On this page you will read detailed information about Commercial Courts Act 2015.
As a legal practitioner, staying current on India’s legal landscape is crucial for providing sound counsel. The Commercial Courts Act, passed in 2015, instituted pivotal reforms that directly impact your practice. The Act established commercial courts and divisions to adjudicate commercial disputes efficiently. As you navigate this evolving system, an overview equips you to leverage the Act’s mechanisms and procedures for your clients’ benefit. In 100 words, this article elucidates key provisions, analyzing their implications for legal practitioners. Understanding the Act’s objectives, timeline, and requirements grants you a robust foundation. Peruse with an eye toward bolstering your commercial law competencies.
Introduction to the Commercial Courts Act 2015
The Commercial Courts Act, 2015 establishes commercial courts and commercial divisions in high courts for adjudicating commercial disputes. The Act aims to improve the ease of doing business in India by expediting resolution of commercial cases. Prior to the Act, commercial cases were heard in civil courts which were burdened with excessive caseloads, leading to significant delays.
The Act defines ‘commercial disputes’ broadly to include disputes arising from ordinary transactions of merchants, bankers, financiers and traders. ###It covers disputes relating to partnerships, companies, contracts, arbitration agreements, and insolvency. The pecuniary jurisdiction of commercial courts is over Rs 1 crore, allowing higher value disputes to be adjudicated expeditiously.
The commercial courts follow simplified procedures and timelines.
Written statements must be filed within 30 days and trials must conclude within 6 months of the first case management hearing. Judgments must be delivered within 90 days of conclusion of arguments. The Act allows limited appeals to ensure speedy dispute resolution. It provides for recording of evidence by video conferencing and allows service of summons by speed post, courier and email.
The commercial courts are presided over by judges with expertise in commercial laws.
The central government established commercial courts in Delhi, Mumbai, Calcutta, Chennai and State governments have set up commercial courts in other cities. The Act is a significant step towards improving the ease of doing business and promoting foreign investment in India.
In conclusion, the Commercial Courts Act aims to reduce delays in resolution of high value commercial disputes and improve investors’ confidence in the Indian legal system. By establishing dedicated commercial courts, simplifying procedures and imposing strict timelines, the Act is achieving its objectives of expedited and effective dispute resolution. Legal practitioners must familiarize themselves with the provisions of this important legislation.
Key Provisions of the Commercial Courts Act
Establishment of Commercial Courts
The Commercial Courts Act, 2015 provides for the establishment of commercial courts at the district level in all states. These courts will exclusively deal with commercial disputes of a specified value. The Central Government may also establish Commercial Divisions in High Courts.
Jurisdiction and Pecuniary Limit
The commercial courts will adjudicate commercial disputes of a ‘specified value’. The Act defines ‘specified value’ as disputes where the value of the subject matter in respect of the same contract does not exceed one crore rupees or such higher value, not exceeding two crore rupees, as may be notified by the Central Government.
Appeal
Appeals from orders of Commercial Courts below the level of a District Judge shall lie before the Commercial Appellate Courts. Appeals from Commercial Courts at the level of District Judges shall lie before the Commercial Division of the High Court.
Transfer of Pending Cases
The High Court may transfer any suit, appeal or other proceedings pending before any court subordinate to it to the Commercial Court or Commercial Division. The Act also provides for transfer of miscellaneous proceedings related to arbitration, company matters, etc. to the Commercial Courts.
Timelines for Adjudication
The Act lays down strict timelines for disposal of cases. Commercial Courts are required to dispose of cases within 12 months, extendable by a period of 6 months. Appeals have to be disposed of within 6 months. These timelines will ensure speedy resolution of commercial disputes.
The establishment of Commercial Courts is a significant step towards improving the ease of doing business in India by facilitating faster resolution of commercial disputes. The Act aims to instill confidence in investors and boost economic activity in the country. Legal practitioners must acquaint themselves with the provisions of this important legislation.
In the previous post, we had shared information about An Overview of the Legal Metrology Act in India, so read that post also.
Establishment of Commercial Courts
The Commercial Courts Act, 2015 provides for the establishment of commercial courts at district and high court levels in India.
District Commercial Courts
The state government may establish commercial courts at the district level in consultation with the concerned high court. These courts will be presided over by a district judge or an additional district judge with relevant experience. They have jurisdiction to entertain commercial disputes of a value of at least one crore rupees.
High Court Commercial Divisions
High courts may constitute commercial divisions comprising one or more benches. Each bench shall consist of at least two judges with experience in commercial disputes.The commercial divisions of high courts have jurisdiction over commercial disputes of at least two crore rupees.
Commercial Appellate Courts
The state government may establish commercial appellate courts at the district level. These courts shall be presided over by a judge of the rank of district judge with experience in commercial disputes. They hear appeals against judgments of the district commercial courts within their territorial jurisdiction.
The establishment of specialized commercial courts aims to improve the ease of doing business in India by expediting the resolution of commercial cases. The commercial courts are expected to reduce the pendency of commercial cases in regular courts. They adopt innovative methods of case management to achieve speedy disposal of cases. The judges of commercial courts are provided periodic training to equip them with skills required for efficient handling of commercial disputes.
The provisions of the Commercial Courts Act, along with amendments, apply to the whole of India except the State of Jammu and Kashmir. The establishment of commercial courts is a step towards improving the enforcement of contracts and recovery of monetary claims in India.
Jurisdiction of Commercial Courts
Commercial Courts in India have been established under the Commercial Courts Act of 2015 to adjudicate commercial disputes. As per the Act, Commercial Courts have jurisdiction to try all suits and applications relating to commercial disputes of a specified value.
Commercial Disputes
The Commercial Courts Act defines a commercial dispute as a dispute arising out of ordinary transactions of merchants, bankers, financiers and traders. This includes disputes relating to partnerships, contracts, infringements of trademarks, copyrights or patents, mercantile agency and mercantile usages. However, it excludes disputes relating to succession or inheritance.
Specified Value
The pecuniary jurisdiction of Commercial Courts is determined by the value of the subject matter in dispute. Commercial Courts in metropolitan areas have jurisdiction over disputes of one crore rupees or more. In other areas, Commercial Courts can adjudicate disputes of at least fifty lakh rupees. The High Courts have the power to specify the pecuniary limits of Commercial Courts in consultation with the respective State Governments.
Exclusions from Jurisdiction
Some categories of disputes have been excluded from the jurisdiction of Commercial Courts. These include disputes relating to immovable property, recovery of monies secured by mortgages, documents of title relating to such property or mortgages, and arbitration proceedings. The Commercial Courts also cannot grant declaratory reliefs or injunctions in relation to immovable property.
The establishment of Commercial Courts in India is a significant step towards improving the ease of doing business by providing a specialised mechanism for speedy resolution of commercial disputes. With a wider scope, specified pecuniary limits and dedicated subject-matter expertise, Commercial Courts can effectively adjudicate complex commercial matters in a time-bound manner.
Transfer of Suits to Commercial Courts
Under Section 15 of the Commercial Courts Act, certain pending suits and applications can be transferred to the Commercial Courts. These include suits and applications relating to commercial disputes, irrespective of the value of the subject matter, pending in civil courts in places where Commercial Courts have been established. Once transferred, the Commercial Court will have jurisdiction to hear and decide such suits and applications.
Procedure for Transfer
The transfer of pending suits and applications to Commercial Courts shall be done in the following manner:
The Commercial Court, either suo motu or on an application made by any of the parties to the suit, may order the transfer of such suit or proceeding or appeal pending in a civil court either in whole or in part, to itself, if it is satisfied that it relates to a commercial dispute. The Court shall not transfer any suit, application or appeal unless it is satisfied that it is necessary for the ends of justice.
Before making an order for transfer, the Commercial Court shall give notice to the other parties in the suit or proceeding, hear their objections or representations, if any, and pass appropriate orders. The Court may impose such terms and conditions as it deems fit while ordering such transfer.
