Introduction:
According to the latest reports, there are over 3.5crore[1] cases pending adjudication in the country. Litigation in India is a prolonged matter due to the availability of very limited resources, mainly the availability of lawyers or judges in the adjudication of the cases. The inability of the judicial or legal system in adjudicating a matter because of circumstances like the inadequate judge strength to handle cases, the inability of most of the population in securing efficient legal services, etc, these have an adverse effect on the country’s economic standing on the global platform and thus the country suffers as a “business-friendly” nation.
The Central and the State governments have from time to time enact appropriate legislation and also amend the existing laws so that the process of litigation gets smoother, less lengthy. Thus the promulgation of the Commercial Courts Act, 2015 was enacted by the central government to achieve the above-mentioned goals.
About The Commercial Courts Act, 2015
The Commercial Courts Act was enacted after the 253rd report of the Law Commission which recommended the establishment of Commercial Courts at various levels for speedy disposal of commercial disputes.
The Act in Section 2(1) (c) defines the term “Commercial Dispute” which is an inclusive definition covering almost all the types of disputes that are involved in a commercial transaction. The definition in the act includes 22 instances of commercial disputes; it broadly includes disputes relating to transactions between merchants, bankers, financiers, traders, etc. and also includes disputes concerning shareholders agreements, mercantile documents, partnership agreements, joint venture agreements, intellectual property rights, insurance, etc
The Commercial Courts Act through Section 3 allows the State governments to consult with High courts to establish commercial courts at the High court and District court levels to hear commercial matters or adjudicate commercial disputes above a certain pecuniary value, initially the “Specified Value” (as mentioned in Section 2(1) (c)) to be a minimum of Rs 1 crore and later reduced to a minimum of Rs 3 lakh through an Ordinance promulgated in 2018. Section 3(3) of the Act mentions that 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 Judge of Commercial court. Section 7 deals with the Jurisdiction of commercial divisions of High Courts. All suits and applications relating to commercial disputes of particular values filed in the High Court having original civil jurisdiction to hear and resolved by commercial division of High courts.
Commercial Division of the High Court has jurisdiction to hear all suits and applications relating to commercial disputes, specified by an act to lie in a court (not inferior to a District court) and pending on the original side of High court.
Section 6 of the Act deals with the Jurisdiction of Commercial Courts. The Commercial Courts are established to resolve commercial disputes arising out of the entire state over which it has been vested in territorial jurisdiction. A commercial dispute should be relating to Section 17, 18, 19, 20 of The Code of Civil Procedure, 1908.
About Section 15 of the Commercial Courts Act, 2015 and Order XI of the Civil Procedure Code, 1908
Section 15 of the Commercial Courts Act deals with the transfer of pending cases. Section 15(1) clearly states that all suits and applications, including applications under the Arbitration and Conciliation Act, 1996, relating to a commercial dispute of a Specified Value which is pending in a High Court where a Commercial Division has been established, it directs all such pending suits and applications to be transferred to the Commercial Division of the High Court.
Subsection 2 of Section 15 states that any case or application which is pending before any civil court in any area or district and in respect of which Commercial Court has been established, such suit or application must be transferred to the Commercial Court.
However, the proviso to Section 15(2) provides that where a final judgement has been reserved before the establishment of either Commercial Division or Commercial Court, no suit or application shall be transferred.
In the case of Dr. Dilip Choudhury v. Pratishruti Projects Ltd. And Ors.[2] the issue that arose before the Calcutta High Court was whether an appeal lies against an order of grant of extension of time to file written statement if the matter falls under the purview of the Commercial Courts, 2015?
The Court held that the disputes which were included in the current suit are recognized to be falling under the purview of Section 2 (1) (c) (xi) which mentions disputes arising out of joint venture agreements. The Court went further to hold that since the suit was filed before coming into effect of the Commercial Courts Act, 2015, Section 15 of the Act which prescribes for ‘Transfer of pending cases’ would be attracted in the instant case.
Section 15(1) of the Act provides for the transfer of all pending suits and applications, including application under the Arbitration and Conciliation Act 1996, relating to a commercial dispute of a “Specified Value” to the Commercial Division. Such transfer can take place in the direction of the Court or the Registry of the Court without the intervention of the parties.
However, in this matter, the suit was never transferred to the Commercial Division under Section 15(1) of the Act and neither did any of the parties approach the Commercial Appellate Division of the High Court to get the matter transferred from the regular Court to the Commercial Division for trial. The Court, therefore, held that since the suit involved in the matter comprises of a commercial dispute, it ought to be transferred to the Commercial Division for trial. The Court further went on to repeat that after the matter has been transferred under Section 15(1) of the said Act to the Commercial Court, it is incumbent upon the Commercial Division to hold case management hearing in respect of the transferred suit to prescribe new timeline or issue further directions, as may be necessary for speedy and effective disposal of such suit or application.
The Court thus, held that since the procedure as mentioned above, has not been followed in the existing suit, the transferee Court in its discretion has the power to prescribe a new time period within which a written statement shall be filed and thus, granted extension of time to the defendant no.2 to file its written statement on judicially recognized principles.
It further emphasized the proviso to Section 15(4) of the said Act, which lays down that sub-rule (1) of Order V of the Code of Civil Procedure, 1908 shall not apply to a transferred suit. The Court further discussed the overriding effect of Section 15(4) of the Act on Section 16, which provides for following the provisions of the Code of Civil Procedure, 1908, as amended by the Act of 2015 for the trial of a commercial dispute of a specified value.
In HPL (India) Limited & Ors v. Qrg Enterprises and Another[3], it is also well settled that the right of appeal is a creation of the statute. In other words, the provision for an appeal has to be found in the statute itself. The said Act is a special Act pertaining to commercial disputes of a specified value as defined in Section 2 (1) of the said Act. Therefore, the provision for an appeal would have to be located in the said Act itself. This is so particularly because Chapter IV of the said Act specifically deals with “Appeals”. Section 21 of the said Act stipulates that save as otherwise provided, the provisions of the said Act would affect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument affecting by virtue of any law for the time being in force other than the said Act. This means that where the provisions for appeals are provided in the said Act, if there is any other provision for appeal in any other law for the time being in force which is inconsistent with what is provided in the said Act, the provisions for appeals in the said Act would have overriding effect.
Order XI of the CPC deals with the discovery and inspection of documents. The Commercial Courts Act, 2015 calls for a presiding judge of the Commercial Court to engage in the discovery of truth. Order XI Rule 5 of the Civil Procedure Code, 1908 inter alia empowers the court to order (even suo motu) production by any party or person of documents in their possession or power relating to any matter in question.
Conclusion
Section 15 of the Act specifically deals with the Transfer of Pending suits and Order XI of the Civil Procedure Code with the discovery and inspection of the documents. The Commercial Courts Act. The Commercial Courts Act, as per Statement of Objects and Reasons, was enacted to provide for speedy disposal of high-value commercial disputes involving complex facts and question of law and to fulfil the need for early resolution of such disputes to create a positive image to the investor world about the independent and responsive Indian legal system.
References:
[1] https://thewire.in/law/pending-court-cases
[2] (G.A No. 17 of 2019 with C.S. No. 23 of 2015)
[3] 2017 SCC Online Del 6955
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