Application of Commercial Courts Act, 2015 in West Bengal reflects a concerted effort to modernize India’s legal framework for commercial dispute resolution.
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Application of Commercial Courts Act, 2015:
The application of the Commercial Courts Act, 2015 in West Bengal epitomizes a concerted effort to modernize India’s legal infrastructure, particularly in the realm of commercial dispute resolution. The 188th Report on Proposals for Constitution of Hi-Tech Fast-Track Commercial Divisions in High Courts by the Law Commission identified concerns regarding litigation delays in India, critiquing generalizations from the UK and US. Consequently, in 2003, India established commercial courts to swiftly resolve high-value commercial matters, emphasizing defining ‘commercial dispute’ and ‘specified value’. The enactment of the Commercial Courts Act, 2015, further refined this framework, aiming to address judicial delays and enhance India’s contract enforcement ranking. Seven years on, these courts have garnered attention from legal practitioners, evidenced by a surge in case volume. In this context, the paper aims to reassess the effectiveness of commercial courts and the CCA, 2015, questioning whether it fulfilled legislative intent or merely represented a rebranding effort. If you need more guidance regarding the application of Commercial Courts Act, 2015, kindly get in touch with an experienced property lawyer in Kolkata and West Bengal.
Revolutionizing India’s Commercial Justice:
The economic reforms of 1991 in India ushered in an era of liberalization, globalization, and privatization, fundamentally altering the economic landscape. However, the inadequate state of the country’s judicial infrastructure posed significant challenges for investors, particularly in the resolution of commercial disputes. Overburdened courts, a shortage of judges, and lengthy case resolutions hindered the efficient adjudication of complex commercial matters. Recognizing the pressing need for legal reforms, the Law Commission’s 2003 report highlighted the surge in commercial disputes post-1991 and advocated for the establishment of specialized commercial courts equipped with technologically adept judges. These courts aimed to prioritize high-value commercial litigations and provide timely resolutions, crucial for fostering a favourable business environment and enhancing international economic relations. Consequently, the Commercial Division of High Courts Bill was proposed in 2009, signalling a legislative attempt to address the issue. Despite initial opposition, extensive deliberations led to the enactment of the Commercial Courts Act in 2015, marking a significant milestone in India’s legal framework. This legislation aimed to streamline the adjudication process for commercial disputes, catering to the needs of domestic businesses and signalling India’s commitment to providing a conducive environment for economic growth and investment.
Commercial Disputes in India:
The traditional justice delivery system in India was characterized by civil and criminal courts, each governed by specific procedural codes. Prior to the economic reforms of 1991, commercial disputes were treated as civil matters and adjudicated by ordinary civil courts. However, recognizing the need for specialized handling of commercial disputes, High Courts such as Bombay, Calcutta, and Madras introduced expedited resolution procedures for commercial cases. The introduction of Original Side Rules in these courts defined ‘commercial causes’ and included matters related to mercantile transactions, company law, and responsibilities of railway administrations. Additionally, specialized tribunals like the Debt Recovery Tribunal and the National Company Law Tribunal were established to handle specific commercial matters, further highlighting the evolving landscape of commercial dispute resolution in India.
The Commercial Courts Act of 2015 marked a significant shift by categorizing commercial disputes into 22 distinct categories, aiming to provide dedicated attention to each case. This legislation aimed to address the inefficiencies of the civil justice system by establishing commercial courts within the existing framework. However, it also acknowledged the preference of parties towards alternative dispute resolution mechanisms such as arbitration and mediation, governed by the Arbitration and Conciliation Act of 1996. By incorporating provisions for specialized commercial courts and recognizing the importance of alternative dispute resolution methods, the Commercial Courts Act sought to streamline the resolution of commercial disputes and instil confidence in litigants to seek timely and efficient justice. To understand the lengths of commercial disputes in West Bengal, it is advised to seek legal counsel from an experienced property lawyer in Kolkata and West Bengal.
