The author, through this article, aims to elaborate on the concept of commercial courts with reference to the Commercial Courts Act, 2015 while throwing light on the hierarchy and pecuniary jurisdiction of commercial disputes and enlightening readers on its current position in Goa
It is well known that the judicial system in any nation plays a pivotal role when it comes to legal dispute resolution and enhancing social, and more importantly the economic development of the nation. The competence with which this system works and the rate at which disputes, especially ‘commercial’ disputes are decided would be fundamental in deciding how expeditiously our Government is working towards prompt delivery of justice.
In this regard, the prime legislation that operates in India is ‘The Commercial Courts Act, 2015.’
This is an Act that provides for the constitution of Commercial Courts, Commercial Appellate Courts, Commercial Division and Commercial Appellate Division in the High Courts by State Governments to adjudicate upon commercial disputes of specified values and matters connected therewith and incidental thereto. The Act consists of 7 chapters spread over 23 sections followed by a Schedule.
This Act under Section 2(c) defines “commercial dispute” to be disputes arising out of –
• Ordinary transaction of merchants, bankers, financiers and traders relating to mercantile documents.
• Export and import of merchandise or services
• Admiralty and maritime law issues
• Transactions pertaining to aircrafts, its engines, equipment, helicopters, including its sales, leasing and financing
• Carriage of goods
• Construction of infrastructure contracts
• Agreements pertaining to immovable properties exclusively used to trade and commerce
• Franchising agreements
• Intellectual property rights
• Insurance and re-insurance and so on.
Forums and Valuation under the 2015 Act v/s 2018 Amendment Act:
Under Chapter 2 of the 2015 Act, there was a requirement of having a Commercial Court at the district level where the High Courts do not exercise Original Civil Jurisdiction. It also called for creation of a Commercial Division where High Courts had Original Civil Jurisdiction.
However, after the 2018 amendment to the Act, appeals under Section 13 stand amended. Previously, all appeals from the Commercial Courts at district levels or Commercial Divisions of High Courts would lie before the Commercial Appellate Division set up in each High Court. Nonetheless, under the amended section 13, appeals against Commercial Courts’ orders will now lie before the Commercial Appellate Court, unless such Commercial Courts of the first instance are below the level of a district judge. Further, as per section 13 (1A), any appeals from Commercial Courts of the first instance at the district judge level will lie before the Commercial Appellate Division.
The Commercial Courts Act, 2015 prescribes a minimum value of the subject matter of a commercial suit and the specified value under the 2015 Act was set to a minimum of Rs. 1 Crore. This means that any commercial litigation failing the abovementioned valuation would not be tried under this Act as a commercial suit but would be tried instead, as an ordinary civil suit.
After the 2018 amendment, this specified value clause was reduced from `1 Crore to `3 Lakhs.
Vital amendments to the Code of Civil Procedure (CPC), 1908 under the Act:
The Law Commission of India in its 253rd Report has introduced several procedural amendments to existing provisions of the CPC, 1908 in order to achieve time-bound and rationalized adjudication of commercial disputes. Few of them are enlisted below:
1. Case Management Hearings (CMH): Under the Act, a court must mandatorily hold a CMH between parties that cannot be adjourned and schedule timeline for different stages during the litigation. Once such a CMH is conducted, all arguments must conclude within 6 months, thereby indicating that such CMH is vital in ensuring expedited disposal of commercial cases.
2. Summary Judgment: This process requires either parties to apply for summary disposal of the commercial suit. In case where the facts are clearly favouring a particular party, the judge may rule in favour of that party without actually evaluating elaborate evidence.
3. No appeals against interim orders: The Act mandates that there would be no civil revision petition against any interim or interlocutory order of a Commercial Court and any grievance against such orders may only be raised in appeal against the final decree.
4. Pre-institution mediation: The 2018 amendment to the 2015 Act mandates pre-institution mediation. This requires parties to the commercial suit to attempt an out of court settlement before approaching the Commercial Court for full fledged litigation. The objective here is once again, to expedite dispute resolution through out of court settlement techniques.
The Goa State Scenario:
Notification dated 03/11/2016: The State of Goa in the year 2016 released a notification constituting the court of District Judge- I at Panaji and Margao as Commercial Courts for the district of North and South Goa respectively and appointed judges of the said courts as Judges of the said Commercial Courts, respectively.
Notification dated 05/05/2020: In 2020, the State Government released another notification designating the Courts of District Judge – I at Panaji and Mapusa to be Commercial Appellate Courts for North Goa district while designating the Courts of District Judge – I and II at Margao to be Commercial Appellate Courts in the South Goa district. The notification further empowered these Courts to exercise jurisdiction and powers conferred on Commercial Appellate Courts.
Further, via the same notification, the State Government constituted the Courts of Senior Civil Judge ‘A’ Court at Panaji, Mapusa, Bicholim and Ponda to be Commercial Courts for the North Goa district, while the Courts of Senior Civil Judge at Margao, 1st Additional Senior Civil Judge at Margao, Senior Civil Judge at Vasco da Gama and Ad Hoc Senior Civil Judge at Quepem to be Commercial Courts for the South Goa district. The said Judges of the said Courts were appointed as Judges of the said Commercial Courts, respectively.
The Commercial Courts Act interpreted by High Court of Bombay at Goa via Order dated 20/07/2020:
In this case, the High Court has interpreted the relevant provisions of the Commercial Courts Act wherein it has been held that the establishment of Commercial Courts under this Act depends on whether the High Court in a State has “ordinary original civil jurisdiction”. The Court also placed emphasis on the 2018 amendment to the Act though the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018.
Paragraph 50 of the Order reads:
“Section 2 (1) (b) defines “Commercial Court” to mean the Commercial Court constituted under sub-section (1) of Section 3. Let us see Section 3, which deals with the constitution of Commercial Courts. As per subsection (1), the “State Government may, after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary.” Earlier, there were no Commercial Courts at the district level if the High Court had “ordinary original civil jurisdiction” as, for example, in Bombay. Now, in the districts under the High Courts with original jurisdiction, too, the 2018 Amendment permits the State Government to constitute Commercial Courts at the District Judge level, too. Here, in Goa, the District Courts were the Commercial Courts until the Amendment was enforced, for the High Court at Goa has no original jurisdiction.”
Finally, the High Court made few key conclusions pertaining to the hierarchy of Commercial Courts in the State of Goa.
1. The notification dated 05/05/2020 issued by the Goa Government was held to be in tune with the legislative mandate under relevant sections of the Commercial Courts Act, 2015.
2. In Goa, District Courts were held to be Appellate Commercial Courts, while the Senior Civil Judges’ Courts were held to be Commercial Courts. In conclusion, one can say that there are certain positive changes that are implemented with Commercial Courts by way of the 2018 Amendment Act.
However, certain aspects such as jurisdiction of commercial divisions alongside Commercial Courts could be a possible grey area