COMMERCIAL COURTS

[Mr. M. GOVINDARAJAN]

Commercial dispute

Section 2(1) (c) of the Commercial Courts Act, 2015 (‘Act’ for short) defines the expression ‘commercial dispute’ as a dispute arising out of-

• ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
•  export or import of merchandise or services;
• issues relating to admiralty and maritime law;
• transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
•  carriage of goods;
• construction and infrastructure contracts, including tenders;
• agreements relating to immovable property used exclusively in trade or commerce;
• franchising agreements;
•  distribution and licensing agreements;
•  management and consultancy agreements;
•  joint venture agreements;
• shareholders agreements;
• subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
• mercantile agency and mercantile usage;
• partnership agreements;
• technology development agreements;
• intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
• agreements for sale of goods or provision of services;
•  exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
• insurance and re-insurance;
•  contracts of agency relating to any of the above; and
• such other commercial disputes as may be notified by the Central Government.

 A commercial dispute shall not cease to be a commercial dispute merely because-

• it also involves action for recovery of immovable property or for realization of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
• one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions.

Commercial courts

The State Government may after consultation with the concerned High Court, by notification-

• constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act;
• constitute Commercial Courts at the District Judge level.

Pecuniary limit

The State Government may, by notification, specify such pecuniary value which shall not be less than ₹ 3 lakhs (with effect from 03.05.2018) and not more than the pecuniary jurisdiction exercisable by the District Courts/District Judge, as it may consider necessary.

Jurisdiction

The State Government shall, after consultation with the concerned High Court specify, by notification, the local limits of the area to which the jurisdiction of a Commercial Court shall extend and may, from time to time, increase, reduce or alter such limits.

The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction.   A commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908.

Where the subject-matter of an arbitration is a commercial dispute of a Specified Value and-

• If such arbitration is an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 that have been filed in a High Court, shall be heard and disposed of by the Commercial Division where such Commercial Division has been constituted in such High Court.
• If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that have been filed on the original side of the High Court, shall be heard and disposed of by the Commercial Division where such Commercial Division has been constituted in such High Court.
•  If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that would ordinarily lie before any principal civil court of original jurisdiction in a district (not being a High Court) shall be filed in, and heard and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Court has been constituted.

Specified value

The expression ‘specified value’ is defined under section 2(1)(i) of the Act in relation to a commercial dispute, shall mean the value of the subject-matter in respect of a suit as determined in accordance with section 12 which shall not be less than ₹ 3 lakhs or such higher value, as may be notified by the Central Government.

The Specified Value of the subject-matter of the commercial dispute in a suit, appeal or application shall be determined in the following manner:--

• where the relief sought in a suit or application is for recovery of money, the money sought to be recovered in the suit or application inclusive of interest, if any, computed up to the date of filing of the suit or application, as the case may be, shall be taken into account for determining such Specified Value;
• where the relief sought in a suit, appeal or application relates to movable property or to a right therein, the market value of the movable property as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining such Specified Value;
• where the relief sought in a suit, appeal or application relates to immovable property or to a right therein, the market value of the immovable property, as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining Specified Value; and
• where the relief sought in a suit, appeal or application relates to any other intangible right, the market value of the said rights as estimated by the plaintiff shall be taken into account for determining Specified Value.

The High Court may, by notification, issue practice directions to supplement the provisions of Chapter II of this Act or the Code of Civil Procedure, 1908 insofar as such provisions apply to the hearing of commercial disputes of a Specified Value.

Judges

The State Government may, with the concurrence of the Chief Justice of the High Court appoint one or more persons having experience in dealing with commercial disputes to be the Judge or Judges, of a Commercial Court either at the level of District Judge or a court below the level of a District Judge.

Commercial Division of High Court

In all High Courts, having ordinary original civil jurisdiction, the Chief Justice of the High Court may, by order, constitute Commercial Division having one or more Benches consisting of a single Judge for the purpose of exercising the jurisdiction and powers conferred on it under this Act.   The Chief Justice of the High Court shall nominate such Judges of the High Court who have experience in dealing with commercial disputes to be Judges of the Commercial Division.

All suits and applications relating to commercial disputes of a Specified Value filed in a High Court having ordinary original civil jurisdiction shall be heard and disposed of by the Commercial Division of that High Court.  All suits and applications relating to commercial disputes, stipulated by an Act to lie in a court not inferior to a District Court, and filed or pending on the original side of the High Court, shall be heard and disposed of by the Commercial Division of the High Court.

Infrastructure

The State Government shall provide necessary infrastructure to facilitate the working of a Commercial Court or a Commercial Division of a High Court.

Bar of jurisdiction

A Commercial Court or a Commercial Division shall not entertain or decide any suit, application or proceedings relating to any commercial dispute in respect of which the jurisdiction of the civil court is either expressly or impliedly barred under any other law for the time being in force.

Revision application

No civil revision application or petition shall be entertained against any interlocutory order of a Commercial Court, including an order on the issue of jurisdiction, and any such challenge, subject to the provisions of section 13 (appeal), shall be raised only in an appeal against the decree of the Commercial Court.

Pre-institution Mediation and Settlement

A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.  The Central Government may, by notification, authorize the Authorities constituted under the Legal Services Authorities Act, 1987, for the purposes of pre-institution mediation.  Such Authority shall complete the process of mediation within a period of 3 months from the date of application made by the plaintiff.   The period of mediation may be extended for a further period of 2 months with the consent of the parties.

The period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963. 

If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.  The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms.

Appeals

• Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of 60 days from the date of judgment or order.
•  Any person aggrieved by the judgment or order of a Commercial Court at the level of District Judge exercising original civil jurisdiction or, as the case may be, Commercial Division of a High Court may appeal to the Commercial Appellate Division of that High Court within a period of 60 days from the date of the judgment or order.

No appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act.

The Commercial Appellate Court and the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within a period of six months from the date of filing of such appeal.