Enactment of the Commercial Courts Act, 2015:
The Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Act, 2015, came into force on 23rd October 2015, aimed to enhance India’s civil justice system, focusing on resolving commercial disputes efficiently. Despite initial optimism, concerns arose regarding the effectiveness of commercial courts, especially highlighted in the Economic Surveys of India in 2017-2018. These surveys emphasized the critical need for an expedited contract enforcement regime to bolster India’s Ease of Doing Business (EODB) index. While the 2015 Act established Commercial Divisions in High Courts and Commercial Courts at the district level, challenges remained in enforcing contracts and resolving legal disputes effectively, as noted by the Economic Survey of India, 2018-2019.
In response to the shortcomings, the 2018 Amendment to the Commercial Courts Act introduced significant changes, including the establishment of Commercial Courts at the district level and Commercial Divisions in High Courts, enhancing accessibility to commercial dispute resolution. Notably, this amendment lowered the pecuniary value of commercial disputes and introduced pre-institution mediation, aiming to expedite dispute resolution and alleviate the burden on the judicial system.
Overview of the Commercial Courts Act, 2015:
The Commercial Courts Act, 2015, designated as Act No. 4 of 2016, came into force from 23rd October 2015, with the objective of establishing specialized judicial bodies within India’s High Courts to adjudicate commercial disputes of specified value. It encompasses the formation of Commercial Courts, Commercial Appellate Courts, Commercial Division, and Commercial Appellate Division, aiming to expedite the resolution process of commercial conflicts and matters ancillary to them. The Act, deemed effective from October 23, 2015, covers the entirety of India, ensuring uniformity and accessibility in addressing commercial disputes across the nation.
The Act provides a comprehensive definition of “commercial dispute,” spanning various transactions and agreements commonly encountered in commercial dealings. These include disputes arising from mercantile documents, import/export activities, maritime law, aviation transactions, construction contracts, property agreements, franchising, distribution, intellectual property rights, insurance, and others. Moreover, the Act clarifies the jurisdictional threshold by defining the “Specified Value” of commercial disputes, ensuring that cases falling under its purview meet the stipulated monetary criteria. Additionally, it incorporates definitions for key terms essential for its interpretation and implementation, while also incorporating provisions for disputes involving immovable property or public entities, thereby maintaining the Act’s applicability and relevance in diverse commercial scenarios. To get further details in this context you need to get in touch with an experienced property lawyer in Kolkata and West Bengal.
Objects of the Commercial Courts Act, 2015:
India has experienced remarkable transformations, marked by privatization, liberalization, and globalization, leading to significant economic development characterized by increased commercial activities, including foreign direct investments and public-private partnerships. However, the surge in commercial transactions has also brought about a rise in commercial disputes, necessitating measures to enhance the efficacy of the Indian legal system. In response, the Union of India has enacted new measures aimed at expediting the resolution of commercial disputes, broadening the jurisdiction of courts to address such disputes, and facilitating a more favourable environment for business operations in the country. The Commercial Courts Act, effective from October 23, 2015, targets the swift resolution of high-value commercial disputes amounting to Rs. One Crore and above, establishing Commercial Courts at the District Judge Level, as well as Commercial Division and Commercial Appellate Division within High Courts, thereby enhancing accessibility and efficiency in handling commercial conflicts and bolstering India’s reputation as an independent and responsive legal jurisdiction.
The Commercial Courts Act aims to establish specialized judicial bodies, including Commercial Courts, Commercial Appellate Courts, Commercial Division, and Commercial Appellate Division within High Courts, dedicated to adjudicating commercial disputes of specified value and related matters in India. Enacted by the Parliament in the Sixty-sixth Year of the Republic of India, the Act provides definitions crucial for its interpretation, defining “Commercial Appellate Courts,” “Commercial Appellate Division,” “Commercial Court,” and “commercial dispute.” It broadly defines a commercial dispute as one arising from various transactions involving merchants, bankers, financiers, and traders, encompassing aspects like mercantile documents and related enforcement or interpretation issues. This comprehensive framework establishes specialized fora aimed at expediting the resolution process of commercial conflicts, promoting efficiency, and fostering a conducive environment for commerce within the Indian legal system. To get further details in this context you need to get in touch with an experienced property lawyer in Kolkata and West Bengal.
Constitution of Commercial Courts in West Bengal:
- The State Government, in consultation with the relevant High Court, holds the authority to establish Commercial Courts at the district level through notification, tailored to address the jurisdiction and powers conferred by the Commercial Courts Act.
