India: Introduction Of Commercial Courts: End Of Endless Litigation!

I. Introduction

India is infamous for having an overburdened legal system that leads to indefinite delays in the disposal of cases. Inefficiencies in its legal infrastructure have made it all the more difficult for foreign as well as domestic investors to protect their investments in India. In fact, as seen in the famous case of White Industries Australia Ltd. vs Union of India1, inordinate delays in the legal process was viewed as breach of investment treaty obligation by India.

Thus, there has always been a long standing requirement for a stable and efficient dispute resolution system ensuring quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered, all of which are critical in encouraging investment and economic activity.

After more than a decade of extended deliberations, and given a fresh impetus by the current Government's mission to improve India's image as an investment destination, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015 ("Ordinance") was recently cleared by the Cabinet and received Presidential assent on October 23, 2015. The Ordinance is in line with international trends, aided by the in-depth study of Commercial Courts of the United Kingdom, the United States of America, Singapore, France etc. carried out by the Law Commission of India ("Commission") in their 188th report2 and 253rd report3.

II. Constitution of Commercial Courts, Commercial Division and Commercial Appellate Division ("Special Courts"):

The Ordinance provides that the Commercial Courts are to be established by notification by the State Government, in consultation with the concerned High Court. For territories where the High Court itself is vested with the original jurisdiction4 i.e. where particular suits may directly be filed before the High Court, the Chief Justice of such High Court may constitute a Commercial Division within such High Court. Once the Commercial Division/Commercial Court is established, the Chief Justice of the High Court would be required to constitute the Commercial Appellate Division.

In order to ensure that commercial matters are dealt with by persons with the requisite skillsets, the Ordinance specifically requires that judges of such courts/divisions be experienced in dealing with Commercial Disputes.

III. Jurisdiction

The Ordinance provides that the Commercial Courts shall have the jurisdiction to try all suits and applications relating to a Commercial Dispute5 of a Specified Value.6 Suits and applications filed in the High Court having original civil jurisdiction would be brought before the Commercial Division of the said High Court.

The definition of "Commercial Disputes" as defined in section 2(c) of the Ordinance is very wide and essentially covers every commercial transaction including general commercial contracts, shareholder & joint venture agreements, intellectual property rights, contracts relating to movable and immovable property, natural resources etc..

"Specified Value" as defined in section 2(j) the Ordinance pertains to the value of the subject matter in respect of the suit which shall not be less than ten (10) million rupees [about USD 150,000] or such higher value, as may be notified by the Central Government. The purpose of such segregation of Commercial Disputes of the given Specified Value from other disputes is to ensure that the selected disputes are speedily and efficiently resolved by the Special Courts.

IV. Limited right to appeal/revision

The Ordinance in section 13 provides that appeals against decisions of the Commercial Courts/Commercial Division can only be brought before the Commercial Appellate Division of the concerned High Court within sixty (60) days from the date of decision and that Commercial Appellate Division should endeavor to dispose it within six (6) months.

A number of interlocutory/interim orders of a court are currently subject to an appeal or revision petition leading to delay in adjudication of principal dispute. The Ordinance has reduced the ability of defaulting parties to use such appeal/revision provisions as delaying tactics. It is now specifically provided that:

  1. An appeal would lie against only certain identified orders7 of the Commercial Court/Division and that no other appeal under any law including the Letters Patent of a High Court could be preferred against the orders of Commercial Court/Division.8

  2. No civil revision application/petition shall lie against any interlocutory order of a Commercial Court and any such grievance against the order may only be raised in appeal against the final decree.9

V. Fresh procedure for hearing suits

The Code of Civil Procedure, 1908 ("CPC") has been amended by the Ordinance, with a view to streamline the processes and completely alter the prevalent litigation culture. Global practices such as holding of case management hearing have been introduced. Indicative timelines have been prescribed such as a six (6) month period for completion of trial post first case management hearing to bring about efficient and faster dispute resolution.

The amendments to the CPC are a welcome change. However, the government may need to provide clarifications on various practical difficulties which may arise in its application to ongoing proceedings. Further, based on section 16(1) of the Ordinance, arguments may be raised to apply such amended provisions to ongoing suits before various courts till such time the Commercial Court/Division are constituted and the suits are transferred.

