Report No. 253

Chapter IV

Conclusions and Summary of Recommendations

4.1 While the need for commercial courts is obvious in India, the institution of such courts should be seen as a stepping-stone to reforming the civil justice system in India. At the same time, the reforms should be tailored to keep in mind the existing institutions and should focus on improving them within the existing legal framework.

4.2 The Commercial Courts, the Commercial Divisions and the Commercial Appellate Divisions of High Courts that have been recommended are intended to serve as a pilot project in the larger goal of reforming the civil justice system in India. The goal is to ensure that cases are disposed of expeditiously, fairly and at reasonable cost to the litigant. Not only does this benefit the litigant, other potential litigants (especially those engaged in trade and commerce) are also advantaged by the reduction in backlog caused by the quick resolution of commercial disputes.

In turn, this will further economic growth, increase foreign investment, and make India an attractive place to do business. Further, it also benefits the economy as a whole given that a robust dispute resolution mechanism is a sine qua non for the all-round development of an economy.

4.3 In view of the above, a summary of the key recommendations of the Law Commission are reiterated below:

(a) Commercial disputes should be defined broadly to mean disputes arising out of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents; joint venture and partnership agreements; intellectual property rights; insurance and other such areas as have been defined in the proposed 2015 Bill.

(b) Commercial Divisions are to be set up by the Central Government in High Courts that are already exercising ordinary original civil jurisdiction, such as Calcutta, to take up commercial disputes with a specified value of Rupees One Crore or more. Commercial Divisions to exercise jurisdiction over all suits and applications relating to commercial disputes (i) stipulated by statute to lie at a court not inferior to a District Court, and filed on the original side of the High Court and (ii) transferred to the High Court by virtue of Section 22(4) of the Designs Act, 2000 or Section 104 of the Patents Act, 1970.

(c) Commercial Courts are to be set up in (i) States and Union Territories where the High Courts do not have ordinary original civil jurisdiction, such as Bangalore and (ii) in those regions to which the original civil jurisdiction of High Courts (already having original civil jurisdiction) does not extend, such as Pune or Madurai. The minimum pecuniary jurisdiction of such Commercial Courts shall also be Rupees One Crore or more.

(d) Pecuniary jurisdiction of the High Courts having original jurisdiction to be raised uniformly to Rupees One Crore and Commercial Divisions should be set up only when the pecuniary jurisdiction has been so raised. Consequently, Commercial Divisions may be set up in Delhi, Himachal Pradesh, and Madras High Courts once the pecuniary jurisdiction is raised to Rupees One Crore.

(e) No jurisdiction with Commercial Divisions or Commercial Courts to adjudicate matters relating to commercial dispute, where the jurisdiction of the civil court has been either expressly or impliedly barred under law.

(f) The constitution of a Commercial Division or a Commercial Court should take place simultaneously with the constitution of a Commercial Appellate Division. The Commercial Appellate Division will hear the appeals against the orders and decrees passed by the Commercial Divisions or Commercial Courts.

The Commercial Appellate Division to not entertain any civil revision applications or petitions against any interlocutory order of a Commercial Court, including an order on the issue of jurisdiction (which can be agitated only in an appeal against a decree). Appeals would lie only against the orders enumerated in Order XLIII of the CPC and Section 37 of the Arbitration and Conciliation Act, 1996 and against no other orders.

(g) 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.

(h) 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.

(i) Notwithstanding anything contained in the CPC, the filing of a counter-claim of specified value in a suit relating to a commercial dispute to result in transferring the suit to the Commercial Court or Commercial Division, as the case may be.

(j) All pending suits and applications relating to commercial disputes above Rupees One Crore in the High Courts and Civil Courts will be transferred to the relevant Commercial Division or Commercial Court as the case may be. In case the transfer cannot be carried out in the manner contemplated by the proposed sub-sections, the Commercial Appellation Division can pass appropriate orders.

(k) The Bill shall have a streamlined procedure to be adopted for the conduct of cases in the Commercial Division and in the Commercial Court by amending the Code of Civil Procedure, 1908 so as to improve the efficiency and reduce delays in disposal of commercial cases. The amended CPC as applicable to the Commercial Divisions and Commercial Courts will prevail over the existing High Court rules and other provisions of the CPC to the contrary. Some of the important changes proposed to the CPC are listed below:

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