Amid complaints of delays and pendency of 16,884 commercial cases in five high courts—Delhi, Bombay, Calcutta, Madras and Himachal Pradesh, settling such “high-value” disputes may become easier and cheaper if government accepts a draft Law Commission bill to set up commercial courts in the country.
The institution of such courts has been seen as a stepping-stone to reforming the civil justice system in India and will also accelerate economic growth, increase foreign investment, and make India an attractive place to do business.
The law panel’s recommendation is in tune with prime minister Narendra Modi’s assurance to investors that settling commercial cases in India will no longer be a difficult affair. Even the government plans to amend the Arbitration and Conciliation Act to make it mandatory for an arbitrator presiding over commercial disputes to settle cases within nine months.
The Law Commission under the chairmanship of retired Justice AP Shah in its draft ‘Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015’ to the law ministry has suggested special commercial courts for the speedy disposal of “high value commercial suits,” “streamlined procedure” to be adopted for the conduct of cases in the Commercial Division and in the Commercial Court by bringing in “substantial” changes in the Code of Civil Procedure, 1908 (CPC) to improve the efficiency and reduce delays.
Legal experts have termed the recommendations to set up commercial courts as a step in the right direction, one that will not only curtail the overstretched litigation but also propel foreign investments. However, they feel the exercise will be futile if such courts are not be manned by experts who are equipped to handle commercial and related matters.
According to them, commercial disputes fall under a distinct and separate category and require different mindset, expertise and commercial principles. A robust dispute resolution mechanism is a must for the all-round development of an economy, they feel.
Says senior lawyer Kevin Gulati, it will be a “viable” idea provided members have the necessary expertise in commercial laws, corporate documentation and banking laws. “Like income tax tribunal or FEMA board, the bench should essentially comprise of one judicial and one expert member. While the judicial member will be conversant with laws, the technical member will have expertise on the subject,” he said.
The government should follow the parameters laid down by the Supreme Court in the National Tax Tribunal case for appointment of members to the specialised tribunals/commercial courts and rather avoid obliging bureaucrats with post-retirement jobs. “The government should bring in for a fixed tenure young minds who are not only familiar with latest business developments but are also well conversant with business laws. To attract them, the best brains should be given good emoluments to keep them motivated,” says Gulati.
Supporting his view, senior counsel Gopal Jain also feels that to accelerate economic growth and increase foreign investments, the government should make every efforts to bring in specialists/experts or train young minds to ensure that purpose is achieved. “Unless and until you get experts or train judiciary or sensitise them to commercial principles, the whole purpose will lose its relevance,” he adds.
According to Jain, a long-term solution for efficient alternate dispute resolution mechanism over traditional judicial system is required.” We need to learn from our mistakes. Arbitration couldn’t take off in India and we have lost it to Singapore, which has not only developed as an important regional centre for commerce in South-East Asia, but also emerged as one of the world’s leading centres for international commercial arbitration.”
According to him, “predictability, certainity and consistency are three mantras for such commercial courts in the country. We need to have a codified set of commercial laws on the lines of the Constitution of India which lays down basic principles that can be adhered to for resolving commercial disputes.”
Thus, to ensure effective alternate system these commercial courts should be manned by experts who can demonstrate a clarity of knowledge and understanding of commercial issues besides efficiency in disposal of matter, he says, adding that delays otherwise only act as an disincentive to foreign investors.
A commercial dispute has been defined in the draft legislation in the commission’s report, which includes disputes arising from agreements ranging from those of shareholders, franchising, joint venture agreements and subscription and investment agreements in the service industry to technology, intellectual property and insurance. The definition also clarifies that disputes from such agreements with the central and state governments and bodies performing public functions would still constitute a commercial dispute.
indu.bhan@expressindia.com