- For High Courts possessing ordinary original civil jurisdiction, Commercial Courts can be constituted at the District Judge level, with the State Government’s notification following consultation with the respective High Court.
- Provision exists for specifying a pecuniary value, not less than three lakh rupees, and not exceeding the jurisdiction of District Courts, applicable to territories under High Courts’ ordinary original civil jurisdiction, through State Government notification.
- Notwithstanding the Act’s provisions, the State Government, in consultation with the concerned High Court, can specify a pecuniary value of at least three lakh rupees, or higher, for the entire state or parts thereof, via notification.
- The delineation of the local limits of a Commercial Court’s jurisdiction falls under the State Government’s purview, subject to consultation with the relevant High Court, with provisions for modification as deemed necessary.
- Appointments of Judges to Commercial Courts, whether at the level of District Judge or below, are made by the State Government with the Chief Justice of the High Court’s concurrence, ensuring judicial expertise in resolving commercial disputes.
Designation of Commercial Appellate Courts in West Bengal:
The designation of Commercial Appellate Courts, excluding territories under High Courts’ ordinary original civil jurisdiction, lies within the purview of the State Government, facilitated through consultation with the respective High Court and notification. The State Government holds the authority to designate Commercial Appellate Courts at the District Judge level, as deemed essential, for effectively exercising the jurisdiction and powers conferred by the Commercial Courts Act. This process underscores the decentralized approach to establishing specialized judicial bodies, ensuring accessibility and efficiency in resolving commercial disputes at the appellate level across different regions. To get further details in this context you need to get in touch with an experienced property lawyer in Kolkata and West Bengal.
Constitution of Commercial Division of High Court in West Bengal:
The Commercial Division of High Courts is established under the authority of the Chief Justice, particularly in High Courts with ordinary original civil jurisdiction, where the Chief Justice may issue orders for its constitution, comprising one or more Benches presided over by a single Judge, with the specific mandate of exercising jurisdiction and powers as prescribed by the Commercial Courts Act. Additionally, the Chief Justice is tasked with nominating Judges from the High Court who possess expertise in handling commercial disputes to serve as Judges within the Commercial Division, ensuring that the adjudication process is conducted by individuals with relevant experience and proficiency in commercial law, thereby enhancing the efficacy and specialized nature of the Commercial Division in resolving commercial disputes at the High Court level.
Constitution of Commercial Appellate Division in West Bengal:
Following the issuance of notifications under subsection (1) of section 3 or orders under sub-section (1) of section 4, the Chief Justice of the respective High Court is mandated to establish a Commercial Appellate Division through an order, comprising one or more Division Benches, entrusted with the jurisdiction and powers conferred by the Commercial Courts Act. Moreover, the Chief Justice is responsible for appointing Judges from the High Court with proven expertise in handling commercial disputes to serve within the Commercial Appellate Division. This process ensures that the Division operates with a bench of Judges possessing specialized knowledge and experience in commercial law, thereby facilitating effective adjudication of appeals arising from commercial disputes within the High Court jurisdiction. To get further details in this context you need to get in touch with an experienced property lawyer in Kolkata and West Bengal.
Jurisdiction of Commercial Courts in West Bengal:
The jurisdiction of a Commercial Court extends to the adjudication of all suits and applications concerning commercial disputes of a Specified Value within the territorial jurisdiction allocated to it, encompassing the entire territory of the State over which it holds jurisdiction. Clarifying this provision, a commercial dispute is deemed to originate from the entire territorial expanse of the State under a Commercial Court’s jurisdiction if the suit or application pertaining to said dispute is filed in accordance with the procedural requirements outlined in sections 16 to 20 of the Code of Civil Procedure, 1908. This delineation underscores the comprehensive authority of Commercial Courts in resolving commercial conflicts across their designated territorial ambit, providing clarity on the scope of their jurisdiction and ensuring uniform application of procedural norms in the adjudication process.
