Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015

The 253rd Report of Law Commission of India titled “Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015”.
The Report,  inter-alia, recommends  the establishment of Commercial Courts, and Commercial Divisions and Commercial Appellate Divisions in the High Courts in order to ensure speedy disposal of high value commercial suits.
To this effect a new Bill, titled  “The Commercial Division and Commercial Appellate Division of High Courts and  Commercial Courts Bill, 2015” has been drafted by the Commission.
While formulating  this  draft Bill, the Commission has suggested  substantive  procedural changes in the form of amendments to the Civil Procedure Code, 1908.  These suggestions are aimed  at ensuring disposal of cases expeditiously, fairly, and  at reasonable cost to the litigants.
After in-depth study of the commercial courts abroad, the Law Commission found necessity of such courts in India.
It suggests a new approach to civil litigation  – by substantially changing the procedures for the resolution of commercial disputes. These changes are a product of a seminal report (in UK) authored by the then Master of Rolls, Lord Woolf, known as the Access to Justice Report 1996 (called “Woolf Report”). Focus shifts from party driven case to judge driven case.

Some of the observations and recommendations are:

  1. The power to constitute Commercial Division of the High Court or Commercial Court, as the case may be, shall vest with the Central Government.
  2. At present only five High Courts – the High Court of Judicature at Bombay, the High Court of Judicature at Calcutta, the Delhi High Court, the Himachal Pradesh High Court and the High Court of Judicature at Madras – have original civil jurisdiction. And there is a wide variance in their pecuniary jurisdiction. Considering this, it is desirable that all the five High Courts should have a uniform pecuniary jurisdiction of Rupees One Crore.
  3. A “case management conference” has different connotations in different jurisdictions and since it is being introduced for the first time in India, it is necessary to clarify the meaning and scope of the term in the Indian context.
  4. To set up Commercial Courts and Commercial Divisions within High Courts, which will function as model courts (on the basis of the guidelines and recommendations of the Model Court Report) establishing new practices and norms of practice in commercial litigation that can, over time, be scaled up and extended to all civil litigation in India.
  5. All commercial courts should be made e-courts to help reduce the need to maintain voluminous records and improve the efficacy of functioning.
  6. Commercial Divisions will be set up only in those High Courts that have ordinary original civil jurisdiction and have a pecuniary jurisdiction of not less than Rupees One Crore.
    In those States or Union Territories where a High Court does not exercise original civil jurisdiction, it is recommended that the Central Government, in consultation with the concerned State Government and Chief Justice of the concerned High Court, set up Commercial Courts, but the pecuniary jurisdiction of such Commercial Courts will be Rupees One Crore.
    For instance, Commercial Courts may be set up in cities such as Nagpur or Pune where the original civil jurisdiction of the Bombay High Court does not extend.
  7. The Central Government should simultaneously constitute a Commercial Appellate Division of the High Court composed of one or more Division Benches of the jurisdictional High Court to hear the appeals from the orders and decrees of the Commercial Division or the Commercial Court, as the case may be.
  8. All judges appointed as judges of the Commercial Court should be required to undergo training in a special program for a period of six months at the National Judicial Academy and/or at the relevant State Judicial Academy. The syllabus  for the training will be developed by the National Judicial Academy in consultation with lawyers, academics and judges.
  9. The Commercial Division of High Courts must, wherever possible, take benefit of new infrastructure but otherwise should be located in the respective High Court’s premises. Commercial courts on the other hand should, as far as possible, have separate infrastructure and registries from regular civil courts.
  10. All the proceedings of the Commercial Courts should be digitised. E-filing and all facilities for audio-visual recording should be available.
  11. Recommends amendments, as fully described in Schedule of the proposed Bill, be made to the CPC in its application to Commercial Courts and Commercial Divisions in High Courts.
  12. The provisions of the Bill should prevail over the CPC, State amendments to the CPC, and the applicable High Court rules in case of any conflict. Some of the key normative changes being suggested in the 2015 Bill are:
    1. ) Written statements, which are not filed within the thirty day period prescribed by Orders V and VIII of the CPC, can be filed afterwards (subject to a Court’s written order and the payment of costs); however, in no case can they be filed beyond one hundred twenty days from the days of summons. In such cases, the defendants shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record.
