Status as on- 15/05/2023

The transaction entered in commercial courts was ‘Commercial in Nature’ and hence, the different spear of law that crept into this concept is “Commercial Law”. Thus, there was a need for resolving the commercial dispute which arose from the commercial transaction and hence this paved the way for the emergence of the “Commercial Act, 2015” hereinafter called “Act” for the sake of brevity. The main purpose of the Act was to ensure the speedy disposal of high-stake commercial matters. The Act came into force on 23.10.2015. Wherein the Act had limited the specific value of the suit to not less than Rupees One crore and the commercial courts were established at all the District levels.

Commercial courts

As defined in Section 2(b) of the Commercial Courts Act, 2015- “Any court for the purpose of exercising the powers under the Act, 2015 which is constituted by State Government at the district level, may after consultation with the concerned High Court by notification.”

Section 3(3) of the Act, the State governments with the concurrence of the Chief Justice of the High Court appoint one or more persons having experience in commercial disputes to be the judges of Commercial court.

However, Commercial Disputes are defined under section 2(c) of the Act, 2015.

• In the routine transactions of merchants, bankers, financiers, and traders, there is a debate over the enforcement and interpretation of papers.
• Export and import of goods and services.
• Admiralty and marine law issues.
• Transactions involving aircraft, aircraft engines, aircraft equipment, and helicopters, such as sales, leasing, and financing.
• Carriage of goods is a term that refers to the transportation of things.
• Tenders and contracts connected to building and infrastructure.
• Agreements for the use of immovable property in trade.
• Agreements for franchising.
• Agreements regarding distribution and licensing.
• Agreements for management and consulting.
• Agreements forming a joint venture.
• Agreements between shareholders.
• Agreements relating to subscriptions and investments in the services business, such as outsourcing and financial services.
• Mercantile agency and mercantile use are two terms that are used interchangeably.
• Partnership Agreements.
• Agreements on technological advancements
• Trademarks, copyright, patents, domain names, geographical indications, and semiconductor integrated circuits are all examples of intellectual property rights.
• Contracts for the sale of products or the rendering of services.
• The exploitation of natural resources such as oil and gas deposits, as well as the electromagnetic spectrum.
• Insurance and reinsurance are two types of insurance.
• Any of the following can be covered by an agency contract.
• Other business conflicts that the Central Government has been made aware of.

Types of Commercial Disputes:

1. Disputes arise between two businesses because of a breach of the contractual relationship or any other contract-related issue which does not fit with the existing contract and leads to the disagreement between the parties.
2. Customers whose expectations do not match with the product quality or services provided by the company or matters related to unfair trade practices are covered under this type.
3. Matters which give rise to IPR infringements between two businesses or issues regarding the land dispute in which the said land is used for commercial purposes are also covered under commercial disputes.

 Jurisdiction of The Commercial Courts:

The Commercial Courts’ Jurisdiction is covered in Section 6. All cases and petitions of commercial disputes arising out of the full territory of the State over which it has been conferred territorial jurisdiction are resolved by the Commercial courts. The requirements of Sections 16, 17, 18, 19, and 20 of the Code of Civil Procedure 1908 apply to business disputes.

The jurisdiction of the Commercial Division of High Courts is defined under section 7 of The Commercial Courts Act, 2015.

The jurisdiction of the Commercial Court is discussed in detail in the case of Daimler Financial Services India Pvt. Limited Vs. Vikash Kumar and Ors. 2020

In this case, the petitioner is a non-banking financial company from which the respondents obtained a loan and later failed to repay the same. As per the agreement of the parties, the matter was referred to the sole arbitrator, and judgment was passed but the petitioners were not satisfied with it so they filed a petition at the Commercial Court Dhanbad the presiding officer dismissed the petition and concluded that the pecuniary jurisdiction of the said court is 1 crore and above and there is no such notification from the state government about any amendment.

The petitioner filed a petition at the High Court of Jharkhand in Ranchi under Article 227 of the Constitution of India which says that the High Court has supervisory authority over all courts and tribunals in the territory over which it has jurisdiction.

