The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred as ‘the Act’) was passed with an objective to streamline commercial disputes via specific channels like Commercial Courts, Commercial Division and Commercial Appellate Division in order to achieve ease of business and speedy trial.

Passage of time brought with it experience with respect to the working of the Act leading to promulgation of an Ordinance on 3rd May 2018 in order to amend the Act which envisaged major modifications, alterations and additions in the Act to achieve its aim.

This Ordinance has been replaced by Bill no. 123-C of 2018 which stands passed by the House of People on 1st August 2018. Following is the list of few important changes, modifications and additions proposed by this Bill-

  1. The Bill proposes to change the title of the Act as ‘Commercial Courts Act, 2015’;
  2. One of the most vital change proposed by this Bill is the change in the pecuniary jurisdiction of the commercial courts. The Act under section 2(i) defined ‘specified value’ wherein the pecuniary jurisdiction of the commercial courts is mentioned to be ‘not less than one crore rupees’. The Bill amends this section by reducing the amount of ‘specified value’ to ‘not less than three lakhs’.
  3. The Bill also envision formulation of Commercial Appellate Courts by way of adding a new section numbered as section 3A. According to this section the State Government has been assigned the task of appointing the required number of Commercial Appellate Courts at District judge level where the High Court does not exercise the ordinary original civil jurisdiction;
  4. Another proposal by way of amendment in section 3(3) is formulation of Commercial Courts at the level of District Judge or below it with concurrence of Chief Justice of the concerned High Court;
  5. Section 9 of the Act dealing with transfer of suit if counter claim in a commercial dispute is of specified value stands repealed by this Bill and consequently section 12(e) has also been omitted;
  6. The Bill introduces a new chapter IIIA after chapter III titled as pre-institution mediation and settlement. According to this chapter, the concept of mediation and settlement at the level prior to institution of a suit is proposed which has a direct nexus with the aim of the Act i.e. ease of business. The crux of this chapter is that in all those suits where no interim relief is contemplated it is necessary for the parties to the dispute to exhaust the remedy of mediation and settlement. If the parties succeed in settling the matter at this stage then the settlement will be reduced in writing having an effect similar to arbitral award. The Bill also provides the time limit to finish the mediation and settlement process, which is three months with an extended period of two months with the consent of parties. The period spent at mediation and settlement stage is excluded from the limitation period in accordance of the Limitation Act, 1963;
  7. Hence, according to this Bill now the flow of a suit will be as follows- a suit initiated before commercial court below the level of District Judge will be appealed before the Commercial Appellate Court at the District Judge level, and a suit initiated before the commercial court at the district judge level will be appealed to Commercial Appellate Division of the High Court.

Now this Bill stands before the Rajya Sabha which will decide its fate.

 

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Legislation: Commercial Courts Act 2015