Amendments to the Commercial Courts Act
The Government promulgated an ordinance on 3 May 2018, amending the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Commercial Courts Act). The Commercial Courts Act had led to the establishment of certain special courts to deal with commercial disputes, including the establishment of a commercial division in High Courts. The ordinance seeks to introduce important amendments to the Commercial Courts Act, bringing a wider array of matters within its ambit and improving the adjudication of commercial disputes.
The changes introduced by the ordinance are summarized below:
- Pecuniary value of commercial disputes: Earlier, commercial disputes were defined as a certain class of disputes, where the value of the subject matter was not less than Rs. 1 crore. The ordinance has now reduced this pecuniary value to Rs. 3 lakhs, thereby bringing in a wider array of disputes within the ambit of the commercial courts.
- Commercial Courts at the district level: Since the pecuniary value of commercial disputes have been significantly reduced, the ordinance proposes to constitute commercial courts at the district level, for areas over which High Courts exercise ordinary original civil jurisdiction, for matters exceeding Rs. 3 lakh but not exceeding the pecuniary jurisdiction of such district courts.
- Mandatory mediation prior to institution of the suit: For commercial suits which do not seek urgent ad-interim reliefs, the suit can only be instituted after the plaintiff has gone through a new compulsory procedure of pre-institution mediation in accordance with the rules prescribed by the Government. Such mediation is to be completed within three months from the date of application by the Plaintiff. The period of the mediation is excluded for the purposes of computing limitation under the Limitation Act, 1963.
- Commercial Appellate Courts: The Ordinance provides that any person aggrieved by a judgement/order of a commercial court below the level of a district judge may appeal to the commercial court within a period of 60 days from the date of the judgement or order. Any person aggrieved by the judgement/order of a commercial court at the level of a district judge exercising original civil jurisdiction or the commercial division of a High Court can appeal to the commercial appellate division of that High Court within a period of 60 days from the date of that judgement/order.
The amendments are certainly welcome and will bring a much wider array of commercial disputes within the scope of the commercial courts. However, it remains to be seen whether effective adjudication is possible, with a surge in the number of commercial cases.
Author: Bhushan Shah - Partner
This update was released on 01 Jun 2018.
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