With a view to ensure faster resolution of matters relating to commercial disputes, the Parliament had enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act (hereinafter “Act”) in 2015 and commercial courts were established in the country, except in the territories over which the High Courts have original ordinary civil jurisdiction. Now, in order to make the mechanism to entertain and dispose of the matters more efficiently, the President of India gave his assent to The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018 (hereinafter “Ordinance”) which was published in the official gazette of India[1] on May 03, 2018.

The salient features and new Amendment/Ordinance are as under:

  • The Ordinance has brought down the specified value of a commercial dispute from Rs. 1crore/ 10 Million (Approx. $149,655*) to Rs. 3 Lakh/ Three Hundred Thousand (Approx. $4,490*). Therefore, a commercial dispute, including IPR disputes, whose value is Rs. 3 Lakh/ Three Hundred Thousand (Approx. $4,490*) and less than Rs. 1crore/ 10 Million (Approx. $149,655*), can now be adjudicated and decided by the commercial courts at District Judge Level set up by the State Government in consultation with the High Court. The notification regarding setting up of commercial courts at District Judge Level in the states where High Court having Original Civil Jurisdiction is to be notified by the State Government.
  • The Ordinance gives the power to the State Governments to constitute Commercial Courts and Commercial Appellate Courts in territories where the High Court exercises Original Civil Jurisdiction. Earlier, in such territories, only the Commercial Division and Commercial Appellate Division of the High Court had the power to hear commercial disputes, that too having a specified value of atleast Rs. 1 crore (Approx. $149655*). With the amendment, now commercial disputes of at least Rs. 3 Lakh (but less than Rs. 1 crore) can be heard by the Commercial Courts at the District Judge level and the Commercial Division of the High Courts will continue to hear Commercial Disputes of Rs. 1 crore (Approx. $149655*) and above. As for the territories where the High Court does not have Original Civil Jurisdiction, the State Government of such territories may constitute Commercial Appellate Courts at the District Judge level for entertaining and disposing of commercial matters whose specified value is not less than Rs. 3,00,000 (Approx. $4490*) and upto Rs. 10 Million (Approx. $149655*). Therefore, a commercial suit before District Judge Level, as notified by the State Government, will have a specified value which shall not be less than Rs. 3 Lakh and upto Rs. 1 crore. Whereas, any suit whose value is Rs. 3 Lakh (Approx. $4490*) or less, will not be considered a commercial suit.
  • Where, in a suit, the party does not seek an urgent interim relief under the Act, then the suit shall not be instituted unless the Plaintiff exhausts the remedy of Pre-Institution Mediation in manner and procedure as may be prescribed by the Central Government. The Authority authorized by the Central Government shall complete the process of mediation within a period of three months, extendable to two months, from the date of application by the Plaintiff. It is important to mention here that for the purpose of limitation, the period during which the parties are taking time in Pre-Institution Mediation, such period shall not be computed for the purpose of limitation.
  • The Ordinance gives Central Government the power of making rules with regard to the manner and procedure of Pre-Institution Mediation and any other matter which may be required to be prescribed.
  • The Ordinance has also inserted by way of an Appendix- I, a template of the Statement of Truth.

With passing of the Ordinance, the ambit of pecuniary matters which may be filed before the Commercial Court has now been widened exponentially. Introduction of concept of Pre-Institution Mediation, is an attempt to dispose of cases which may be resolved merely by mediation, thereby decreasing the burden on the courts of unnecessary proceedings.

The said Ordinance can be accessed on http://egazette.nic.in/WriteReadData/2018/185101.pdf

*(1USD = Rs. 66.82)