What The Recent Commercial Court Amendment Is All About !!

India's economic development over the recent years has presented a positive image of India in the global scenario. It is evident from the recent Ease Of Doing Business report of World Bank where India improved 30 positions and reached from 130 to 100. This development was a result of an abrupt increase in the commercial activities and transactions. However, as the number of transactions grew, so did the number of commercial disputes.

The result - A long pendency of the commercial cases in Indian Courts. Aiming to resolve the pendency issue and facilitate faster disposal of commercial cases, the Indian government came up with the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 under which commercial courts at district levels were set up excluding territories where the respective High Courts had ordinary original civil jurisdiction.

The Act, although was a brilliant step towards facilitation of faster disposal of commercial disputes yet the ordinary disposal time of a commercial case still hung up at 1445 days. The act also did not indicate about usage of Arbitration mechanism in disposal of commercial disputes.

The recent amendment in the Commercial Courts is aimed at creating a positive image of India particularly among the foreign investors about the independent and responsive Indian legal system and addressing the issue of faster resolution of commercial disputes. The amendment contains the following features -

1. The amendment reduces the specified value of commercial dispute to INR 3 lakhs from the present value of INR 1 crore. This is said to reduce the time taken in the resolution of commercial disputes and would help in improving India's Ease of Doing Business ranking further.
2. The Government has introduced the concept of Pre-Institutional Mediation in cases where no urgent interim relief is not sought.Under this, the parties are provided with an opportunity to resolve the commercial disputes outside the ambit of the courts through the authorities constituted under the Legal Services Authorities Act, 1987.

However, this opportunity is available only to Plaintiff's who do not seek urgent interim relief under the Act. Such Plaintiff cannot institute a suit until he has exhausted the remedy of Pre-Institutional Mediation as prescribed by the Central Government. The mediation process is required to be completed within a period of 3 months from the date of application by the plaintiff, and this period can be extended further for a period of 2 months with mutual consent of the parties.

3. The amendment also provides for establishment of commercial courts in territories where High Courts have ordinary original civil jurisdiction. Thus, in territories where the 5 Hon'ble High Courts namely Delhi, Bombay, Chennai, Kolkata, Himachal Pradesh had the jurisdiction will also have commercial courts at the District Judge level and can only be done upon a notification by the State Government.