The Commercial Courts Act, 2015 | Important Acts and Laws for Judiciary Exams PDF Download

Introduction

• The Indian Government's initiatives like 'Make in India' and improving the 'ease of doing business' aim to enhance business activities.
• Efficient contract enforcement, resolving business disputes, and fair compensation are crucial for economic growth.

Historical Perspective

• The establishment of commercial courts in India aimed to expedite the resolution of high-value commercial disputes.
• In 2003, the law commission recommended setting up commercial divisions in High Courts to address delays in the judicial system.
• Subsequently, the Commercial Courts Act 2015 was introduced to ensure expeditious and fair resolution of commercial disputes.

Commercial Courts Act 2015 - A Snapshot

• The Act was enacted in response to the need for a faster judicial process to boost economic development and investor confidence.
• It encompasses a wide range of commercial disputes, excluding direct and indirect tax matters.
• Key features include the establishment of commercial divisions to handle various commercial matters efficiently.

Establishment of the Courts

• The Act focuses on setting up different judicial entities: Commercial Courts, Commercial Division of High Court, and Commercial Appellate Division.
• Commercial Courts are to be formed in each district of every state by the State Government in consultation with the respective High Court.
• Judges from the Higher Judicial Service cadre in the State will be appointed to preside over these Commercial Courts.
• Commercial Divisions will be established within High Courts by the Chief Justice, handling ordinary original civil jurisdiction.
• Judges with expertise in commercial disputes will be designated to serve in these Commercial Divisions.
• The Commercial Appellate Division will be instituted in every High Court to hear appeals from the Commercial Courts and Commercial Divisions.
• Commercial Appellate Division judges will be selected based on their experience in handling commercial disputes.
• Not all High Courts have ordinary original civil jurisdiction; only a few such as Bombay, Madras, Delhi, Calcutta, and Delhi enjoy this privilege.
• States without ordinary original civil jurisdiction will establish commercial courts to expedite commercial dispute resolution.
• In states without designated Commercial Courts, certain district court judges will handle commercial disputes.
• The Act aims for swift resolution of commercial disputes, highlighting the necessity for more judges to be appointed.
• Existing judges will bear the additional workload of commercial cases, emphasizing the need for specialized Commercial Courts akin to Arbitration Centers.

Determination of the Specified Value

• Previously in the principal Act, only commercial disputes valued at Rs one Crore or more were adjudicated.
• The Commercial Courts, Commercial Division, and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018 have now limited the specified value of a commercial dispute to Rs three lakhs.
• As a result, a significant number of disputes that were previously outside the jurisdiction of commercial courts may now fall under their purview.
• This change could potentially hinder the Act's intended goals and create challenges in its practical implementation.
• In metropolitan areas, property values typically exceed one crore rupees, highlighting a potential implication of this amendment.
• On the positive side, small venture capitalists now have improved access to the courts due to this amendment.
• The determination of the specific value should ideally be left to the respective High Courts because the economic valuation of commercial activities can vary significantly from state to state and on a case-by-case basis.

Training of the Judges

• Judicial Expertise: Judges presiding over commercial disputes must possess substantial knowledge and experience in commercial law to ensure effective adjudication.
• Continuous Training: It is crucial to provide ongoing training to judges to keep them updated on the latest trends, practices, and intricacies of commercial dealings.
• Government Responsibility: As per Section 20 of the Act, the state government is mandated to establish facilities for training judges designated to handle cases in Commercial Courts/Divisions.
• Objective of Training: The primary goal of training is to expedite case resolutions while ensuring fair and just judgments.
• Current Scenario: Many Indian judges lack sufficient experience in resolving commercial disputes, often focusing more on criminal and family cases.
• National Judicial Academies: Utilizing established National Judicial Academies for training and education, in addition to conducting specialized examinations for judge appointments, can guarantee the recruitment of top talent for Commercial Courts/Divisions.