The said amendment which is being discussed above contains the following:

• Section 3(1-A) of the Commercial Courts Act, 2015 as amended by the Amendment Act of 28 of 2018, which became retrospectively effective from 3rd May 2018.

“3. [(1-A) Notwithstanding anything in this Act, the State Government may, by notification, specify a such pecuniary value which shall not be less than three lakh rupees or such higher value, for the whole or part of the State, as it may consider necessary, after consultation with the concerned High Court.]”

• Section 2(1) (i) of the Commercial Courts Act, 2015 as amended by the said Amendment Act of 28 of 2018 which reads as under:-

“2(1)(i) “Specified Worth” refers to the amount of the subject matter in a suit as determined under section 12 [which must not be less than three lakh rupees] or such higher value as the Central Government may notify regarding a commercial dispute.”

Based on the above-mentioned amendments the learned counsel for the petitioner submitted that the impugned order passed by the Presiding Officer of the Commercial Court of Dhanbad, should be quashed and set aside.

The Hon’ble High Court found force in the submissions of the Counsel for Petitioner and held the following:

• That Section 2(1) (i) of the Commercial Courts Act, 2015 post Amendment Act 28 of 2018, the specified value given in section 3(1) of the Commercial Courts Act, 2015 to be determined by Section 12 is “not less than 3 lakhs.”
• The order, passed by the presiding officer of the Commercial Court in Dhanbad, dismisses the petition because the Commercial Courts and Dhanbad had no pecuniary jurisdiction and was said to be non-sustainable by the Hon’ble High Court of Ranchi.
• Hence, Hon’ble Court quashed and set aside the order passed by the Presiding officer of The Commercial Court, Dhanbad, and further disposed of the written petition by directing the Commercial Court, Dhanbad, to proceed with the case.
• The Hon’ble High Court made it very clear that it will make no remarks or express no opinions on the counter-affidavit raised by the respondents in this case and the Commercial Court, Dhanbad is free to pass its independent order without being prejudiced.

Pre-instruction Mediation and Settlement

Pre-instruction Mediation and Settlement Act provide for mandatory pre-institution mediation and settlement, except when there is any interim urgency. Every matter should undergo this mandatory pre-institution mediation and settlement process of 3 months (extendable for another 2 months with the consent of the parties). A suit shall not be instituted unless the plaintiff has exhausted this remedy.

When the matter is not settled in the pre-institution mediation, only then will it come before the Commercial Court. The period occupied in pre-institution mediation shall not be computed for the purpose of limitation.

Transfer of Cases

The Act provides that all suits and applications relating to a commercial dispute of a specified value are pending −

• It shall be transferred to the Commercial Division of a high court where a commercial division has been constituted.
• Such commercial court shall have jurisdiction.

Appeal and Revision

The Act provides that an appeal against a judgment or order of the Commercial Court or Commercial Division of the High Court shall lie before the Commercial Appellate Division of the concerned High Court within a period of sixty days from the date of judgment or order, as the case may be. The Act also requires the Commercial Appellate Division to try to resolve the appeal within six months.

Amendments to CPC

In order to ensure speedy disposal of commercial disputes, the Act prescribed amendments to the CPC in cases of commercial disputes of specified value. The amendments to the CPC relate to the time-bound completion of pleadings, filing of evidence, trial, and pronouncement of judgment.

Conclusion

Commercial courts adjudicate disputes involving business that occur at work. The government proposed the Commercial Courts Act 2015 to establish a new type of district-level court for commercial disputes. In order to ensure the efficient running of commercial courts with the least amount of outstanding cases, a number of enhancements were made in 2018 to the Commercial Courts Act of 2015. However, the Act’s seven-year period of existence may not have yielded the anticipated result. The Act has already undergone a significant alteration that completely changed its original goal of offering a framework for the quick resolution of “high-value” commercial disputes. Nevertheless, despite the obstacles and difficulties, the Act has improved various aspects of the nation’s commercial dispute resolution procedures.

Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us at ibc@centrik.in.

Share

Facebook

Twitter

Linkedin