Commercial Court

What is a Commercial Court?

A commercial court is defined with reference to the subject-matter of the disputes it tries, namely, commercial disputes (relating to contracts, agreements, property transactions, etc.)

The government introduced the Commercial Courts Act in 2015 with the aim of decreasing the backlog of commercial disputes that were previously handled as regular cases.

Official Definition of Commercial Court

Term as defined in Legislation

Section 2(1)(b) of the Commercial Courts Act, 2015 (“Act”) defines “Commercial Court” as the Commercial Court constituted under sub-section (1) of section 3 of the Act.

As per this section, the government can establish district-level commercial courts vide notification, post consultation with the High Court. District-level commercial courts have jurisdiction over commercial disputes with a distinct value ranging from not less than 3 lakhs to not more than 1 crore.

Commercial disputes are defined in section 2(c), and include the following:

1. ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
2. export or import of merchandise or services;
3. issues relating to admiralty and maritime law;
4. transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
5. carriage of goods;
6. construction and infrastructure contracts, including tenders;
7. agreements relating to immovable property used exclusively in trade or commerce;
8. franchising agreements;
9. distribution and licensing agreements;
10. management and consultancy agreements;
11. joint venture agreements;
12. shareholders agreements;
13. subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
14. mercantile agency and mercantile usage;
15. partnership agreements;
16. technology development agreements;
17. intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
18. agreements for sale of goods or provision of services;
19. exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
20. insurance and re-insurance;
21. contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.The Act also facilitates Case Management Hearing (“CMH”), wherein the judge will frame the issues, determine the order in which the issues will be taken up, set timelines for the completion of various stages of litigation, encourage parties to consider alternative dispute resolution mechanisms, allocate time for oral arguments, and decide dates for hearings and trial. It aims to streamline the litigation process and must be conducted within four weeks from the date of filing the affidavit of admission or denial of documents by all parties.

Term as defined in Official Government Reports

In 2003, the Law Commission of India's 188th Report suo motu took up the subject of setting up commercial courts and proposed the establishment of expedited courts in High Courts. Due to concerns, particularly on the scope and definition of a 'commercial dispute', the Bill was referred back for a re-evaluation.

In 2015, the 253rd Law Commission Report recommended the creation of a system of commercial courts, the establishment of Commercial Courts, Commercial Divisions, and Commercial Appellate Divisions within the High Courts. Consequently, the Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Act, 2015 came into force. The 2018 amendment to the Act decreased the monetary limits for jurisdiction over commercial disputes.

Types of Commercial Court

District-level Commercial Courts

Their jurisdiction is laid down in Section 6 of the Act. Commercial courts have jurisdiction over all instances and petitions related to commercial disputes over and above the specified value that arise across the entire geographical expanse of the state where their territorial jurisdiction has been established. These disputes are resolved in accordance with the requirements of Sections 16 to 20 of the Code of Civil Procedure 1908, which are applicable to business-related conflicts.

Commercial Division of High Courts

Their jurisdiction is defined under section 7 of The Commercial Courts Act, 2015.

As per Section 3(3) of the Act, the State governments with the concurrence of the Chief Justice of the High Court, may appoint one or more persons having experience in commercial disputes to be the judges of Commercial court.

Appearance in official databases

Available at https://doj.gov.in/the-national-judicial-data-grid-njdg/

The National Judicial Data Grid publishes data relating to the pendency of suits depending on the type of cases, and includes commercial suits.

The Department of Justice, the nodal department for the Enforcing Contracts Indicator, regularly publishes reports and statistics pertaining to commercial courts and their functioning across the country. Further, it publishes data relating to Dedicated Commercial Courts with pecuniary jurisdiction up to Rs 3 lakh, which has improved the business climate in India thereby reducing the time taken for trial and judgment in these courts.

The Department of Legal Affairs also publishes data pertaining to commercial courts, which includes a number of cases instituted, disposed of and pending at each commercial court. However, the last update was in 2023.

