Approval by the Parliament of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018

The Parliament had, in 2015, come out with the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act (hereinafter “Act”) in 2015. The Act provided for the establishment of Commercial Courts at the District level and Commercial Divisions in High Courts which have ordinary original civil jurisdiction. The Act further provided for setting up of the Commercial Appellate Divisions in High Courts to deal with appeals from the Commercial Court/Commercial Division. This was done to ensure speedy adjudication of matters relating to commercial disputes.

Since, it was felt that the Act of 2015 did not ensure a speedy legal recourse, 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 on May 03, 2018. The amendments in the Ordinance have been incorporated with a view to enlarge the scope of commercial courts in India. The amendments will also act as a catalyst towards improving India’s ranking on the ‘Ease of Doing Business Index’ as released by the World Bank (Ease of Business Report).

The amendments brought to the Act of 2015 by way of the Ordinance, 2018 are as follows:

1. It reduces the pecuniary jurisdiction of the Commercial Courts and the Commercial Divisions of the High Court. Under the Act of 2015, Commercial Courts and the Commercial Divisions of the High Court could entertain matters, including Intellectual Property Rights matters, of Rupees 1 crore and above. However, the Ordinance, 2018 reduces it to Rupees 3 lakhs and above.

2. The Act of 2015 specifically barred the constitution of Commercial Courts for the territory over which the High Court has ordinary original civil jurisdiction. The Ordinance, however, permits the states, after consultation with the concerned High Court, to set up Commercial Courts at the District Judge Level for territories where the High Court has ordinary original civil jurisdiction.
3. Consequently, Section 9 of the Act of 2015 which deals with ‘transfer of a suit if counterclaim in a commercial dispute is of Specified Value’ and corresponding section 12(e) of the Act of 2015 have also been deleted.
4. The state governments have additionally been given powers to establish Commercial Appellate Courts at the District Judge Level, except in territories where the High Courts exercise ordinary original civil jurisdiction, to entertain appeals from the judgment/order of a Commercial Court below the level of a District Judge.
5. Appeals from the Commercial Courts at the District Judge Level and from the Commercial Division of a High Court will lie to the Commercial Appellate Division of that High Court.

6. The Ordinance of 2018 creates a separate chapter for “Pre-Institution Mediation and Settlement” and mandates pre-institution mediation as a remedy to be exhausted by the plaintiff prior to filing a suit, which does not contemplate any urgent interim relief under the Act of 2015.

Surabhi Aggarwal

Senior Associate

The Indian Lawyer