COMMERCIAL COURTS, COMMERCIAL

DIVISION AND COMMERCIAL

APPELLATE DIVISION OF HIGH
COURTS ACT,
2015 (4 OF 2016)
 STATEMENT OF OBJECTS AND REASON
1) To provide for speedy disposal of high value commercial disputes.
2) Early resolution of commercial disputes shall create a positive image to the
investor world about the independent and responsive Indian legal system.
3) The global economic environment has since become increasingly competitive
and to attract business at international level, India needs to further improve its
ranking in the World Bank 'Doing Business Report' which, inter alia, considers
the dispute resolution environment in the country as one of the parameters for
doing business.
4) All the suits, appeals or applications related to commercial disputes of specified
value i.e. one crore or above, are to be dealt with by the Commercial Courts or
the Commercial Division of the High Court.
 Amendment in the Act in 2018
As Parliament was not in session and immediate action was required to
be taken to make necessary amendments in the Commercial Courts,
Commercial Division and Commercial Appellate Division of High Courts
Act, 2015, to further improve India’s ranking in the 'Doing Business
Report', the President promulgated the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts(Amendment)
Ordinance, 2018 on 3rd May, 2018.
It is proposed to introduce the Commercial Courts, Commercial Division
and Commercial Appellate Division of High Courts (Amendment) Bill,
2018 to replace the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts (Amendment) Ordinance,
2018, which inter alia, provides for the following namely:-
• (i) To reduce the specified value of commercial disputes from the
existing one crore rupees to three lakh rupees, and to enable the
parties to approach the lowest level of subordinate courts for speedy
resolution of commercial disputes;
• (ii) to enable the State Governments, with respect to the High Courts
having ordinary original civil jurisdiction, to constitute commercial
courts at District Judge level and to specify such pecuniary value of
commercial disputes which shall not be less than three lakh rupees
and not more than the pecuniary jurisdiction of the district courts;
(iii) to enable the State Governments, except the territories over which the
High Courts have ordinary original civil jurisdiction, to designate such number
of Commercial Appellate Courts at district judge level to exercise the appellate
jurisdiction over the commercial courts below the district judge level;
(iv) to enable the State Governments to specify such pecuniary value of a
commercial dispute which shall not be less than three lakh rupees or such
higher value, for the whole or part of the State; and
(v) to provide for compulsory mediation before institution of a suit, where
no urgent interim relief is contemplated and for this purpose, to introduce
the Pre-Institution Mediation and Settlement Mechanism and to enable the
Central Government to authorize the authorities constituted under the Legal
Services Authorities Act, 1987 for this purpose
 COMMERCIAL DISPUTE
"commercial dispute" means a dispute arising out of -
(i) ordinary transactions of merchants, bankers, financiers and
traders such as those relating to mercantile documents, including
enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft
equipment and helicopters, including sales, leasing and financing of
the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or
commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreements;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services
industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage.
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered
trademarks, copyright, patent, design, domain names, geographical
indications and semiconductor integrated circuits;
(xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources
including electromagnetic spectrum;
(xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above; and
(xxii) such other commercial disputes as may be notified by the Central
Government.
Explanation.- A commercial dispute shall not cease to be a commercial dispute
merely because -
(a) it also involves action for recovery of immovable property or for realization of
monies out of immovable property given as security or involves any other relief
pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or
instrumentalities, or a private body carrying out public functions;
(d) "Commercial Division" means the Commercial Division in a High Court
constituted under sub-section (1) of section 4;
(e) "District Judge" shall have the same meaning as assigned to it in clause (a) of
Article 236 of the Constitution of India;
(f) "document" means any matter expressed or described upon any
substance by means of letters, figures or marks, or electronic means, or
by more than one of those means, intended to be used, or which may
be used, for the purpose of recording that matter;
(g) "notification" means a notification published in the Official Gazette
and the expression "notify" with its cognate meanings and grammatical
variations shall be construed accordingly;
(h) "Schedule" means the Schedule appended to the Act; and
 Specified Value
• (i) "Specified Value", in relation to a commercial dispute, shall mean
the value of the subject-matter in respect of a suit as determined in
accordance with section 12b[which shall not be less than [three lakh
rupees] or such higher value, as may be notified by the Central
Government.
 Determination of Specified Value:
(S.12)
(1) The Specified Value of the subject-matter of the
commercial dispute in a suit, appeal or application shall be
determined in the following manner:––
(a) where the relief sought in a suit or application is for
recovery of money, the money sought to be recovered in the
suit or application inclusive of interest, if any, computed up to
the date of filing of the suit or application, as the case may be,
shall be taken into account for determining such Specified
Value;
(b) where the relief sought in a suit, appeal or application relates to
movable property or to a right therein, the market value of the movable
property as on the date of filing of the suit, appeal or application, as the
case may be, shall be taken into account for determining such Specified
Value;
(c) where the relief sought in a suit, appeal or application relates to
immovable property or to a right therein, the market value of the
immovable property, as on the date of filing of the suit, appeal or
application, as the case may be, shall be taken into account for
determining Specified Value; 1[and]
(d) where the relief sought in a suit, appeal or application relates to any
other intangible right, the market value of the said rights as estimated by
the plaintiff shall be taken into account for determining Specified Value;
(2) The aggregate value of the claim and counterclaim, if any as set out
in the statement of claim and the counterclaim, if any, in an arbitration
of a commercial dispute shall be the basis for determining whether such
arbitration is subject to the jurisdiction of a Commercial Division,
Commercial Appellate Division or Commercial Court, as the case may
be.
(3) No appeal or civil revision application under section 115 of the Code
of Civil Procedure, 1908 (5 of 1908), as the case may be, shall lie from
an order of a Commercial Division or Commercial Court finding that it
has jurisdiction to hear a commercial dispute under this Act.
 Commercial Court At District
Level
(S. 3 & 3A)
• Commercial Courts at District level.
• Commercial Appellate Courts at District Judge level.
Commercial Court At High Court
Level
(S. 4&5)
• In all High Courts having, a [ordinary original civil jurisdiction
• Commercial Division having one or more Benches consisting of a
single Judge for the purpose.
• the Chief Justice of the concerned High Court shall, by order,
constitute Commercial Appellate Division having one or more
Division Benches for the purpose.
PRE-INSTITUTION MEDIATION AND SETTLEMENT