Available at:  https://legalaffairs.gov.in/commercial-court-data-page?page=1

The Commercial Courts (Statistical Data) Rules, 2018 along with the Commercial Courts (Statistical Data) Amendment Rules, 2020 provides the formats for collection and disclosure of data by Commercial Courts, Commercial Appellate Courts, Commercial Divisions and Commercial Appellate Divisions of High Court.

Accordingly, High Courts shall maintain the following data:

1. list of cases e-filed during the month;
2. list of cases in which e-Payment of Court fees was made during the month;
3. list of cases in which Electronic Service of Process has taken place during the month;
4. list of total number of cases randomly allocated during the month;
5. list of cases in which case management hearing was held during the month;
6. contested commercial cases disposed during the month; and
7. summary of commercial cases during the month.

The Commercial Courts (Statistical Data) Amendment Rules, 2020, prescribes Form 7 for the High Courts to maintain the summary of commercial cases each month. This requires the courts of all districts to provide a summary of the total number of cases pending on the 1st day of the month, the total number of cases instituted during the month, the total number of cases disposed of during the month, and the total number of cases pending at the end of the month. Most high courts provide this data on their websites. However, not all courts follow the requirements under this Rule. This lack of concrete data is especially evident in commercial courts below the district judge level.

Available at: https://delhihighcourt.nic.in/reports/commercial_court_statistic

Statistical information regarding commercial cases pending in the commercial courts for June 2023 in NCT of Delhi [available at: https://delhihighcourt.nic.in/uploads/CommercialCourt/145031183864b67cb368304.pdf]

Statistical information regarding commercial cases pending in the commercial courts for June 2023 in Karnataka [available at: https://karnatakajudiciary.kar.nic.in/commercialCourts/ccourts/stat_pdfs/June-2023.pdf]

Statistical information regarding commercial cases pending in the commercial courts for June 2023 in NCT of Delhi wherein data is provided for all categories of cases [available at: https://delhihighcourt.nic.in/uploads/CommercialCourt/161922613564ac0c3c36859.pdf]

Research that engages with Commercial Court

Commercial Courts Act, 2015: An Empirical Impact Evaluation, by Vidhi Centre for Legal Policy

An empirical impact evaluation of the Commercial Courts Act, 2015, undertaken by Vidhi Centre for Legal Policy, found that the Act failed to solve systemic issues that exist in the Indian litigation scenario such as overburden on courts, lack of courts in regions of high case density and procedural delays in disposal of cases.

Anindita Pattanayak: How Effective Are Commercial Courts?

Anindita Pattanayak of Daksh India has published an article regarding the effectiveness of commercial courts. Commercial Courts, envisaged as an avenue for complex commercial disputes nevertheless have regular civil judges making them no different from ordinary courts. The Act does not lay any specific criteria for judges in Commercial Courts except requiring judges to be “persons having experience in dealing with commercial disputes”. This, with frequent transfer, and training programs failing short of a proactive approach, delineate the current functioning of commercial courts. Pattanayak ends with the need of the hour.

Commercial Courts in India: Three Puzzles for Legal System Reform,

The article reviews the effectiveness of commercial courts in India and seeks to find out whether they have lived up to the purposes for which they have been constituted by evaluating their performance. The paper reviews performance of commercial courts via quantitative and qualitative methodology. It re-evaluates the court's utility against the standard they were expected to meet. The observation being that the objective to speedy justice was not only not met, but resolution of commercial matters has slowed down.

The Emergence of International Commercial Courts in India: A Narrative for Ease of Doing Business

The article critically evaluates the effectiveness of commercial courts vis-à-vis their impact on India’s ease of doing business and resolution of cross border disputes. It notes the focus on international commerce disputes and the following concerns relating to insufficiencies of the legal systems. The traction in commercial court is analysed and critiqued on functioning of commercial dispute resolution in cross-border cases, and the attempt to address the system via specialised courts.