Jurisdiction of Commercial Divisions of High Courts in West Bengal:
The jurisdiction of Commercial Divisions within High Courts extends to the adjudication of all suits and applications concerning commercial disputes of a Specified Value within High Courts possessing ordinary original civil jurisdiction. These disputes include those stipulated by law to be heard in a court not lower than a District Court and filed or pending on the original side of the High Court, all of which are to be heard and resolved by the Commercial Division. Additionally, any suits or applications transferred to the High Court by virtue of specific provisions in Acts such as the Designs Act, 2000, or the Patents Act, 1970, are also under the purview of the Commercial Division, particularly in areas where the High Court exercises ordinary original civil jurisdiction. This provision ensures that all relevant commercial disputes within the High Court’s jurisdiction are appropriately channelled to the specialized Commercial Division for efficient and specialized resolution, maintaining consistency and efficacy in the adjudication process.
As of now, according to the Commercial Courts Act, 2015, in the case of Commercial Courts at Siliguri, Asansol, Alipore, and Rajarhat, the specified pecuniary jurisdiction is for disputes involving an amount not less than rupees thirty lakh. For Commercial Courts within the territorial jurisdiction of the City Civil Court at Calcutta, the jurisdiction is delineated as follows: (i) disputes with amounts not less than rupees three lakh and not more than rupees ten lakh exclusively, and (ii) disputes exceeding rupees ten lakh but not exceeding rupees one crore, to be handled concurrently with the Commercial Division of the High Court, Calcutta. Additionally, for the Commercial Division of the High Court, Calcutta, the jurisdiction extends to disputes involving amounts exceeding rupees ten lakh. To get further details in this context you need to get in touch with an experienced property lawyer in Kolkata and West Bengal.
Case Laws:
In the case of STP Limited v. The State of West Bengal, the main issue revolved around the jurisdiction of the court in adjudicating a commercial dispute. The appellant challenged an order passed by the Learned AdditionalDistrict Judge 1st Court, Howrah, which set aside an arbitral award. The appellant argued that the court acted illegally and failed to exercise its jurisdiction properly, contending that the dispute fell within the purview of the Commercial Courts Act, 2015. The court, after examining relevant provisions of the Act, observed that the dispute indeed constituted a commercial dispute as defined under Section 2(1)(c) of the Act and should have been tried by a Commercial Court. Despite the constitution of aCommercial Court in Howrah, the matter was adjudicated by a regular court without jurisdiction over commercial disputes. Consequently, the court allowed the appeal, set aside the impugned order, and directed the transfer of the case to theCommercial Court at Rajarhat for re-hearing in accordance with the provisions of the Act, emphasizing expeditious disposal. To fight such legal hassles it is important to get in touch with an experienced property lawyer in Kolkata and West Bengal.
In the case of Maharshi Commerce Limited v. Rajiv Balani & Ors. , the main issue revolved around the determination of whether a suit for eviction and recovery of possession concerning a property utilized for commercial purposes constitutes a commercial dispute under the Commercial CourtsAct, 2015 (CCA). The Defendant argued that since the premises in question were being used for business purposes, the suit should be transferred to a forum designated under the CCA, 2015. Conversely, the Plaintiff contended that there was no formal agreement specifically outlining the commercial nature of the lease. The Court, after considering the submissions and examining the nature of the property and its usage, observed that the property was primarily commercial in nature and was being used for business activities. Consequently, the Court concluded that the dispute fell within the ambit of a commercial dispute as defined by the CCA, 2015. Accordingly, the High Court returned the suit to be presented before the appropriate court with jurisdiction to adjudicate commercial matters, thereby affirming the Defendant’s contention.
Final Thoughts on the Commercial Courts Act, 2015:
In summary, the application of the Commercial Courts Act, 2015 in West Bengal epitomizes a concerted effort to modernize India’s legal infrastructure, particularly in the realm of commercial dispute resolution. Through the establishment of specialized judicial bodies and the delineation of jurisdictional boundaries, the Act aims to expedite the adjudication process, ensuring timely and efficient resolution of complex commercial matters. Despite initial challenges highlighted by economic surveys, subsequent amendments have endeavoured to address shortcomings, emphasizing accessibility and efficacy in dispute resolution. Case law examples underscore the imperative of adhering to the Act’s provisions, emphasizing the importance of transferring relevant disputes to specialized fora for expeditious resolution. As the Act continues to evolve and adapt, its overarching goal remains clear: to provide a robust legal framework conducive to fostering a favourable business environment and bolstering India’s reputation as an independent and responsive legal jurisdiction.
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