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Parliament passes amendment bill for speedy disposal of commercial disputes

Aug 11, 2018 12:14 IST
Parliament passes amendment bill for speedy disposal of commercial disputes

The Rajya Sabha on August 10, 2018 passed the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018. The Lok Sabha had passed it on July 31.

The bill seeks to amend the law for speedy disposal of commercial disputes and to reduce the pecuniary jurisdiction of commercial courts from Rs 1 crore to Rs 3 lakh. It will now be sent to the President for his assent.

Key Provisions of the bill

  • The Bill allows state governments to establish commercial courts at the district level, even in territories where high courts have ordinary original civil jurisdiction.
  • Under the bill's provisions, the state governments may set up commercial appellate courts at the district level to consider appeals from commercial courts below the level of a district judge in areas where high courts do not have original jurisdiction.
  • While the Commercial Courts Act, 2015 provided for commercial courts and commercial divisions of high courts to adjudicate commercial disputes with a value of at least Rs 1 crore, the amendment reduces the limit to Rs 3 lakh.
  • The reduction in the value from Rs 1 crore to Rs 3 lakh is aimed to help small business houses. The move will further enhance India’s ranking in the ease of doing business.

Following are the bill's main objectives:

The Bill brings down the specified value of a commercial dispute to 3 Lakhs from the present 1 crore to enable the commercial courts  to decided on commercial disputes of a reasonable value.

This would bring down the time taken (presently 1445 days) in resolution of commercial disputes of lesser value and thus further improve India's ranking in the Ease of Doing Business.

The amendment further provides for establishment of commercial courts at district judge level for the territories over which respective High Courts have ordinary original civil jurisdiction such as in the cities of Chennai, Delhi, Kolkata, Mumbai and State of Himachal Pradesh.

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 will be provided in the form of Commercial Appellate Courts to be at district judge level.

The introduction of the Pre-Institution Mediation process in cases where no urgent, interim relief is contemplated to provide an opportunity to the parties to resolve the commercial disputes outside the ambit of the courts through the authorities constituted under the Legal Services Authorities Act, 1987.

It will also help in reinforcing investor's confidence in the resolution of commercial disputes.
 
Background

The Union Cabinet chaired by Prime Minister Narendra Modi had on March 7, 2018 approved the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018 for introduction in the Parliament.

With the rapid economic development there has been considerable increase in commercial activities and consequent steep rise in number of commercial disputes at domestic and international level.

Increase of Foreign Direct Investment (FDI) and overseas commercial transactions have further contributed to a significant increase of commercial disputes.

Hence, to address the issue of faster resolution of matters relating to commercial disputes, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 was enacted and commercial courts were established at District Levels in all jurisdictions, except where the High Courts have original ordinary civil jurisdiction.

Five high courts including the high courts of Bombay, Delhi, Calcutta, Madras and Himachal Pradesh, exercise ordinary original civil jurisdiction in regard to territories of cities of Mumbai, Delhi, Kolkata, Chennai and the territory of the state of Himachal Pradesh respectively.

In such territories of these High Courts there are no commercial courts at district level and instead Commercial Divisions have been constituted in each of these High Courts.

The specified value of such commercial disputes to be adjudicated by the Commercial Courts or the Commercial Division of High Court was decided to be Rs 1 crore.

 

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