India: The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Ordinance, 2015

Last Updated: 26 February 2016
Article by   Trilegal

On 23 October 2015, the President of India promulgated the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015. The Ordinance provides for the constitution of Commercial Courts, and the establishment of Commercial Divisions and Commercial Appellate Divisions within High Courts to adjudicate 'Commercial Disputes'. The Ordinance amends certain provisions of the Civil Procedure Code, 1908, to the extent applicable to 'Commercial Disputes' and also prescribes timelines to streamline the conduct of such 'Commercial Disputes'.

To provide fresh impetus to ease of doing business in India and to facilitate smooth and prompt resolution of commercial disputes, the President of India promulgated the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015 (Ordinance) on 23 October 2015. The Ordinance brings into force the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015, which was pending before Parliament but could not be cleared as Parliament was not in session.

The Ordinance, which provides for the constitution of Commercial Courts, and the establishment of Commercial Divisions and Commercial Appellate Divisions in the High Courts to adjudicate Commercial Disputes (together Specialized Commercial Courts), has come into effect at once.

THE KEY FEATURES OF THE ORDINANCE ARE AS FOLLOWS.

1. Wide meaning of 'Commercial Dispute': The term 'Commercial Dispute' has been very broadly defined in the Ordinance, to encompass almost every kind of transaction that gives rise to a commercial relationship. The subject matter of such disputes could be as wide ranging as commercial contracts relating to exploitation of natural resources, intellectual property rights, insurance, construction and infrastructure contracts, government contracts, immovable property, etc. Such commercial disputes will now be adjudicated by Specialized Commercial Courts which will comprise of judges specially trained to deal with Commercial Disputes.

2. Specialized Commercial Courts at various levels: These will be categorised as follows:

(a) Commercial Courts will be constituted in every district in all states and union territories where the High Court of that state or union territory does not have/exercise ordinary original civil jurisdiction. At present, only five High Courts exercise ordinary original civil jurisdiction – the High Courts of Delhi, Bombay, Madras, Calcutta and Himachal Pradesh. Therefore, in all other states and union territories, Commercial Courts will now adjudicate upon Commercial Disputes.

(b) Commercial Divisions will be set up within High Courts which do exercise ordinary original civil jurisdiction. A Commercial Division in such states and union territories will exercise jurisdiction over all cases and applications relating to Commercial Disputes.

(c) Commercial Appellate Divisions will be set up in every High Court to hear appeals against (i) orders of Commercial Division of High Court; and (ii) orders of Commercial Courts. Interestingly, the Ordinance does not provide for a statutory right to appeal to the Supreme Court from an order of the Commercial Appellate Division. Accordingly, the Ordinance limits the number of appeals allowed in Commercial Disputes to only one.

At present, although there are no specialized designated commercial courts which hear Commercial Disputes, certain judges at the district court level predominantly hear Commercial Disputes. Similarly, in the five High Courts which exercise ordinary original civil jurisdiction in India, there are designated judges who hear Commercial Disputes. Such designated judges at the district court level and the High Court level, however, do not hear commercial matters exclusively. The Ordinance proposes to constitute and establish Specialized Commercial Courts to hear only Commercial Disputes.

3. Commercial Dispute value threshold: Under the Ordinance, only those Commercial Disputes where the value of the subject matter in respect of the said Commercial Dispute is more than Rs 1,00,00,000 (defined as Specified Value in the Ordinance), will be adjudicated by the Specialized Commercial Courts. Further, the Ordinance has also prescribed the manner in which the Specified Value of a commercial dispute is to be determined.

Given that the objective of the Ordinance is to fast track the resolution of Commercial Disputes, the threshold of Rs. 1,00,00,000 can be considered to be low. As a result, larger Commercial Disputes may not receive the focus that may have been intended through the Ordinance.

4. Existing Commercial Disputes to be transferred: Under the Ordinance, all suits and/or applications relating to a Commercial Dispute of a Specified Value pending before any civil court where a Commercial Court has been constituted will be transferred to such Commercial Court. Similarly, where a Commercial Division has been constituted (in the five High Courts exercising ordinary original civil jurisdiction), such pending suits and applications will be transferred to the new Commercial Divisions of such High Courts.

5. Jurisdiction over arbitrations: In line with the terms of the arbitration ordinance, all matters pertaining to international commercial arbitrations have been brought within the purview of the High Court, whether or not such High Court exercises original jurisdiction 1xcept matters relating to the appointment of arbitrators in international commercial arbitrations 2.

Applications and appeals arising out of domestic arbitrations involving purely local Indian parties, which would ordinarily lie before any principal civil court of original jurisdiction (not being a High Court), shall now lie before a Commercial Court (where constituted) exercising territorial jurisdiction over such arbitration.

