Commercial Ordinance turns into an Act

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 has come into effect from October 23, 2015. The intent of this Act is to establish a court for commercial litigation in India which will follow best practices from around the world. The projected timeline of litigation under the new Act is given below:

Stage Timelines
Issuance of summons 1 to 10 days
Completion of pleadings 30 – 120 days

(+ time taken for completion of service)

Inspection of documents 30 – 60 days

(from date of filing written statement)

Admission-denial

(though affidavit)

15 days

(from date of inspection – can be extended by court)

First Case Management Hearing 4 weeks

(from  date of filing affidavit of admission-denial)

Conclusion of trial and final arguments 6 months

(from date of first case management hearing)

Pronouncement of judgment 90 days

(from conclusion of arguments)

According to calculations, the lifespan of a commercial dispute action would hypothetically be as short as 12 months. The term ‘commercial disputes’ as defined under the Act include Intellectual Property Rights disputes. Also, disputes of a ‘specified value’, i.e. Rs. 10 million and above, must be entertained by the Commercial Courts. The specified value of the subject matter is the market value of the intangible right sought to be protected as estimated by the Plaintiff.

The Court under this Act has wide powers to impose costs in favour of a successful party and may take into account the frivolity of the case, refusal to mediate, raising frivolous counter-claim or claim for damages or otherwise wasting the time of the Court. The costs may include attorney fees and the fees and expenses of the witnesses in the case.

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 also impacts various procedural aspects, like:-

  • Written Statement: – The Defendants have to file their written statement within a maximum of 120 days from the date of receipt of summons. On expiry of this time, this right shall stand forfeited. The written statement must indicate which of the Plaintiff’s allegations are (1) Admitted (2) Denied or (3) unable to admit or deny but required to be proved by the Plaintiff. Every fact denied by the Defendant in the written statement, must state reasons for denial and the Defendants’ own version of the truth, if he intends to put forth one. If the Defendant denies jurisdiction, it must give a statement as to which court indeed has a jurisdiction. Similarly, if the Defendant denies valuation of the suit it must give its own valuation.
  • Verification:- All verification of pleadings is to be done by a Statement of Truth
  • List of Documents:- The list of documents must specify whether these are originals or copies and accompanied with a brief description of the mode of execution etc.
  • Evidence :- Courts may permit a trial without oral evidence. Evidence will be recorded on a day to day basis until cross of all witnesses has been completed (as far as possible). The court also has the power to strike out affidavit evidence if it is a mere reproduction of the pleadings.
  • Written submissions:- Parties must file written submissions 4 weeks prior to commencing oral arguments.

Thus sun has finally shown on commercial litigation in India including patents and the impact is yet to be assessed.

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Commercial ordinance, 2015

The Commercial Courts,Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015 has been introduced on 23rd October 2015. It envisages creation of commercial divisions in high courts, and commercial courts at the district level for ensuring that commercial disputes arising out of transactions between merchants, bankers, financier, traders etc. are disposed of expeditiously. Such transactions include mercantile documents, partnership agreements, intellectual property rights, insurance, etc.

The commercial divisions in high courts and commercial courts at district level will deal with all matters relating to commercial disputes involving an amount of Rs one crore or more.

All suits of a value of Rs one crore or more that are pending in the high court shall be transferred to the commercial division. Likewise, all suits pending in the district courts, with a value of Rs. one crore or more would be transferred to the commercial court.

The Bill further proposes to set up Commercial appellate divisions in all high courts to hear appeals against orders of commercial divisions of high courts; orders of commercial courts; and appeals arising from arbitration matters that are filed before the high courts.

Any appeal filed in a high court against the orders of tribunals like ‘Intellectual Property Appellate Board’ may be heard by the commercial appellate division of the high court if it relates to a commercial dispute.