Sadananda Gowda on April 29 this year ( See Box ) after which it was referred to the Department- Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice for due examination and report.

The Commercial Courts' et al Bill, 2015 inter alia proposes to set up commercial courts both at district and High Court level to ensure that the commercial cases/disputes are disposed of expeditiously, fairly and at reasonable cost to litigant. At the time of writing this cover story, the ibid Committee as headed by Dr. EM Sudarsana Natchiappan was yet to submit its report.

Though there may be varying opinions amongst civil society in general and legal/judicial fraternity in particular over the way incumbent ruling dispensation has been resorting to Ordinance route for bringing into force those laws which are on its highly-prioritized agenda, as far as the issue regarding setting up of commercial courts is concerned, it needs to be borne in mind that it has been more than a decade since 17th Law Commission of India (LCI) headed by Justice M. Jagannadha Rao in its 188th Report titled "Proposals For Constitution Of Hi-Tech Fast - Track Commercial Divisions In High Courts (December, 2003)" had recommended this idea .

As the then 13 th Lok Sabha was dissolved prematurely in February 2004 well ahead of its normal tenure, one may very much understand why the then Vajpayee-led NDA dispensation did not proceed in this regard. Though the succcesive UPA regime during its first innings did nothing on this front but after the Joint Conference of the Chief Ministers of States/Chief Justices of High Courts in August 2009, considered and agreed upon the ibid report of the LCI aimed at constitution of a dedicated Bench of the High Court (Commercial Division) to decide commercial cases above a certain monetary limit on a fast-track basis. The then UPA-2 Government in December 2009 tabled "The Commercial Division of High Courts Bill, 2009" in the Lok Sabha which was even passed by the Lower House of Parliament within a couple of days of being introduced without being referred to any Parliamentary Standing Committee.

But when this Bill reached the Rajya Sabha, it was referred to the Select Committee which submitted its report in July 2010 suggesting several changes in the legislation including the need for expanding the definition of 'commercial dispute', inserting a clarification that the Commercial Division of a High Court would comprise a Single Judge rather than Bench of Two Judges, the reduction of pecuniary jurisdiction of the Commercial Division from ` 5 crore to ` 1 crore, etc.

We will:

  • set up a separate class of courts for cases involving specified commercial laws which fast track the litigation process.
  • create courts specially equipped to deal with IPR cases.
    Extract from BJP’s Election Manifesto, 2014

Even after accepting all the recommendations of the aforementioned Select Committee, when the Bill was redrafted and placed before the House for its consideration, certain concerns were again expressed by the members of the Rajya Sabha which eventually resulted in the then UPA-2 Government withdrawing the legislation. Thereafter, the Bill was referred to the 20 th LCI for re-examining its various provisions with special emphasis on the scope and definition of 'commercial dispute'. It was in January 2015 that the 20 th LCI headed by Justice AP Shah submitted its 253 rd report over the same. ( See Box )

Here it also needs to be mentioned that the Election Manifesto-2014 of ruling BJP had explicitly committed to set up such commercial courts ( See Box ). Also one must recall here that the global ranking of India with respect to the index regarding "Ease of doing Business" has significantly improved vis-à-vis its previous years' ranking as per a report released by the World Bank in October this year. But, India still stands last amongst all BRICS nations (Brazil, Russia, India, China and South Africa). This undoubtedly warrants taking much more firm and hard decisions by the ruling "Modi Sarkar".

One of the most signficant differences in the Commercial Courts' et al Bill, 2015 including in its Ordinance avatar vis-à-vis the Commercial Division Bill, 2009 is that the threshold monetary limit is definition of "Specified Value" in relation to a commercial dispute has been decreased drastically from ` 5 crore as provided in the latter vis-a-vis
` 1 crore in the former.

Here it also merits due reference that apart from providing constitution of Commercial Courts in districts coupled with Commercial Division & Commercial Appellate Division at High Court level, the Bill also contains a Schedule which incorporates appropriate Amendments to the provisions of the Code of Civil Procedure (CPC) which would govern (trial) proceedings in a suit in respect of a commercial dispute of a specified value. The Orders and Rules as appended to CPC, 1908 have been amended/substituted in a considerable manner as far as working methodology of commercial courts is concerned.

Further, noteworthy is that the LCI in its 253rd Report on Commercial Courts' Bill recommended that the Chief Justice shall nominate sitting judges of the High Court, having expertise and experience in commercial disputes, to the Commercial Division of the High Courts and the Commercial Appellate Division, preferably for a period of two years and that the Commercial Courts are to be manned by specially trained judges appointed by the High Court from advocates and judges with demonstrable expertise and experience in commercial litigation.

But as the 2015 Bill including the now-in-force Ordinance merely specifies the condition of experience in dealing with commercial disputes for judges manning such courts rather than providing requirement of expertise much less demonstrable expertise in commercial litigaton, hence in such a scenario there is an urgent need for National Judicial Academy and the State Judicial Academies to create necessary facilities for the training and continuous education of Judges of the Commercial Court or the Commercial Division or the Commercial Appellate Division in a High Court as also suggested by the LCI.

In mid-November this year, the Chief Justice of the Delhi High Court constituted Commercial Division with six Benches consisting of a Single Judge each under section 4(1) of the Commercial Courts' et al Ordinance, 2015 as well as four Division Benches as Commercial Appellate Division under section 5(1) of the same. Also requisite directions have been issued for the purpose of filing of matters to be heard and decided by both.

Here the author of this cover story wonders if certain commercial courts at district level as provided under section 3(1) of the ibid Ordinance could also be constituted for NCT of Delhi notably since on October 26, 2015 the Delhi High Court Amendment Act, 2015 as passed by the Parliament in August this year has come into force which provides for enhancement of pecuniary jurisdiction of the district courts in Delhi from ` 20 lakh to ` 2 crore. Earlier in the year 2003, this limit was raised from ` 5 lakh to ` 20 lakh.

As the primary reason behind increasing the limit is that the same would lessen the burden of the Delhi High Court and there would be substantive improvement in the disposal of cases in subordinate courts which would facilitate access of the general public to 11 district courts located in six court complexes within the vicinity of their location thus ensuring speedy justice to the litigants at their door steps, hence one may argue why certain appropriate courts at district level in Delhi be not designated as Commercial Courts for adjudicating commercial disputes within the specified value of ` 1 crore to ` 2 crore ?

Well, this would not be as simple to do as to be suggested. Even the 20 th LCI in its 253 rd Report on Commercial Courts' Bill had also recommended that in order to achieve the objective of the Bill and prevent such anomalies from occuring, the Government may consider enhancing the pecuniary jurisdiction of the Delhi High Court to ` 1 crore so as to bring uniformity amongst all such High Courts which possess original civil jurisdiction. Unfortunately, this aspect was perheps not seriously considered while passing the Delhi High Court Amendment Bill, 2015 during Monsoon Session this year.

Finally, although the promulgation of Commercial Courts' et al Ordinance, 2015 has paved the way for putting in place a statutory framework for adjudicating commercial disputes of specified value but as of now it remains to be seen if the requisite legislation for the same would be able to sail smoothly through both the Houses of Parliament in the upcoming Winter Session of the Parliament or else in the event of failing to do so, the Ordinance would have to be re-promulgated. Be that as it may, now that the "Modi Sarkar" has embarked upon the voyage of taking bold initiatives so that hitherto-stuck economic reforms can be ushered in letter and spirit, it ought not to yield to any pressure tactics or otherwise which tend to delay or derail the implementation of the same.

 
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