In 1991 the floodgates opened for investments in India. This, coupled with a rapid increase in inbound foreign trade and commerce, saw a big rise in high stake commercial disputes. As a result there was a need for an effective but speedy mechanism to resolve these disputes.
The Law Commission of India, in its 188th report on “Proposals for Constitution of Hi-Tech Fast Track Commercial Division in High Courts”, recommended the creation of a commercial division in each high court. The lower house of the Indian parliament passed the Commercial Division of High Courts Bill, 2009 in December 2009. This bill was forwarded to the upper house, which referred it to a select committee for its recommendations.
The bill provides that every high court may, with the approval of the state government, constitute a commercial division to adjudicate commercial disputes. The term commercial disputes, as defined in the bill, is broad and tries to cover virtually any dispute arising out of ordinary transactions of merchants, bankers and traders. It may include disputes relating to enforcement or interpretation of mercantile documents, export or import of merchandise, carriage of goods, franchising, distribution and licensing agreements, maintenance and consultancy agreements, mercantile agency and mercantile usage, partnership, technology development in software, hardware, networks, internet, website and intellectual property and other commercial disputes as notified by the central government.
The chief justice of the high court would nominate the judges of the commercial division. A single judge sitting in the commercial division may hold case management conferences, fix time schedules for finalization of issues, cross-examination of witnesses, filing of submissions and for recording of evidence and of cross-examination. However, a division bench of the commercial division will decide any objection as to the admissibility of evidence.
Once constituted, the commercial division would hear suits, applications, appeals and execution proceedings of not less than Rs50 million (US$1.25 million). However, this specified value may be increased by the central government, in consultation with the concerned state government. The specified value will be determined as follows: (1) For recovery of money the value will be the principal amount plus interest (if any), computed up to the date of filing the proceeding. (2) For relief relating to moveable or immoveable property or to a right therein the value will be the market value of the moveable property as on the date of filing the proceeding. (3) For relief relating to intangible right the value will be the market value of the right as estimated by the plaintiff. (4) For relief relating to a counter-claim the value will be the value of the subject matter of the commercial dispute in the counter claim as on the date that it is made.
The procedural law governing proceedings, of the commercial division of a high court, will be the Code of Civil Procedure, 1908, except where the bill states otherwise.
The bill proposes that commercial cases of high value be handled on a fast-track basis. Along with the plaint, the plaintiff would be required to file all documents that would be relied upon, affidavits in lieu of examination-in-chief, brief issues likely to arise, a list of interrogatories, as well as applications for discovery and production of documents. The plaintiff could serve summons upon the defendant by email. The defendant would then be obliged to file a written statement within 30 days of the receipt of the plaint (with other relevant documents) and/or any counter-claim. If the plaintiff so desires, a rejoinder to the written statement, may be filed with permission from the court.
The bill also provides for the appointment of a commissioner for cross-examining witnesses. A unique feature of the bill is that written submissions would have to be filed prior to the commencement of oral arguments. The time limits for the oral arguments would be fixed in case-management conferences, held at the start of the proceedings.
A judgment would be pronounced within 30 days after the completion of oral submissions. Parties will receive copies of the judgment by e-mail. The commercial division will also entertain execution proceedings of commercial disputes of the specified value. Appeals against the orders and decrees passed by the commercial division will lie with the Supreme Court. These procedures have been designed solely to ensure speedy disposal of disputes.
The bill also provides that where arbitration relates to the commercial disputes of Rs50 million or more the commercial division will consider applications under sections 34, 36 and 37 of the Arbitration and Conciliation Act, 1996. To give effect to these provisions the act must be amended.
The recommendations of the select committee are presently being awaited. Despite that, the bill is a small yet significant step towards ensuring speedy disposal of commercial cases.
This bill will not only bring a sea change to the dispute resolution scenario in commercial cases, but will also usher in hopes for a windfall in foreign investment. Both these are particularly important in India.
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