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Law Commission Submits Draft on Commercial Courts
Feb 02, 2015

In what may curtail the overstretched litigation and also propel foreign investments, the Law Commission 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.

Key Suggestions

  • The commission, headed by chairman Justice A.P. Shah, forwarded its 253rd report 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 Commission 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.

  • The goal is 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.

  • This will boost economic growth, increase foreign investment, and make India an attractive place to do business.

  • 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.

  • The Bill proposes to include several sectors in the ambit of the disputes that the commercial courts could adjudicate upon.

  • 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.

  • Such divisions may be set up in Delhi, Himachal Pradesh, and Madras high courts once the pecuniary jurisdiction is raised.

The Law Commission’s move to set up commercial courts to expedite judgments on business disputes is a welcome step that can reassure investors and help protect their interests. The draft legislation drawn up by the Commission, which seeks to set up two or three commercial courts in each state and appellate division benches in high courts, will help bring down the time spent on business litigation and ensure better utilization of scarce resources.


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