The Time is Now: Implementing the Law Commission’s 253rd Report

The establishment of commercial courts is long overdue in India. The issue was raked up in the 188th Report in 2003. It was almost passed in 2009 but was referred to the present Law Commission to iron out the creases..The 20thLaw Commission, under the chairmanship of Justice A.P. Shah has now presented the finely drafted 253rdReport titled “Commercial Division and Commercial Appellate Division of High Courts Bill, 2015” keeping in mind the practicalities of the suggestions. It has also drafted a new Bill with the aforementioned title which has been appended to the Report..To complement the suggestions in the Report and the appended Bill, the Commission has suggested amendments to the Civil Procedure Code, 1908..The 253rdReport which is aimed at ensuring disposal of cases expeditiously, fairly and with reasonable cost to the litigants is a welcome move by the Commission at a time when India grapples not only with pendency of cases but also pulverization of inbound investments due to an inefficient justice delivery system..The Report was prepared after identifying the drawbacks of the present Bill and after consulting similar system of commercial courts followed in countries like UK and Singapore. The Commission did an exemplary collection of data by asking the right and relevant questions to the High Courts to draft the 243rd Report..The Finance Minister in his recent Budget Speech has reinforced the commitment of the present government to implement the recommendations of the Report..This piece seeks to outline the major reforms suggested by the Commission through the Report..1. Commercial Divisions/Courts and Appellate Divisions.The Report has recognised three broad reasons to deal with commercial matters expeditiously, them being a) Economic Growth, b) Improving the international image of the Indian justice delivery system and c) Improving legal culture. To fulfill these goals, the Commission has envisaged establishment of:. I. Commercial Divisions in the 5 High Courts which already have ordinary original civil jurisdictions namely: i) Calcutta, ii) Bombay, iii) Madras, iv) Delhi and v) Himachal Pradesh;. II. Commercial Courts in States and Union Territories where the High Courts do not have ordinary civil jurisdictions and also in regions where original civil jurisdiction of High Courts does not extend, such as Pune or Madurai. And;. III. Commercial Appellate Division..The Report has made it amply clear that establishment of Commercial Division or Commercial Court should be established in tandem with the establishment of Commercial Appellate Division..While suggesting the above structure, the commission has been mindful that the pecuniary jurisdiction across all the High Courts having original jurisdiction be uniform and has therefore suggested raising it to Rs. 1 Crore so that there is no anomaly. The empirical study done by the Commission in this regard presents that if the pecuniary jurisdiction of the Delhi High Court, Calcutta High Court, Madras High Court and the Himachal Pradesh High Court is increased to Rs. 1 Crore, the pendency of civil suits involving commercial disputes would be reduced substantially by 93.5%, 58.7%, 86%, and 72%, respectively..Such detailed analysis of the problem to formulate solutions breaks the shackles of past in suggesting meaningful changes backed by scientific research, and not just cosmetic ones..2. Onus on the Central Government for Establishment.The Commission has recommended that the power to constitute the aforementioned categories of commercial courts shall vest with the Central Government. This recommendation makes the Central Government responsible for taking the initiative. Reposing the responsibility with the Central Government will take care of the disbursement of finances at appropriate intervals and will make the Central Government responsible for overseeing steady implementation of the plan..3. Broadening the Ambit of Commercial Dispute.The Report has recommended broadening the definition of commercial dispute to include disputes arising out of ordinary transactions of merchants, bankers, financiers and traders and also include areas such as Intellectual Property Rights. This proposal is to allay any ambiguity on the nature of dispute that is admitted to the commercial courts..4. Amending the CPC.The most important suggestion, perhaps, has been to amend the CPC. The Commission has suggested as many as 20 amendments to the CPC to tackle the problem of a possible sluggishness that may seep in the commercial courts. These amendments will greatly aid in streamlining the procedure for the conduct of cases in the Commercial divisions and commercial courts. Some of these suggestions deserve mention:.A. It has been proposed that defendants will have thirty days to file written statements and an additional 90 days if the Court is so satisfied, after the expiry of which they forfeit their right to file the written statement..B. Introduction of “Summary judgment” procedure has been proposed which will permit Courts to decide any Commercial Dispute claim without recording oral evidence if the application for summary judgment has been filed before the issues are framed. Simultaneously, there is a proposal to empower the Courts to make “Conditional Orders”..C. To aid arbitration procedure it has been proposed that: i) all applications or appeals in international commercial arbitrations concerning disputes of a specific value that have been filed at High Court be heard and disposed of by Commercial Appellate Division of High Court. ii) all applications or appeals