Surely and quietly, our law makers have taken a giant stride in introducing the Commercial Division of High Courts Bill 2009, to set up special fast track Courts for commercial disputes. Though the Law Commission had recommended this as early as 2003, it is believed that the current initiative was motivated by the 2007 World Bank Report, grading India’s dispute resolution, judicial and enforcement systems as near rock bottom.
The definition of “commercial disputes” has tried to capture a wide range, arising out of ordinary transactions of merchants, bankers and traders, including those relating to enforcement and interpretation of mercantile documents, commercial contracts such as franchising, distribution, agency and licencing agreements. It also brings within its ambit cases involving transportation of goods, exports and imports, intellectual property rights, information technology development.
The definition clause, in the explanations thereto, provide an unexpected dimension by including disputes involving immovable property being traded in, or put to commercial use. For real estate barons this may not be good news, but the lessee corporation is bound to derive comfort. The pecuniary jurisdiction of the Division defined as “specified value” is pegged at Rupees five crore and above.
The definition of “court” in Section 2 (1) (e) in the Arbitration and Conciliation Act, 1996 has been modified to provide for the High Courts in exercise of original jurisdiction wherever the specified value criteria is met. Applications under Sections 34 and 36, appeals, interim applications are also to be treated as commercial disputes. This is also the opportunity to provide legislative clarity on whether the current judicial approach to foreign awards based on the Supreme Court decisions in the Bhatia International and Venture Global cases in applying Section 36 to international commercial arbitrations will continue.
The Statement of Objects and Reasons acknowledge that the reforms were warranted in the context of the changing climate with increasing foreign investment and privatisation, to provide an effective mechanism for speedy resolution of commercial disputes of high threshold value, in order that these economic benefits are not frittered away.
The Bill envisages a fast track procedure, virtually bypassing the CPC. The Plaintiff at the time of instituting his suit has to upfront file all documents on which he sues or relies, affidavits containing all evidence, statements in examination-in-chief, brief issues that are likely to arise for determination, and list of interrogatories / application for discovery and production, as applicable.
Defendants are required to file their defence or counter claim in writing to which the Plaintiff has the opportunity to provide a rejoinder. Time limits for making oral submissions if any are fixed in advance in a case management conference, and written submissions are mandatory. Ideally the Courts should be specifically vested with more power and flexibility in case management, including facilitation of settlements. The current CPC provisions have not been very effective in this regard. Judgments have to be delivered within thirty days of conclusion of hearing, and appeal lies only to the Supreme Court.
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Presently, other than the Presidency towns and in Delhi and Jammu & Kashmir, High Courts do not have jurisdiction to try and entertain civil cases. These are tried in the district courts, irrespective of pecuniary value, unless specifically excluded and dealt with by dedicated tribunals. Over the years, both civil and the High Courts of original jurisdiction have faced denudation of their portfolio with the creation of alternate forums like Consumer Forums, DRT, Cyber Courts, to name a few.
Yet the backlogs and delays persist. Will the addition of a new Division not make this worse? These questions are bound to arise. The Bill has also been criticised as being elitist and in discriminating between the poor litigants who will still undergo multiple rounds in appeals tier as opposed to large corporations. Both these charges have to be countered. Hopefully, experiences in other jurisdictions have shown that providing designated courts and alternate dispute resolution mechanisms for high value commercial claims, have facilitated the core courts in meting out justice to the underprivileged. Let’s hope this reform works in that direction.
(Kumkum Sen is a partner at Rajinder Narain & Co., and can be reached at kumkumsen@rnclegal.com )