The Commercial Court Act, 2015
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Bill, 2015 was passed on 23rd December 2015. The passing of this stature is of utmost importance given the Business scenario in India as if properly implemented it can have a tremendous effect on the adjudication of commercial disputes.
On 3rd May 2018 an ordinance called The Commercial Court, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018 was passed regarding The Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015, one of the changes made in the ordinance included changing the name of the act to The Commercial Courts Act, 2015 as the former name of the act created confusion about the courts. People wondered if there was a division of the High Court or the introduction of some new courts. The act was, hence renamed The Commercial Court Act, 2015 to avoid such confusion. On 21st August 2018, the Bill was passed and the amendments were made. The objective of, now, named The Commercial Courts Act, 2015 (formerly known as “Commercial Courts, Commercial Divisions and Commercial Appellate Division of High Courts Act”) was the speedy resolution of the commercial disputes.
The definition of the commercial disputes in the Commercial Courts Act, 2015 is covered in section 2(1) is a very inclusive definition and it has been drafted so as to cover most of the disputes arising out of the commercial activities. Commercial activity can be defined as a transaction between merchants, bankers, financiers, traders, etc., such transactions deal with mercantile documents, partnership agreements, intellectual property rights, etc. By introducing this act the government appears to be making serious efforts to make litigation less complicated and much more efficient.
The Act constitutes of 2 layer set-up:
The Commercial Court/ Commercial division: Except wherever High courts have ordinary jurisdiction, the chief justice is to set up commercial courts at the district level; and wherever the high court has the ordinary original civil jurisdiction, the chief justice will set-up a commercial court division bench presided by a single judge.
The Commercial Appellate division: The Commercial Appellate Division will be presided by the bench of 2 judges is to be constituted by the Chief Justice of each of the High Courts, to hear appeals from decisions of the commercial courts or commercial division.
The Commercial Court Act, 2015 sets a specified value for the commercial cases that can be heard in the Commercial Courts, i.e. INR 3,00,000/- (3 Lacs) is the minimum value of disputes after the amendment (before the amendment the minimum value was INR 10,00,000/- Only (INR Ten Lacs) while the maximum value of dispute is INR 1,00,00,000/- (1 Crore Only). If suits and application of the specified value are filed in the High Court having the ordinary original civil jurisdiction, then they shall be heard and disposed of the commercial division bench of that High Court. The specified value shall be determined in the following ways:
In the case of recovery of money, the money sought to be recovered including the interest, if any, computed up to the date of filing of case shall be taken into account.
In the case relating to the moveable property, the market value of the moveable property on the date of filing of the case shall be taken into account.
In the case of the immovable property, the market value of the immovable property on the date of filing of the case shall be taken into account.
In the case relating to any other tangible right, the market value of the said right estimated by the plaintiff is taken into the account.
In the case of a counterclaim, the value of the subject matter is taken into the account.
In case a counterclaim is filed in a civil court relating to the disputes of the commercial court shall be transferred to a commercial division or commercial court having territorial jurisdiction over the suit. In the event of the suit not being transferred, the Commercial Appellate Division exercising supervisory jurisdiction over the Civil Court in question may, on an application by anyone of the parties, withdraw such suit pending before the Civil Court and transfer the same to a Commercial Court or Commercial Division. Such order of transfer shall be final and binding.
The Commercial Court Act, 2015 mandates that the appeal against the judgment or the order from the Commercial Court or Commercial Division Bench of the High Court should be presented before the Commercial Appellate Division of the Highdivision Court within sixty days of the date of the judgment or order being passed as the case may be. The Act also mandates that Commercial Appellate division shall dispose such appeals within 6 months of them being filed.
After the amendment in 2018, the procedure of appointing the judges for Commercial Court has changed as well. Before the Commercial Court, Commercial Division and Commercial Appellate (Amendment) Ordinance, 2018 passed on 3rd May 2018 the state government could appoint the judges for Commercial Court with the concurrence of the Chief Justice of the High Court. After the ordinance being passed state government can appoint the judges without any concurrence with the Chief Justice of the High Court.
The Commercial Court, Commercial Division and Commercial Appellate (Amendment) Bill, 2018 inserted section 12A in the Commercial Courts Act, 2015 which introduces mandatory pre-institution mediation. It entails that where a suit does not contemplate urgent interim relief, the plaintiff has to undergo pre-institution mediation. In this regard, authorities constituted under the Legal Services Authorities Act, 1987 will be notified and such authority shall complete the process of mediation within three months from the date of application. It further entails that the settlement arrived at by such mediation shall have the status and effect of an arbitral award under section 30(4) of the Arbitration and Conciliation Act, 1996.
The Commercial Courts Act, 2015 also takes up certain cases of arbitration under its wings. In Arbitration matters, involving a Commercial Dispute of subject matter of the value of more than Rs.1,00,00,000 Only (Rs One Crore Only), all applications or appeals arising out of such arbitration is to be heard and disposed by the – (i) Commercial Court, in case of matter, which would ordinarily lie before any principal civil court; or (ii) Commercial Division of the High Court, in case of matter which would ordinarily lie before the original jurisdiction of the concerned High Court.