in domestic arbitrations concerning commercial disputes of specified value that have been filed on the original side of the High Court be heard and disposed of by the Commercial Appellate Division of the High Court. and iii) all applications or appeals in domestic arbitrations concerning commercial disputes of specified value that would ordinarily lie in a Civil Court will be heard and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitrations..D. It has been proposed that all appeals preferred against any order or decree of the Commercial Division or Commercial Court be heard and disposed of by the Commercial Appellate Division of the relevant High Court within a period of six months from the date of filing of such appeal. Similarly, writ petitions filed before Commercial Appellate Division to also be disposed within a similar six-month period..E. The Commission has proposed that no civil revision application or petition be entertained against any interlocutory order of the Commercial Court, including an order on the issue of jurisdiction..F. It has been suggested that writ petitions and appeals filed in a High Court against the orders of specified tribunals like Competition Appellate Tribunal or the Intellectual Property Appellate Board be heard by the Commercial Appellate Division, if the subject matter of such writ or appeal relates to a commercial dispute..G. The concept of case management has been included for the first time which will include among other things power to fix dates for hearing, finalizing the issues of the case and witnesses to be summoned. Further, the court will have power to impose costs and other penalties on parties’ failure to follow the directions given after the case management hearing..H. Additionally, it would be made mandatory to complete the oral arguments in a time bound manner and supplement it with written submissions. Case management will be of great aid as it would restrict the culture of asking for adjournments prevalent among lawyers as it incentivizes them. This will mark a shift in lawyers charging on the basis of their work put in to prepare the matter rather than on the basis of the number of appearances done in a given matter. The Commission has emphasized that a change in litigation culture in India to shift from a litigant-managed to a court-managed litigation process..I. The proposal also entails that the Courts would also be mandated to deliver the judgment within 90 days from the conclusion of arguments..J. The Commission has recommended revision of Court fee to deter false and vexatious claims. This idea has been adopted from Singapore and the State governments have been advised to re-examine the existing court fee regime..K. The Commission has suggested that although Commercial Division of High Courts may take the benefit of new infrastructure, it would be better if they are located in the premises of respective High Courts. The Commission has suggested these courts to be on the lines of Model Courts which were envisaged in a Report made as a part of the National Mission for Justice Delivery and Legal Reform..L. Importantly, it has been suggested that these Courts be required to publish data relating to number of cases instituted each month, number of hearings conducted, number of cases disposed, and the status of each case in a manner easily accessible to the general public. The Commission believes that this will increase the confidence of the general public in the functioning of the judiciary and assist the institution in achieving the purpose for which it was set up..5. Appointment of Trained Judges.The Report suggests that the proposed commercial courts be managed by specially trained judges appointed by the HC from advocates and judges with demonstrable expertise and experience in commercial litigation. The National Judicial Academy and the State Judicial Academies shall create necessary facilities for the training and continuous education of judges of the Commercial Court or the Commercial Division or the Commercial Appellate Division in a High Court..6. Transferring the Cases in Pipe Line.As regards the pending suits, the Commission has suggested that pending suits and applications relating to commercial disputes above Rs. 1 Crore will be transferred to the commercial courts so that the process of segregation gains momentum..7. Imposing Costs.To deter parties from making frivolous claims or engaging in vexatious litigation, it has been proposed that “costs” be imposed and the court to give reasons for not awarding costs. The Commission has proposed the model of costs it suggested to the Arbitration and Conciliation Act, 1996 in its 246th Report be adopted in the Bill, as also, the consequent amendments to S 35 and 35-A of the CPC which govern the award of costs. Costs mean fees and expenses of the arbitrators, courts and witnesses; legal fees and expenses and; any other expenses incurred in connection with the proceedings..To prepare this Report, the Commission has gone into the heart of problems to find appropriate and executable solutions. It is now imperative upon the Government to take on the baton and reintroduce the Bill in the Parliament for it to be finally passed and acted upon..Ashutosh Ray is a lawyer based in Delhi and is currently assisting a former Chief Justice of India in international and domestic arbitrations, and opinions. He was part of the Expert Committee constituted by the Law Commission of India for drafting the 246th Report on amendments to the Indian arbitration law. He was the first Indian to be invited to speak at the YAP during the 22nd Biennial ICCA Congress in Miami, USA.