A. Strict Timelines

The Ordinance features a number of amendments to the CPC which should result in expediting proceedings. Litigants often fail or deliberately refuse to file pleadings in matters during the time period prescribed and thereafter approach the Court to condone their delay, which is more often than not granted by the Courts to avoid miscarriage of justice. In order to discourage such practices it is now prescribed that if the defendant fails to file the written statement within one hundred and twenty days (120) from the date of having been served with the summons, then he would abdicate his right to file a written statement and the Court would be bound to not take such a delayed submission on record.

Other indicative timelines/measures have been prescribed to ensure that speedy resolution such as:

  1. Closure of arguments not later than six (6) months from the date of first case management hearing;
  2. Written arguments to be submitted before four (4) weeks of the oral hearing following revised written arguments, if any post oral hearing within one (1) week.
  3. Judgment to be pronounced within ninety (90) days of the conclusion of arguments;
  4. Recording of evidence on a day to day basis;
  5. Six (6) month period for disposal of appeals;
  6. Adjournments not permitted on account of appearing advocate not being present;

B. Cost to follow event

One of the biggest contributors to the endemic delays of our legal system are the litigants themselves. More often than not, parties resort to dilatory tactics like false and vexatious counter claims, frivolous applications and meritless appeals to delay and effectively deny due process of law. Litigants indulge in such behavior as courts would normally not impose the burden of costs on unsuccessful parties and lacked flexibility to impose costs of a quantum which may act as a deterrent. The Ordinance has sought to correct this, by incorporating a cost to follow event regime10.

Several important parameters have been incorporated for the court to take into consideration while awarding costs. One of the key parameters is an unreasonable refusal of a reasonable offer for settlement made by a party. This clearly is aimed at promoting settlement of disputes and encouraging a reasonable approach by parties towards such discussions.

The Ordinance also provides an illustration by which it states that even an unsuccessful party can be awarded costs if it comes to light that the successful party had made frivolous and vexatious claims. Therefore the intention of the legislature has been to ensure that litigants come to court with clean hands and that Courts have the requisite statutory power to impose costs on erring litigants. It is important to note that the legislature has also taken into account the fact that Courts had in the past imposed a nominal cost on litigants which were not commensurate with actual costs. However, the Ordinance has specifically mentioned that "legal fees" and "fees and expenses of witnesses" are to be taken into consideration while awarding costs to the successful party.

C. Streamlined process

The Ordinance has provided new and detailed procedures regarding disclosure, discovery11, inspection12, admission and denial of documents13 and nature of verification of pleadings, with a view to bring forth greater clarity, objectivity and efficiency in the proceedings. Such procedures should end the delays occasioned due to prevalent practices such as bald denials without proper reasoning, introduction of fresh documents and amendment of pleadings during the course of the proceedings which were not disclosed at the outset. Care must be taken to meet the prescribed timelines for disclosure failing which a party may not be permitted to rely upon the same. Further, it may be practically difficult to comply with the extensive filing requirements contemplated under the Ordinance.

D. Case Management

The Supreme Court in Rameshwari Devi v Nirmala Devi14 had observed that at the time of filing of a suit the trial court should finalize a timeline for all filings and pleadings and all parties should adhere to these timelines. The observations of the Supreme Court follow the best practices from different jurisdictions like United States and Australia where Case Management is an essential and integral part of the legal system.

The Ordinance has in Section 7 of its Schedule inserted Order XV in the CPC, providing for the concept of Case Management whereby the Court would mandatorily have to hold a meeting between the parties where the Court will decide upon a timeline for most important stages in a proceeding like recording of evidence, filing of written arguments, commencement and conclusion of oral arguments. The court is further authorized to pass a wide variety of orders at such case management hearing to ensure smooth and effective disposal of the suit.

The Court is further empowered to dismiss a petition, foreclose the right to make certain pleadings or submissions or order payment of costs in the event of non-compliance of the orders passed in a Case Management Hearing.

E. Summary Judgment

On many occasions certain disputes linger on in courts without there being any substance in them as the entire process envisaged in the CPC has to be followed by the Court and all stages need to be completed before a judgment can be passed. Courts are duty bound to follow the principles of natural justice and afford to the defendants all kinds of statutory remedies available. The process envisaged by the Ordinance for a summary judgment is akin to the existing procedure of Summary Suits15 in the CPC. Principal difference being the ability of parties to request for summary judgments in all commercial disputes of Specified Value irrespective of the nature of relief sought and ability to request for such summary judgment at any stage prior to framing of issues.