The Commercial Court may, if it thinks fit, either suo motu or on application of any party, withdraw from itself any suit, application or appeal and transfer the same for trial or disposal to the court in which the same was pending prior to the transfer order. The Court may pass orders for costs, as it may deem fit, against any party for causing such withdrawal and transfer.
Effect of Transfer
Upon transfer of a suit, application or appeal to a Commercial Court, the provisions of the Commercial Courts Act shall apply to such suit, application or appeal. The suit, application or appeal so transferred shall be deemed to have been instituted or filed before the Commercial Court on the date on which it was instituted or filed in the court from which it was transferred.
Appeals Under the Commercial Courts Act
Appeals against the orders and judgments passed by the Commercial Courts or Commercial Appellate Courts can be filed before the Commercial Appellate Courts and Commercial Division of High Courts respectively.
The aggrieved party has the right to prefer an appeal against final judgments and orders before the Commercial Appellate Court within a period of 60 days from the date of judgment or order. The Commercial Appellate Court may entertain an appeal after the expiry of 60 days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the stipulated time period.
Appeals against the orders of the Commercial Appellate Courts can be filed before the Commercial Division of the relevant High Court by the dissatisfied party. The High Court has the jurisdiction to hear appeals against the final judgments and orders passed by the Commercial Appellate Courts. Such appeals must be filed within a period of 90 days from the date of the impugned judgment or order. The High Court has the power to condone the delay in filing the appeal if the appellant proves that there was sufficient cause for not preferring the appeal within the prescribed time period.
It is pertinent to note that no further appeal shall lie against the judgment or order passed by the Commercial Division of the High Court. However, in exceptional circumstances, the Supreme Court may grant special leave to appeal against the orders of the High Court. The granting of special leave petition and consequent hearing of appeals by the Supreme Court will be guided by the provisions of Order XLVII of the Code of Civil Procedure, 1908.
In summary, the Commercial Courts Act provides an efficient mechanism for expeditious disposal of commercial disputes by limiting the number of appeals. The legislative intent is to minimize delays in the resolution of commercial litigations and provide certainty and finality to commercial relationships.
Amendments to the Code of Civil Procedure
The Commercial Courts Act introduced several amendments to the Code of Civil Procedure, 1908 (CPC) to improve the efficiency of commercial dispute resolution in India. Some of the key amendments are:
The pecuniary jurisdiction of commercial courts has been enhanced to INR 300 lakhs. This expansion in jurisdiction aims to reduce the burden on High Courts. Commercial courts will now have the authority to try a larger number of commercial cases.
Strict timelines have been prescribed for key stages of a suit including filing of written statement, completion of discovery and inspection, framing of issues and arguments. This will expedite the disposal of cases and reduce procedural delays. For instance, written statements must be filed within 30 days which can be extended to a maximum of 120 days.
Certain provisions of Order XVIII of CPC like examination-in-chief, cross examination and re-examination of witnesses have been excluded for commercial disputes. Witnesses will now submit affidavits and can be cross-examined based on their affidavits. This aims to make the witness deposition process less time consuming.
Appeals from orders and judgments of Commercial Courts below the level of District Judge will lie before the Commercial Appellate Courts. Appeals from Commercial Courts at the level of District Judge will lie before the High Court. This dedicated mechanism for appeals in commercial matters will ensure speedy disposal.
Provisions for summary judgment have been introduced to provide for quick decisions in cases where there are no triable issues. If the court concludes that the defendant has no real prospect of defending the claim or part of the claim, it can pass a summary judgment without a full trial.
These amendments, along with establishment of commercial courts and dedicated commercial appellate courts, will significantly improve the pace of dispute resolution in commercial matters. Legal practitioners must acquaint themselves with these new provisions to effectively represent clients in commercial litigation.
Implications for Legal Practitioners
The Commercial Courts Act has significant implications for legal practitioners in India. Lawyers will need to familiarize themselves with the provisions of the Act to effectively represent clients in commercial disputes.
The Act establishes Commercial Courts and Commercial Appellate Courts in India to adjudicate commercial disputes. Legal practitioners should understand the pecuniary jurisdiction and territorial jurisdiction of these courts to determine the appropriate forum for disputes. The Act also sets out provisions related to the appointment of judges to the Commercial Courts, including qualifications and experience requirements practitioners should be aware of.
The Act specifies that the Commercial Courts must follow certain procedures to achieve speedy and efficient disposal of cases. For instance, they must conduct continuous trial proceedings, restrict adjournments to exceptional circumstances, and ensure judgments are pronounced within 90 days of conclusion of arguments. Lawyers should be prepared to complete arguments and submissions within prescribed time periods.
The Act also provides for several mechanisms to facilitate settlement between parties such as mediation and arbitration. Legal practitioners should counsel clients on the benefits of alternative dispute resolution (ADR) mechanisms, especially for small value disputes. They should also be well-versed in procedures related to mediation and arbitration to represent clients effectively should parties opt for ADR.
In conclusion, the Commercial Courts Act aims to improve the ease of doing business in India by expediting resolution of commercial disputes. For legal practitioners, keeping abreast of the provisions and implications of this legislation is vital to provide optimal representation and advice to clients on commercial matters. By understanding the practices and procedures of the Commercial Courts, lawyers can help achieve the objectives of speedy and efficient disposal of commercial cases as envisaged by the Act.
FAQs on the Commercial Courts Act
The Commercial Courts Act aims to facilitate a speedy trial of commercial disputes in India. As a legal practitioner, you may have several questions regarding the Act. Here are some frequently asked questions and their answers:
The Act covers commercial disputes of a specified value, such as disputes related to mercantile law, contracts relating to commerce and industry, partnership agreements, intellectual property rights relating to commerce and industry, insurance, and construction of commercial buildings or infrastructure projects.
Commercial Courts have jurisdiction to decide commercial disputes of a specified value of at least one crore rupees. Commercial Appellate Courts can hear appeals against orders of Commercial Courts.
Some key features of the Act are:
I) Establishment of Commercial Courts and Commercial Appellate Courts.
II) Specified pecuniary jurisdiction and subject matter jurisdiction.
III) Mandatory pre-institution mediation and settlement.
IV) Case management hearings and timelines for speedy disposal.
V) Limited grounds for appeal to avoid frivolous litigation.
VI) Costs imposed on frivolous litigants.
The procedure for filing a commercial suit is:
Pre-institution mediation: Parties must undertake pre-litigation mediation. If mediation fails, plaintiff can institute suit.
Filing of suit: Suit is filed before the Registrar who will scrutinize and issue summons to defendants.
First Case Management Hearing: The court will lay down a timeline for trial and frame issues.
Trial: Trial is conducted as per the Civil Procedure Code and Indian Evidence Act.
Judgment and decree: Judgment shall be delivered within 90 days of the conclusion of arguments.
The Commercial Courts Act aims to reduce the pendency of commercial cases and ensure speedy justice. Familiarising yourself with its provisions and procedures can help you assist your clients better. Please let me know if you have any other questions!
Conclusion
As we have seen, the Commercial Courts Act is a landmark reform that aims to improve the dispute resolution landscape in India. By establishing dedicated commercial divisions in High Courts and commercial courts at the district level, it seeks to enhance efficiency and expertise in resolving commercial disputes. For legal practitioners, the Act brings both opportunities and challenges. To fully leverage the benefits, you must equip yourself with the domain knowledge and advocacy skills needed to appear before these specialized benches. At the same time, anticipate and prepare for the heightened level of pleading and advocacy expected. Overall, embrace the higher standards introduced by the Act not just as a compliance exercise but as an opportunity to enhance your professional capabilities. This will enable you to provide better service to your clients and contribute to strengthening India’s commercial dispute resolution ecosystem.
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