The Union cabinet has approved the Commercial Court, Commercial Division and Commercial Division of High Courts (Amendment) Bill, 2018.

BACKGROUND:

With the increase in Commercial transaction, the commercial disputes have increased as well and there was a dire need to address these commercial matters with a view to resolve them faster and in an efficient manner. The high Foreign Direct Investment has put us in a position to come up with a positive image of the Indian Legal System, thereby attracting larger foreign investments.

The Commercial Courts, Commercial Division and Commercial Division of High Courts Act, 2015 was enacted with a view to achieve the above objectives. Commercial Courts were established in all the jurisdiction of India except for the territories in which the High Courts already consist of ordinary original civil jurisdiction.

The five High Courts which already have such ordinary original jurisdiction are: Bombay, Delhi, Calcutta, Madras and Himachal Pradesh.

As per the proviso of Section 3(1) of the Commercial Courts Act, 2015, these states do not have a commercial court at district level, like the rest of the states and instead their High Courts consist of a Commercial Division.

The Value of Commercial Court dispute to be adjudicated upon by the Commercial courts at district level or the Commercial Division of the High Courts as per the 2015 Act is Rs. 1 Crore.

SALIENT FEATURES OF THE BILL

1. VALUE OF THE DISPUTE DECREASED TO RS THREE LAKHS

The Current Act provides for a suit value of Rs. 1 Crore for a Commercial dispute to be initiated in the Court of Law. The amendment bill seeks to reduce that value to Rs. 3 Lakhs in order to increase the scope of suits that can be tried by the commercial courts.

This bringing down of the value will also bring down the time taken in resolving the commercial disputes, which currently is 1445 days. This will further improve India’s Rank in Ease of Doing Business.

2. ESTABLISHMENT OF COMMERCIAL COURTS AT DISTRICT JUDGE LEVEL

The amendment bill seeks to establish Commercial Courts at the District Judge Level in those territories where High Courts have Ordinary Original Civil Jurisdiction, namely: Chennai, Delhi, Kolkata, Mumbai and Himachal Pradesh.

The State Government shall decide the pecuniary jurisdiction of such Commercial Courts, which will not be lesser than Rs. 3 Lakhs and not more than the pecuniary jurisdiction of the district courts.

In the jurisdiction of High Courts other than those exercising ordinary original jurisdiction, a forum of Appeal in commercial dispute decided by commercial courts below the level of District judge is being provided, in the form of Commercial Appellate Courts to be at district judge level.

3. PRE-INSTITUTION MEDIATION PROCESS

The Amendment bill seeks to provide for a Pre-Institution Mediation Process, in those cases wherein an urgent interim relief is not required and the parties can be given time to resolve their issues internally in an amicable manner.

The mediation will be facilitated through the authorities constituted under the Legal Services Authorities Act, 1987. This exercise will save precious time and cost of Court Proceedings thereby restoring the investors’ confidence in the resolution process.

4. INSERTION OF A NEW SECTION 21A

A new Section 21A is proposed to be inserted in the Act, which will empower the Central Government to makes rules and regulations for governing the Pre-Institution Mediation Process.

This is a welcome step and will curtail useless litigations as well.

5. PROSPECTIVE EFFECT OF THE AMENDMENT

The amendment bill seeks to provide for a prospective effect in order to not interrupt with the present judicial forum adjudicating the commercial disputes prior to the enforcement of the amendment Bill, 2018.

CONCLUSION AND OBSERVATION

The major benefits from the enforcement of this Bill, 2018 will be reduction of the burden on Courts leading to faster resolution of commercial disputes.

This will increase the confidence of Foreign Investors and will ultimately lead to development of newer technologies and advancement in the Manufacturer as well as the Service Sector. This in turn will give a push to the Government schemes such as Make in India, Start up India, etc. thus, increasing employment and Standard of Living.

The reduction of monetary limit and establishment of new Commercial Courts in aforesaid States will relieve citizens and businesses as well.