High value commercial cases may no longer take an eternity to get resolved. In a first such step in the country, the Delhi High Court recently dedicated four benches as “commercial courts” to streamline the civil justice system and also to ensure speedy disposal of commercial cases. “This will lead to a reduction in the backlog of such cases,” says Delhi High Court registrar-general Vinod Goel.

Currently, about 20,000 commercial cases are pending in the Delhi High Court.

The setting up of commercial courts in Delhi is in line with the Law Commission of India’s 253rd report titled “The Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015”.

The report recommends the establishment of commercial courts and commercial divisions and commercial appellate divisions in the high courts to ensure the swift disposal of high-value commercial suits. According to the Law Commission’s report, 34,32,493 civil cases, including commercial ones, were pending across the 24 high courts in India as on March 31, 2014. Of them, 2,30,317 cases were pending in Calcutta High Court alone.

So how will these commercial courts be different from regular courts? Especially since some courts already have specific benches dealing with matters related to company, arbitration and taxation matters?

“Though high courts have separate benches dealing with monetary matters, not all of them are adequately equipped to adjudicate cases involving mercantile documents, joint venture, partnership agreements, intellectual property rights, insurance and other such areas. Hence, the report proposes to include several sectors in the ambit of the disputes that the commercial courts could adjudicate upon,” says Adish C. Aggarwala, senior advocate and chairman of the All India Bar Association.

Moreover, the Centre can appoint special judges with expertise in commercial matters in these courts. “Currently, most judges dealing with specific aspects of commercial disputes also deal with other matters. Most of the time, because of changes in the roster of judges or the lengthy process of dispute resolution, the same judge might not be presiding over a particular case from start to finish. This leads to confusion and delay and sometimes lawyers have to argue the same point more than once. Also, these judges may know about a certain commercial matter such as tax or arbitration, and not about some other. Commercial courts with judges who are equipped to deal with the entire range of cases within their ambit would remove these kinds of problems,” notes Keerthi Kiran Kota, advocate, Supreme Court.

But Aggarwala points out that the concept is not new in India. The courts of commercial civil judges have been functioning in Delhi’s district courts since the 1990s, with one civil judge in each district handling low-value commercial suits,” he says.

Calcutta High Court too has exclusive benches dealing with commercial cases, says a court official. “These benches have been functioning for several years and they have been dealing with suits involving high stakes,” the official informs. Most courts in Mumbai and Chennai also have specific benches dealing with matters related to company, arbitration, taxation and so on.

So if a similar function was already being performed at some courts in the country — without being called “commercial courts,” of course — why did the Law Commission recommend the setting up of commercial courts?

Experts say the main reason for the constitution of commercial courts is to allay the fears of foreign investors that the legal process in India is too lengthy. In its “Ease of Doing Business Report” 2014, the World Bank had ranked India 142nd out of 189 countries.

“Of late, the government has been inviting multinational companies to set up operations in India. But there is a lot of apprehension with regard to red-tapism and delay in adjudicating disputes. So, dedicated commercial courts will help to improve the image of India’s judicial system,” points out Kota. Commercial courts exist in the UK, the US, Singapore, Ireland, France, Kenya and in other countries as well. 

Lawyers say though the recommendation for the establishment of commercial courts is a welcome step, there is confusion with regard to their jurisdiction and procedural rules. For example, though the proposal is to establish these courts in high courts which have ordinary original civil jurisdiction (the power to hear a case for the first time as opposed to appellate jurisdiction) only five high courts — at Calcutta, Delhi, Mumbai, Chennai and Himachal Pradesh — have that jurisdiction.

There are other problems too. The report proposes that commercial courts will deal with cases worth Rs 1 crore or more. And that those with lesser stakes will go to the commercial civil judges at the district court. But at present high courts do not have uniform pecuniary jurisdiction. While it is Rs 1 crore in Bombay and Calcutta High Courts, it is Rs 25 lakh in Madras High Court, Rs 20 lakh in Delhi High Court, and Rs 10 lakh in Himachal Pradesh High Court. “So it is pointless to specify the value of Rs 1 crore or more for commercial disputes without recommending an increase in the pecuniary jurisdiction at all high courts,” says Vikrant Pachnanda, advocate, Supreme Court.

Moreover, Kota points out that all high courts may not need commercial courts. “Only states where there is a high volume of commercial transactions need them. For example, places like Sikkim or Patna, where the volume of business transaction is not much, do not need them,” he observes.

Some fear that the bill might create elitist courts where only commercial disputes of a particular value would be adjudicated. “The costs involved in commercial dispute litigation may go up and if one party is rich and other poor, he or she may not be able to afford court fees or the money required to litigate. Over-burdening of high courts may also take place unless new judges are appointed for these courts. But if the judges are transferred from the existing pool then it would lead to more problems and the very purpose of these courts would be defeated. As such, several laws with regard to jurisdiction, procedural laws and so on, which are already in existence, have to be revamped. Unless that happens, this new system of commercial courts would not be successful,” says Kota.

One hopes that if and when the government decides to table a bill in Parliament to set up commercial courts around the country, it would do so after looking into — and addressing — all these concerns.