6. Consequent amendments to CPC: The provisions of the Code of Civil Procedure, 1908 (CPC), to the extent of its application to any suit in respect of a Commercial Dispute of a specified value, has been amended by the Ordinance to streamline the conduct of Commercial Disputes. Key amendments to the CPC are as follows:

(a) The Ordinance has introduced a new provision in the CPC, which prescribes that a Commercial Court or a Commercial Division will hold a 'case management hearing' to frame issues and fix timelines, as noted below, to ensure that the case is concluded in an expeditious and efficient manner.

(b) The amended provisions of the CPC allow parties to apply for summary judgement where the court could arrive at a decision solely on the basis of written pleadings.

(c) The ordinance has also introduced comprehensive provisions in the CPC dealing with award of actual costs and interest. The amended provisions of the CPC also provide the issues that Specialized Commercial Courts may consider while imposing costs on parties. The earlier provisions under the CPC dealing with costs and interest, provided for imposition of only nominal costs 3 (which continue to apply to matters other than Commercial Disputes).

7. Fixed Timelines: The Ordinance, while amending the provisions of the CPC, has also introduced strict timelines to ensure prompt resolution of disputes, in the following manner:

(a) The maximum period for filing a written statement has been set at 120 days upon the expiry of which the defendant's right to file a written statement shall stand forfeited.

(b) All appeals to the Commercial Appellate Division must be made within a period of 60 days from the date of the impugned judgement and the appellate division must endeavour to dispose of the same within 6 months from when it is filed.

(c) A plaintiff seeking to adduce additional documents must make an application for the same within 30 days of filing the suit.

(d) All applications seeking leave to deliver interrogatories must be decided within 7 days from the date on which they are filed.

(e) Interrogatories shall be answered by affidavit to be filed within 10 days, however such period is extendable by the court.

(f) All parties must complete inspection of all documents disclosed within 30 days of the filing of the written statement.

(g) Any directions sought by parties for inspection of documents must be disposed of within 30 days of filing an application for such directions.

(h) Inspection of documents must be completed within 5 days of the passing of an order allowing inspection.

(i) Parties must submit their statements of admission/denial of all disclosed documents within 15 days of completion of the inspection. The court however has the discretion to fix any other such time as it deems fit for submission of these statements.

(j) Any party served with a notice to produce documents may be given up to 15 days to submit the relevant documents.

(k) The first case management hearing is to be held within four weeks from the submission of admission/denial of documents by all parties to the suit.

(l) Arguments must be concluded within 6 months from the date of the first case management hearing

(m) Written arguments under distinct heads are to be submitted by the parties within 4 weeks of the commencement of oral arguments. Thereafter, the court may allow revised written arguments to be filed within one week after conclusion of oral arguments.

(n) The court must pronounce judgement within 90 days of conclusion of arguments.


The direction of the Ordinance and some of the provisions it contains could go a long way towards achieving early resolution of Commercial Disputes, and instill a sense of confidence in the business and investor community. However, as the threshold of the pecuniary jurisdiction of the Specialized Commercial Courts as prescribed in the Ordinance is low, this may put a strain on such courts, such that adherence to certain timelines might become a practical challenge. Further, there appear to be problems in the Ordinance in respect of the potentially overlapping jurisdiction of the Commercial Divisions proposed for in the five High Courts exercising original jurisdiction and the Commercial Appellate Divisions within those High Courts in relation to arbitration matters 4.


The Ordinance will continue to be in effect until the Parliament formally legislates the Ordinance into a statute.

Footnotes

1. On 23 October 2015, the President of India also promulgated an ordinance to amend the Arbitration and Conciliation Act, 1996. Under this Ordinance, the 'Court' competent to entertain any proceedings in connection with an international commercial arbitration, will be the High Court of the relevant State with territorial jurisdiction.

2. The arbitration ordinance provides that applications for the appointment of arbitrators in international commercial arbitrations lie before the Supreme Court.

3. The CPC underwent amendment in 1976 whereby section 35A (dealing with compensatory costs in respect of vexatious claims/defences) was amended. The amended provision, which dates as far back as 1976, provided for a nominal upper limit of Rs. 3,000 exceeding which, courts could not order compensatory costs.

4. On the one hand, section 10 of the Ordinance provides that all applications and appeals arising out of arbitrations under the Arbitration and Conciliation Act, 1996 that are pending before the High Court, shall be transferred to the Commercial Appellate Division of such High Court. On the other hand, under section 15 of the Ordinance, all applications under the Arbitration and Conciliation Act, 1996 that are pending in the High Court, are to be transferred to the Commercial Division of such High Court, if constituted. There is therefore, an overlap between the jurisdiction of the Commercial Appellate Division and the Commercial Division to be constituted in the High Courts exercising original civil jurisdiction in relation to applications arising out of arbitrations under the Arbitration and Conciliation Act, 1996.

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 Mondaq.com.

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

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 by clicking here .

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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