Infrastructure

• According to Section 19 of the Act, it is the responsibility of the state government to provide necessary infrastructure for the efficient functioning of Commercial Courts/Divisions.
• Currently, these courts are often housed within the same premises as District/High Courts. However, there is a crucial need for separate buildings dedicated to these specialized courts.
• The designated Commercial Courts/Divisions should be equipped with modern amenities like e-filing systems and video conferencing capabilities to align with international standards.
• Having a distinct infrastructure ensures that these courts operate seamlessly and are equipped with the latest technology to expedite legal proceedings.
• Establishing specialized infrastructure for Commercial Courts/Divisions enhances the overall efficiency of the judicial system.
• By providing state-of-the-art facilities, such as advanced technology for filing documents and conducting remote hearings, the legal process becomes more streamlined and accessible.
• Creating a separate infrastructure for Commercial Courts/Divisions can lead to increased trust in the legal system and improve the quality of dispute resolution.

Appeal Process under Section 13 of the Act

• Appeals against Commercial Court/Division orders are heard by the Commercial Appellate Division of the High Court within six months of filing.
• The Commercial Appellate Division handles appeals from specific Tribunals such as:
  • Competition Appellate Tribunal
  • Debts Recovery Appellate Tribunal
  • Intellectual Property Appellate Board
  • Company Law Board or the National Company Law Tribunal
  • Securities Appellate Tribunal
  • Telecom Disputes Settlement and Appellate Tribunal
• Appeals related to international commercial arbitration are also under the jurisdiction of the Commercial Appellate Division of the High Court.
• While the six-month timeframe aims for swift resolution of commercial matters, there are concerns:
  • Individuals dissatisfied with Commercial Courts/Divisions can only apply to the Appellate Division, lacking a direct path to the Supreme Court.
  • Hearing appeals from mentioned tribunals may lead to jurisdictional overlaps.

The Act ensures timely adjudication of appeals concerning commercial disputes, yet it raises issues regarding the hierarchy of appellate options and potential jurisdictional challenges.

Transfer of Existing Commercial Disputes

• Commercial disputes that have not been decided, including arbitration cases, will be moved to Commercial Courts/Divisions from the respective District or High Court upon the creation of these specialized courts.
• However, cases where a final decision was pending in the court before the establishment of Commercial Courts/Divisions will not be transferred.
• This provision aims to streamline the handling of commercial disputes. It ensures that cases are dealt with efficiently and by specialized courts.
• Transferring all pending commercial disputes to these specialized courts may lead to an overload on the system. It might not align with the primary objective of the Act.
• It is suggested that the parties involved should have the choice to decide whether they want their disputes to be heard in these specialized Commercial Courts/Divisions.

Dominion of Arbitration Matters

• Commercial applications undecided, including arbitration cases, are to be transferred to Commercial Courts/Divisions as per Section 15 of the Act.
• Pending commercial disputes will be shifted to Commercial Courts/Divisions after their establishment, except for cases where final decisions were reserved before their formation.
• For effective implementation, parties should have the discretion to choose whether to move their cases to these specialized courts.
• Transferring all unresolved commercial matters may overwhelm the Commercial Courts, potentially undermining the Act's intended purpose.
• Flexibility in transferring cases to Commercial Courts/Divisions could help in preventing an excessive burden on these specialized courts.

Dominion of Arbitration Matters

• All matters related to International Commercial Arbitration and Domestic Arbitration of commercial nature will be addressed by the Commercial Appellate Division of the High Court as stated in Section 10 of the Act.
• An exception to this rule is matters concerning the nomination of arbitrators in International Commercial Arbitrations.
• This provision aims to position India as a prominent hub for institutional arbitration, enticing international investors for investments and offering a prompt and dependable means of dispute resolution.

Time Bound Remedy

• All applications to the Commercial Appellate Division must be submitted within 60 days of the impugned decision. The Division aims to resolve the appeal within 6 months.
• Written statements must be filed within 120 days from the service of summons. Failure to do so will result in forfeiture of rights.
• The court is obligated to deliver a decision within 90 days after the conclusion of arguments.

Effective implementation of these timelines is crucial for expedited case disposal. However, the heavy workload on judges in India may hinder timely adjudication of commercial disputes.

Significance of the Act

• The efficiency of the judicial system is vital for national progress. Despite some inconsistencies, this Act represents a commendable effort by lawmakers. The Act's impact on commercial cases is significant, potentially straining the courts. Adherence to specific timelines poses a considerable challenge.
• The Act introduces provisions for summary judgment, streamlining dispute resolution by allowing decisions based on written pleadings. This is expected to alleviate the backlog of commercial disputes. By enhancing the ease of doing business in India and aligning with international standards, the Act could attract more venture capital investment, bolstering India's reputation as an investment destination.