Ordinance has inserted Order XIII-A in the CPC according to which, if a party approaches the Court before the issues have been framed, then the Court would consider the other party's real prospect of succeeding. On this basis, it has the discretion to pass a summary judgment. There are various considerations which are to be taken into account by the Court to decide as to whether a summary judgment can be passed. However the Ordinance has struck a balance in providing equal opportunity and protection for litigants. The Ordinance has ensured that all facets of natural justice are met with, wherein both litigants are asked to provide their individual explanations including documentary evidence as to why a summary judgment should or should not be passed. The Ordinance has also empowered Courts to pass conditional orders which are akin to interim measures. When a Court believes that a particular entity may succeed but it is improbable for it to do so, it can pass a conditional order against that litigant including but not limited to deposit of a sum of money. Practically, putting a party to such terms will work to bring about an amicable resolution of many disputes.

VI. Arbitration v/s Commercial Courts

A crucial question arises in context of whether parties should select Commercial Courts over arbitration.

The Arbitration and Conciliation (Amendment) Ordinance, 2015 ("Arbitration Ordinance") has brought in changes such as a twelve (12) month deadline for completion of arbitration, deeming interim orders passed by arbitral tribunals as orders of court, ability to involve third parties in arbitrations seated in India, which have in fact taken India beyond the global standards.

(For detailed analysis of the Arbitration Ordinance please click here (October 27 hotline) and here (September 1 hotline))

Further, Section 10 of the Ordinance prescribes that applications and appeals arising out of arbitration are to be heard by Commercial Court/Commercial Appellate Division. Thus, the intent is to look at the two regimes as complementing each other.

Section 10(1) and 10 (2), provide that applications and appeals arising out an International Commercial Arbitration and any other arbitration proceedings which would have been filed in the original side of the High Court shall be heard by the Commercial Appellate Division i.e. a division bench (2 judge bench) of the High Court. Appeals under Section 37 of the Arbitration and Conciliation Act, 1996 against an order passed by the Commercial Appellate Division may then directly lie before the Supreme Court. Further, Section 15 of the Ordinance provides that applications under the Act that are pending before the High Court where a Commercial Division has been constituted shall be transferred to the Commercial Division and not the Commercial Appellate Division.

However, in scenarios where party may not have preferred opting for arbitration such as in case of back to back transactions, but still opted to do so, deterred by delays prevalent in the Indian courts, would now be bolstered to adopt a pure court process over arbitration.

VII. Conclusion

The promulgation of the ordinance reflects tangible measures being taken by the government to ease doing of business in India.

Only time will tell how quickly the State Governments and High Courts act on the provisions of this Ordinance and 'notify' and 'order' the constitution of the said courts. Considering that 11 states have the same political party as the center in majority and that the passage of the Ordinance would be an opportunity for states to demonstrate their willingness to add to ease of doing business in the region, it is likely that states would soon constitute such Commercial Courts in the region. With regard to the High Courts exercising original jurisdiction, it is likely that the current benches which hear commercial matters, may be constituted as Commercial Division and Commercial Appellate Division.

However, considering that the Ordinance would automatically lapse upon expiry of six weeks from the reassembly of Parliament and that the winter session16 of the Parliament is on the horizon, the State Governments and High Courts may wait for the Ordinance to be approved by the Parliament before constituting the Commercial Court/Division. Such an introduction of Commercial Courts would mark a landmark legal reform for the nation.


1 Available at

2 Available at

3 Available at

4 High Courts exercising ordinary original jurisdiction are those of Himachal Pradesh, Delhi, Bombay, Calcutta and Chennai

5 Refer to Section 2(1)(c) of the Ordinance

6 Refer to Section 2(1)(i) and Section 12 of the Ordinance

7 Appealable orders as identified under Order XLIII of the Code of Civil Procedure, 1908 and Section 37 of the Arbitration & Conciliation Act, 1996

8 Refer to Section 13 of the Ordinance

9 Refer to Section 8 of the Ordinance

10 Refer to Section 2 of the Schedule to the Ordinance

11 Order XI, Rule 1 of the CPC ( Discovery by interrogatories: Rule 2)

12 Order XI, Rule 3 of the CPC

13 Order XI, Rule 4 of the CPC

14 (2011) 8 SCC 249, at para 52

15 Refer to Order 37 of the CPC

16 Traditionally commences in the third week of November

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions