Since from the inception of Liberalization Privatization and Globalization (LPG) in 1991, India has entered in to the world economy and has significantly involved with the international trade. Thereby the Indian economy is exposed to the world. This is the major step taken by India in its economic growth.
This being the scenario, the transaction entered were of commercial in nature and hence, the different spear of law that crept into this concept that is “commercial law”. Thus there was need for resolving the commercial dispute which arose from the commercial transaction and hence this paved the way for emergence of “commercial Act 2015” herein after called as “Act” for the sake of brevity.
The main purpose of the Act was to ensure speedy disposal of high stake commercial matters. The Act came into force on 23.10.2015. Wherein the Act had limited the specific value of the suit to not less than Rupees One crore and the commercial courts were established at all the District levels. However, there were no commercial courts established in the District level where the High court had original civil jurisdiction such as Delhi, Mumbai, Madrass, Kolkatta and Himachal Pradesh.
However, many amendments were bought to this Act and one of the important ones are in respect to specific value and the jurisdiction which came into effect from 03.05.2018. Thereby, the specific value of the suit was reduced to not less than Rupees Three lakhs as under section 2 (i) and proviso was added to section 3 (1) which states that the commercial courts at District level shall be established even where the High court had its original civil jurisdiction, having pecuniary jurisdiction not less than Rupees three lakhs and not exceeding the pecuniary limit of the said District courts.
From the above discussion, it is clear as to what is commercial court i.e. the courts which are assigned to deal with commercial dispute. It is necessary to understand the concept of Commercial Dispute as mentioned under Section 2(c) of the Act. The commercial dispute means:
(i) Ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) Export or import of merchandise or services;
(iii) Issues relating to admiralty and maritime law;
(iv) Transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) Carriage of goods;
(vi) Construction and infrastructure contracts, including tenders;
(vii) Agreements relating to immovable property used exclusively in trade or commerce;
(viii) Franchising agreements;
(ix) Distribution and licensing agreements;
(x) Management and consultancy agreements;
(xi) Joint venture agreements;
(xii) Shareholders agreements;
(xiii) Subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) Mercantile agency and mercantile usage;
(xv) Partnership agreements;
(xvi) Technology development agreements;
(xvii) Intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
(xviii) Agreements for sale of goods or provision of services;
(xix) Exploitation of oil and gas reserves or other natural resource;
(xx) Insurance and re-insurance;
(xxi) Contracts of agency relating to any of the above; and
(xxii) Such other commercial disputes as may be notified by the Central Government. Explanation – A commercial dispute shall not cease to be a commercial dispute merely because:
(a) it also involves action for recovery of immovable property or for realization of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions.
Thus the commercial court take up the matters which are commercial in nature falling under the above mentioned 22 grounds and having specific value of not less than Three Lakhs Rupees. In the Supreme Court case, it was held that when the suit does not fall under commercial dispute under section 2(1)(c), the case was transferred to the appropriate court having jurisdiction to try the case .
So far as the procedure is concern, the amended Code of Civil Procedure (CPC) is applicable.
The Procedure as per the amended CPC are:
If the matter is not settled in Pre institution mediation or when there is urgency contemplated in the suit, then the matter will come before the commercial court.
Under Order 11 Rule 2 (2) the application for leave of the court to deliver interrogatories (interrogatories in respect to delivery of particulars, or to make admissions of to produce documents relating to the matters in question or any of them) are made, the court shall decide within 7 days of filing of such application.
Interrogatories shall be answered within 10 days by way of affidavit as mentioned in the Form No. 3 in Appendix C or such other time as the court may allow a pplication to set aside the interrogatories can be made within 7 days after the service of the interrogatories as mentioned Under Order 11 Rule 2 (7).
Under Order 11 Rule 2 (11) Where any person who is supposed to answer the interrogatories omits to answer or answers insufficiently, the party interrogating may apply to the court for order directing him to answer or answer further and the court may pass such order, either affidavit or by voce examination.
Under Order 11 Rule 3(2) – Any party to the proceeding can seek the direction of the court at any stage for inspection of documents by the other party wherein the inspection is refused by such party or documents have not been produced even after notice to produce is issued.
Order in such application as mentioned above shall be disposed off within 30 days of filing such application including filing of replies and rejoinder.
Under Order 11 Rule 3(4) – If the application Under Order 11 Rule 3(2) is allowed, the inspection and copies shall be furnished to the party seeking it within 5 days of such order under Order 11 Rule 3(3).
No party shall be allowed to rely on any documents which are not inspected or disclosed except by the leave of the court and court may impose cost on such party who refused to give for inspection or failed to disclose Under Order 11 Rule 3(6).
Order 11 Rule 4(2) states the statement of admission and denial shall contain:
a) Correctness of contents of a document,
b) Existence of a document,
c) Execution of a document,
d) Issuance or receipt of a document,
e) Custody of a document.
The statement of admission and denial shall be in support of affidavit – Under Order 11 Rule 4(5).
If any party refused to admit the document as per Order 11 Rule 4(2), the court shall impose cost on such party . The court shall pass order with respect to admitted documents including wavier of further proof or rejection of any documents – Order 11 Rule 4(7).
Order 11 Rule 5(4)- The court may draw adverse inference against a party refusing to produce such document and where sufficient reasons are not given, the court may order cost.
The concept of case management hearing has been for the first time introduced in India. However this concept was earlier followed in countries such as United States of America, Australia and other countries. Wherein the first case management hearing shall be held by court after 4 weeks from the date of filing affidavit of admission or denial of documents – under Order 15 A(1).
After the hearing, if the court finds out there are issues of fact and law that needs to be tried, then the court may pass an order under Order 15 A Rule 2, in which the court shall frame issues, examination of list of witnesses, fix the date for recording of evidence, fix date for filing written arguments , fix the date for hearing oral arguments and setting time limit for parties and advocate to address oral arguments.
Order 15 A Rule 3 – the arguments shall be made within 6 months from the date of first case management hearing.
Order 15 A Rule 4 – the evidence shall be carried on day to day basis until cross examination of all the witnesses are completed.
Order 15 A Rule 5 – if it is necessary the court may hold case management hearing at any time during the trial to issue appropriate orders and ensure speedy disposal of suit.
Order 15 A Rule 6 – this provision provides list of powers of the court in a case management hearing.
Order 15 A Rule 7 – the court shall not adjourn the case management hearing for the sole reason that the advocate is absent. However the adjournment can be given upon an application and payment of such cost as court deems fit.
Order 15 A Rule 7(2) – if the court is satisfied that there is a justified reason for absence of the advocate, it may adjourn the hearing to another date on such terms and conditions.
Order 15 A Rule 8 – if the order passed in case management hearing has not complied, the court shall impose cost or pass such other order.
Chapter 4 of the Act : Appeals from commercial court below the level of District judge or at the level of District judge exercising original civil jurisdiction, commercial division of high court, shall lie within 60 days from the date of judgment or order before the Commercial Appellate court or Commercial Appellate Division of High Court respectively. The appeal shall include even the appeal under section 37 of Arbitration and Conciliation Act, 1996 .
The Commercial Appellate court and Commercial Appellate Division shall dispose such matter within 6 months from the date of filing such appeal .
This concept was in practice in countries like, United States of America, United Kingdom, Canada.
Order 13 A: wherein the order is passed without recording oral evidence. That is to say the claim is decided in the absence of the oral evidence. However, the application for summary judgment cannot be made when the suit itself is filed as a summary suit under Order 37.
Application for summary judgment shall be made at any time after the summons is served to the Defendant. However the application cannot be made after the issues are framed by the court.
The court can grant summary judgment on the following grounds as set forth in Order 13 A Rule 3 which is as follows:
a) The Plaintiff has no real prospect of succeeding on the claim or the Defendant has no real prospect of successfully defending the claim , as the case may be.
However in case where the Defendant have not entered appearance or filed written statement, the court have passed summary judgment instead of leading Plaintiff evidence exparte . Similarly in the case of exparte, where the Plaintiff’s documents were examined to come to conclusion on whether there is any real prospect of success of Defendant . In another cases relating to refund of money wrongfully paid or, conversely, non-payment of a contractually agreed amount, summary judgment has been awarded where the said receipt or non-payment has been admitted by the Defendant or is clearly evidenced from documents . Yet in another case, Campus Eai India Pvt. Ltd. v. Neeraj Tiwari , wherein the alleged plagiarism of software where the case primarily depended on the report of a third-party expert comparing the codes for the two software, court allowed the Defendant’s application for summary judgment when the expert found no evidence of plagiarism.
There are few instances where the court has not allowed the application for summary judgment. One of such case, Rockwool International A/S v. Thermocare Rockwool (India) Pvt. Ltd . , where triable issues were found in which a mark alleged to have been infringed was a valid registered trademark or was generic in nature. In this case it was also the opinion of the court that the court can take suo moto in passing summary judgment, only if the summons is served to Defendant and before framing of issues.
b) There is no other compelling reason why the claim should not be disposed of before recording of oral evidence.
The procedure to carry out the summary judgment shall be followed as mentioned in the Order 13 A Rule 4 and 5. The order shall be passed under Order 13 A Rule 6 upon an application as mentioned in Order 13 A Rule 1 and the reasons to be recorded for the same. The court can pass such orders as follows:
a) Judgment on claim;
b) Conditional order in accordance with Rule 7;
c) Dismissing the application;
d) Dismissing part of the claim and a judgment on part of the claim that is not dismissed;
e) Striking out the Pleadings (whether in whole or in part); or
f) Further directions to proceed for case management under Order 15 A .
Section 15: wherein all suit and applications from commercial division of High Court or from any civil court in any district, including application under Arbitration and Conciliation Act, relating to commercial dispute of specified value shall be transferred to commercial court. Except the suit or application where the final judgment has been reserved by the court prior to the constitution of commercial division or the commercial court cannot be transferred to commercial court.
In such transferred cases, the commercial court shall apply those procedures that were not complete at the time of transfer . However such courts may hold case management hearings in respect of such transferred suit or application in order to prescribe new timelines or issue directions as necessary for speedy disposal . Provided, the proviso to order 5 rule 1 (1) of Amended CPC does not apply to such transferred suit or application and the court at its discretion may prescribe new time period within which the written statement shall be filed .
In case where the suit or application is not transferred as it is prescribed above, the commercial Appellate Division of High court may upon the application of the parties withdraw such suit or application from the court below and transfer it for trial or disposal to commercial division or commercial court having territorial jurisdiction and such order of transfer is final and binding.
The Act is significant in bringing organized structure in disposal of the suit. I think this can be taken as basis for bringing the systematic method to try and dispose of the suit in the regular course of civil or criminal matters. Thereby the efficacy of legal system will boost and bring in organized method in the legal system.
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