Cabinet approves bill for setting up commercial divisions of high courts

23 April 2015

The union cabinet on Wednesday approved the introduction of a bill for setting up commercial divisions and commercial appellate divisions in high courts for faster settlement of cases involving commercial and business entities.

For this, the Law Commission had recommended the introduction of a bill namely, `The Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015' in the current session of Parliament.

Commercial disputes include disputes arising out of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, joint venture and partnership agreements, intellectual property rights, insurance and other areas.

Commercial divisions are planned to be set up in the high courts already exercising ordinary original civil jurisdiction, such as Delhi, Bombay, Calcutta, Madras, and Himachal Pradesh. Commercial divisions will exercise jurisdiction over all cases and applications relating to commercial disputes and will have territorial jurisdiction over such area on which it has original jurisdiction.

Commercial courts, which will be equivalent to district courts, are also planned to be set up in the states and union territories where the high courts do not have ordinary original civil jurisdiction, and where the high courts have original jurisdiction, in respect of those regions to which the original jurisdiction of a high court does not extend. The minimum pecuniary jurisdiction of such commercial courts and commercial division is proposed to be Rs1 crore.

Accordingly, all pending suits and applications relating to commercial disputes involving a claim of Rs1 crore in the high courts and civil courts will be transferred to the relevant commercial division or commercial court as the case may be.

Commercial appellate divisions will be set up in all high courts to hear appeal against orders of commercial division of high courts and orders of commercial courts.

However, commercial divisions or commercial courts will not have jurisdiction in matters relating to commercial dispute, where the jurisdiction of the civil court has been either expressly or impliedly barred under law.

The bill proposes a streamlined procedure to be adopted for the conduct of cases in the commercial division and in the commercial court by amending the Code of Civil Procedure, 1908, so as to improve the efficiency and reduce delays in disposal of commercial cases. The amended CPC as applicable to the commercial divisions and commercial courts will prevail over the existing high court rules and other provisions of the CPC, an official release said.

The government is considering a mechanism to ensure speedy disposal of high-value 'commercial disputes'. The finance minister, in his budget speech of 2015, had made proposed the setting up of exclusive commercial divisions in various courts in India based on the recommendations of the 253rd Report of the Law Commission.

The establishment of commercial courts is a prelude to bringing about reform in the civil justice system in India.

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