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I. The Ban List: CPC, 1908 provision not applicable to Commercial Suits filed under the Commercial Courts Act, 2015

The Commercial Courts Act, 2015 (“Act of 2015”) is an improvement over the Code of Civil Procedure, 1908 (“Act of 1908”) in respect of commercial disputes. This Act is a handmaid to the Act of 1908 to provide speedy disposal of commercial suits. Various amendments have been made to the Act of 1908 in furtherance of the objectives of the Commercial Courts Act.

Commercial suits are those where cause of action is arising out of a commercial dispute 1 or a dispute arising in the course of commercial or business transactions involving agreement for providing products or services for consideration.

The definition of Commercial Disputes in respect of goods and services under Section 2 (1) (c) of Act of 2015 include disputes arising due to enforcement and interpretation of transactions/ documents between merchants, bankers, financiers and traders; export and import; admiralty and maritime; aircraft related; carriage of goods; construction, infrastructure and tenders; commercial immovable property; franchising; distribution and licensing; management and consultancy; joint venture; shareholding; subscription and investment in respect of services including outsourcing and financial; mercantile agency & usage; partnership; technology; intellectual property rights; sale of goods; exploitation of oil and gas reserves or other natural resources; insurance and re-insurance; agency contracts and as may be notified later.

These disputes are very clearly the disputes which would arise when the Indian Contract Act, 1872 provisions contained in Section 2 (e) : Agreement – Every promise and every set of promises, forming the consideration for each other, is an agreement; and Section 2 (h) : Contract – An agreement enforceable by law is a contract; are breached in the course of commercial transactions.

Commercial Disputes are opposed to civil or non-commercial disputes filed under the un- amended provision of Act of 1908. The suits pertaining to commercial disputes are filed under the Act of 2015. This Act also provides the specified value 2 of a Commercial Suit to be minimum Rs.3 Lakhs.

The introduction to the Act of 2015 specifically bars: (i) Revision application or petition against an interim order, (ii) Appeal or revision from an order of a Commercial Court finding that it has jurisdiction to hear a commercial dispute.

1 Commercial Dispute : Section 2 (1) (c) of the Commercial Courts Act, 2015

2 Specified Value : Section 2 (1) (i) of the Commercial Courts Act, 2015

Bar against filing revision application/ petition against interim order – Section 8 of the Act of 2015: No revision under section 115 of the Act of 1908 shall be filed against any interim order including an order on the issue of jurisdiction. Such issues shall be raised finally in appeal against the decree of the Commercial Court.

Bar against appeals from orders not specifically provided under Order XLIII of the Act of 1908 – Section 13 of the Act of 2015: Only such appeals can be filed against the order of a Commercial Court which are enlisted under Order XLIII– Appeals from Orders of the Act of 1908 under its Rules 1 (a) – (w). If the Order is not covered under any of the categories as per Order XLIII, Rule 1, then the same cannot be challenged in Appeal.

Civil Miscellaneous Applications under Article 227 of the Constitution of India under the supervisory jurisdiction of the High Courts may be filed against interim orders of the Commercial Courts where no remedy of appeal against order under Order XLIII – First Appeal against Order or Revision under Section 115 of the Act of 1908 is available.

Bar on applicability of Order XI of Act of 1908 – New Order XI applicable to commercial disputes: Order XI – Discovery and Inspection of the Act of 1908 is not applicable in totality to the Commercial Suits. Instead, a new Order XI – Disclosure, discovery and Inspection of documents in Suits before the Commercial Division of a High Court or a Commercial Court has been added by special amendment to the Act of 1908 with retrospective effect from 23.10.2015 vide Act 4 of 2016, Section 16 and Schedule 4 (E).

Bar on Applicability of certain other CPC provisions: The Rule 7 of the Order XI (as applicable to Commercial Courts Act) further provides that the following provisions of Act of 1908 shall not be applicable to Commercial Suits :-

(i) Order VII, Rule 14 – Production of documents on which Plaintiff sues or relies.
(ii) Order VIII, Rule 1A – Duty of Defendant to produce documents upon which relief is claimed.
(iii) Order XIII, Rule 1 – Original documents to be produced at or before the settlement of issues.

The above provisions have been made inapplicable because pari-materia provisions have been introduced in the Order XI applicable to the Commercial Suits.

The pari-materia provisions are as follows:

Order VII, Rule 14 Order XI, Rule 1 – 6
Order VIII, Rule 1A Order XI, Rule 7 – 11
Order XIII, Rule 1 Order XI, Rule 5 – 6: Provision of filing electronic records has been introduced under Rule 6

Jurisdiction in respect of Arbitration matters under Act of 1996 – Section 10 of the Act of 2015: Section 34 applications of the Act of 1996 for setting aside of Arbitral Awards and Section 37 applications of the Act of 1996 for Appeal against Section 34 Judgments in respect of commercial disputes of specified value are also heard by Commercial Courts in exercise of their Jurisdiction created under Section 10 of the Act of 2015.

Conclusion:

The Supreme Court of India in its Judgment rendered vide Kandla Export Corporation vs. OCI Corporation [(2018) 14 SCC 715] has discussed the Statement of Objects and reasons for the Act of 2015, which includes among other objectives, the amendment of provisions of the Act of 1908 and prescribing a minimum pecuniary jurisdiction for Commercial Courts in order to improve the efficiency and reduce delays in disposal of commercial cases.

It is the need of the hour that commercial disputes be decided by Commercial Courts by following a special mechanism for their disposal. Challenge to interlocutory/ interim orders by way of Appeal and Revision is not provided as of right under the scheme of the Act of 2015.

The precision and focus sought to be introduced by the Act of 2015 is also to establish a judicial dispute resolution mechanism that is fast and not mired in procedural delays and loopholes.