February 10, 2015
Recognising the optimism in Indian markets, driven by a government that is encouraging growth in trade and commerce, the Law Commission of India (LCI) in its recent 253rd Report has recommended reforms that can support this economic growth from a legal perspective. These are much-needed reforms in a growing economy where commercial disputes are often complex and of high value. The LCI has recommended the establishment of a commercial division in the High Courts to ensure speedy disposal of high-value commercial suits. It has proposed a bill, titled The Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015, and substantive procedural changes in the form of amendments to the Civil Procedure Code, 1908. The bill will define ‘commercial disputes’ so as to include ordinary transactions of merchants, bankers, financiers, joint ventures, partnerships, insurance companies and so on. These courts will have jurisdiction to hear only those disputes valued at Rs.1 crore or more. A commercial appellate division will hear appeals on the orders and decrees of the commercial courts. The Chief Justice will nominate judges with expertise and experience in commercial matters to the commercial and appellate courts. All pending commercial disputes beyond the specified value will be transferred to the commercial division. These recommendations are aimed to ensure disposal of cases expeditiously, fairly, and at reasonable cost.
The LCI had, in its 188th Report, recommended the setting up of specialised commercial courts, but the Rajya Sabha did not pass it then. The proposed bill is the consequence of a re-examination of the previous version tabled in Parliament in 2009. The LCI considers the suggested measures to be a pilot project that would lead to more expansive structural reforms. In the five High Courts with original jurisdiction, there are 32,656 civil suits pending, marking a 6.27 per cent increase in pendency over the previous year. One of the reasons for the large pendency is the shortage of judges in the original side of the High Courts. For instance, in the Madras High Court only four judges were allocated for the 41,702 cases pending on the original side in 2013. So the judiciary has to first tackle the root problem of high pendency rates and the mismatch between pending suits and the number of judges hearing it. Launching grand programmes or pursuing foreign investment without making necessary internal reforms in an already slow and overburdened judicial system will render these policies ineffective in the long run. The LCI’s recommendations are undoubtedly timely and need to be taken up without undue delay.
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