Need exclusive commercial courts: Law Commission

The institution of such courts should be seen as a stepping-stone to reforming the civil justice system in India, it said.

Written by Utkarsh Anand | New Delhi | Published: January 30, 2015 2:36 am

In what may curtail the overstretched litigation and also propel foreign investments, the Law Commission on Thursday recommended a new law to set up exclusive commercial courts and commercial divisions in the high courts across the country to ensure speedy disposal of monetary suits.

The commission, headed by chairman Justice A P Shah, forwarded its 253rd report to Union Law Minister Sadananda Gowda while formulating a draft bill, ‘The Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015’.
Favouring a new legislation to exclusively deal with commercial disputes, the panel also suggested changes in the Civil Procedure Code, which lays down rules for the courts to adjudicate such disputes.

The institution of such courts should be seen as a stepping-stone to reforming the civil justice system in India, said the panel, while pointing out that the goal was to ensure that cases were disposed of expeditiously, fairly and at reasonable cost to the litigant.

“Not only does this benefit the litigant, other potential litigants (especially those engaged in trade and commerce) are also advantaged by the reduction in backlog caused by the quick resolution of commercial disputes. In turn, this will further economic growth, increase foreign investment, and make India an attractive place to do business,” it said.

Further, it also benefits the economy as a whole given that a robust dispute resolution mechanism is a sine qua non for the all-round development of an economy, it added.

The Commission defined a “commercial dispute” to mean 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 such areas as have been defined in the proposed Bill.

Hence, the Bill proposes to include several sectors in the ambit of the disputes that the commercial courts could adjudicate upon.
While commercial divisions should be set up by the central government in high courts that are already exercising ordinary original civil jurisdiction, commercial courts should be set up in states and union territories where the high courts lack such jurisdiction and district courts are deciding such matters.

“The minimum pecuniary jurisdiction of such Commercial Courts shall also be Rs one crore or more. Pecuniary jurisdiction of the high courts having original jurisdiction to be raised uniformly to Rs one Crore and commercial divisions should be set up only when the pecuniary jurisdiction has been so raised,” said the panel, suggesting such divisions may be set up in Delhi, Himachal Pradesh, and Madras high courts once the pecuniary jurisdiction is raised.

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