18 November 2019

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Central Government Approves the Commercial Courts and Commercial Division of High Courts (Amendment) Bill, 2018


The Union Cabinet has approved the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018 for introduction in the Parliament. The decision is in wake of rapid increase in commercial activities and rapid economic development, consequently, there has been steep rise in number of commercial disputes at domestic as well as international level. Increase of Foreign Direct Investment (FDI) and overseas commercial transactions have further contributed to a significant increase of commercial disputes. The Bill seeks to brings down the specified value of a commercial dispute to Three Lakhs from the present One Crore. Therefore, commercial disputes of a reasonable value can be decided by commercial Courts. 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.

With the amendment, Commercial Courts at district Judge level for the territories over which respective High Courts have ordinary original civil jurisdiction i.e in the cities of Chennai, Delhi, Kolkata, Mumbai and State of Himachal Pradesh will be established. The State Governments, in such territories may by notification specify such pecuniary value of commercial disputes to be adjudicated at the district level, which shall 'not be less than Three Lakhs rupees and not more than the pecuniary jurisdiction of the district court. 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 is being 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 will 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. New Section 21A would be inserted to enable the Central Government to make rules and procedures for PIM.

Ease of Doing Business, an index of World Bank refers to the dispute resolution environment in a country which facilitates the investors in deciding for, setting up of and operation of a business. The index has been created by the World Bank Group and since 2002, it has been evaluating almost all the countries of the world. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of the business. Recently, World Bank released its annual 'Ease of Doing Business' report for the year 2018 in which India has emerged out as one among top ten improvers and for the first time ever, India has jumped 30 positions and reached 100th ranked country in terms of 'Ease of Doing Business' amongst 190 countries. The adoption of best practices in regulatory framework is essential for Ease of Doing Business and for resolution of commercial disputes at all fronts.

Tags : Commercial disputes bill Amendment

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