    2. ) Pleadings and filing of documents to follow the procedures under the CPC, but subject to stricter timelines, giving the court the power to strike out vexatious and irrelevant pleadings in order to ensure that the trial takes place on relevant issues.
    3. ) Disclosure and inspection norms that will allow parties to complete discovery of documents efficiently.
    4. ) A new and separate procedure of “summary judgment” to be introduced where parties can seek judgment of the court summarily at any point of time prior to the commencement of trial, namely at the time of framing of issue.
    5. ) The court will be empowered to conduct a case management hearing where it will have all the necessary powers required to ensure the proper conduct of a trial within a specified time frame. This will include,  inter alia, the power to fix dates for hearing, decide which issues are to be tried and witnesses to be summoned. In addition, the Court will be empowered to impose costs and other penalties on parties for failure to follow the directions set out in a case management hearing.
    6. ) A new regime of costs to be introduced, providing for “costs to follow event” in all cases, except where the court gives reasons in writing explaining why costs should not follow. The model of costs proposed in the amendments to the A&C Act, 1996 by the Law Commission in its 246th Report will also be adopted in this Bill. This will entail amendments to Section 35 and Section 35-A of the CPC, which govern the award of costs.
      Court fees will need to be related to the time consumed by the litigants in the conduct of their case, much like Singapore. The State Government may, therefore, consider re-examining the court fee regime in light of its legislative domain under Entry 3, List II of the Seventh Schedule of the Constitution of India.
    7. ) Time bound oral arguments to be supplemented with written submissions to be filed mandatorily.
    8. ) Time bound delivery of judgments within ninety days from the conclusion of arguments.
      The above normative changes will be supplemented by Practice Directions that will be issued by the High Courts.
  13. There will be no appeals from orders of the Commercial Division or the Commercial Court save under Order XLIII of the CPC and from final judgments of the Commercial Division or Commercial Court. Such appeals will only be to the jurisdictional Commercial Appellate Division.
  14. Notwithstanding any other law, no civil revision application or petition shall be entertained against an interlocutory order of the Commercial Court, including an order on a jurisdictional challenge.
  15. No appeals will be permitted from a finding of the Commercial Court or Commercial Division that the dispute in question is a commercial dispute.
  16. Suggestions with respect to arbitrations that involve commercial disputes:
    1. ) First,  it is recommended that in case of an international commercial arbitration concerning a commercial dispute of more than Rupees One Crore, any application or appeal arising out of such arbitration under the A&C Act, that has been filed in a High Court will be heard by  the Commercial Division of the High Court, where such Commercial Division has been constituted in the High Court. In the absence of the Commercial Division, applications or appeals concerning such international commercial arbitrations will be heard by the regular Bench of the High Court.
    2. ) Second,  in the case of domestic arbitrations concerning a commercial dispute of more than Rupees One Crore, applications or appeals may lie either to the High Court or a Civil Court (not being a High Court) depending upon the pecuniary jurisdiction.
      It is recommended that all applications or appeals arising out of such arbitrations under the A&C Act, that have been filed on the original side of the High Court shall be heard by the Commercial Division of the High Court where such Commercial Division is constituted in the High Court. However, in the absence of a Commercial Division being constituted, the regular Bench of the High Court will hear such applications or appeals arising out of domestic arbitration. If the application or appeal in such domestic arbitration is not within the jurisdiction of the High Court and would ordinarily lie before a Civil Court (not being a High Court) and there is a Commercial Court exercising territorial jurisdiction in respect of such arbitration, then such application or appeal shall be filed in and heard by such Commercial Court.
    3. ) Third, it is recommended that all appeals under the A&C Act in relation to arbitration cases concerning a commercial dispute of more than Rupees One Crore preferred against an order of the Commercial Division or Commercial Court, shall be heard and disposed of by the Commercial Appellate Division, where a Commercial Appellate Division has been constituted in the jurisdictional High Court.

Even commercial disputes which are appealed to the High Court from a tribunal, under a statute such as the Copyright Act, 1957 or the Trade Marks Act, 1999 be heard and disposed of by the Commercial Appellate Division. Where the order of the tribunal relates to a commercial dispute, and such order is challenged before the High Court, either by way of appeal or writ petition, it is recommended that such disputes also be heard and disposed of by the Commercial Appellate Division.