12A. Pre-Institution Mediation and Settlement—(1) A suit, which does not

contemplate any urgent interim relief under this Act, shall not be instituted unless
the plaintiff exhausts the remedy of pre-institution mediation in accordance with
such manner and procedure as may be prescribed by rules made by the Central
Government.
(2) The Central Government may, by notification, authorize the Authorities
constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the
purposes of pre-institution mediation.
(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987,
the Authority authorized by the Central Government under sub-section (2) shall
complete the process of mediation within a period of three months from the date
of application made by the plaintiff under sub-section (1):
Provided that the period of mediation may be extended for a further
period of two months with the consent of the parties:
Provided further that, the period during which the parties remained
occupied with the pre-institution mediation, such period shall not be
computed for the purpose of limitation under the Limitation Act, 1963
(36 of 1963).
(4) If the parties to the commercial dispute arrive at a settlement, the
same shall be reduced into writing and shall be signed by the parties to
the dispute and the mediator.
(5) The settlement arrived at under this section shall have the same
status and effect as if it is an arbitral award on agreed terms under
sub-section (4) of section 30 of the Arbitration and Conciliation Act,
1996 (26 of 1996).]
 Patil Automation Private Limited and Ors. v.
Rakheja Engineers Private Limited
AIR 2022 SC 3848

• Issue in present case is with regard to compliance with the

procedure Under Section 12A of the Act .
• Whether the statutory pre-litigation mediation contemplated
Under Section 12A of Act, 2015 as amended by the
Amendment Act of 2018 is mandatory?
• Whether the Courts below have erred in not allowing the
applications filed under Order VII Rule 11 of 'CPC', to reject the
plaints filed by the Respondents in present appeals without
complying with the procedure Under Section 12A of the Act?
• The object of the Act and the Amending Act of 2018, unerringly point to at
least partly foisting compulsory mediation on a Plaintiff who does not
contemplate urgent interim relief.. The provision has been contemplated
only with reference to Plaintiffs who do not contemplate urgent interim
relief
• The language used in Section 12A, which includes the word 'shall', certainly,
go a long way to assist the Court to hold that the provision is mandatory.
• The Supreme Court declares that Section 12A of the Act is mandatory and
hold that any suit instituted violating the mandate of Section 12A must be
visited with rejection of the plaint under Order VII Rule 11. This power can
be exercised even suo moto by the court.
 CASE MANAGEMENT HEARING
Order XV-A
1. First Case Management Hearing.—The Court shall hold the first Case
Management Hearing, not later than four weeks from the date of
filing of affidavit of admission or denial of documents by all parties to
the suit.
2. Orders to be passed in a Case Management Hearing.—In a Case
Management Hearing, after hearing the parties, and once it finds that
there are issues of fact and law which require to be tried, the Court
may pass an order–
(a) framing the issues between the parties in accordance with
Order XIV of the Code of Civil Procedure, 1908 (5 of 1908) after
examining pleadings, documents and documents produced
before it, and on examination conducted by the Court under Rule
2 of Order X, if required;
(b) listing witnesses to be examined by the parties;
(c) fixing the date by which affidavit of evidence to be filed by
parties;
(d) fixing the date on which evidence of the witnesses of the
parties to be recorded;
(e) fixing the date by which written arguments are to be filed
before the Court by the parties;
(f) fixing the date on which oral arguments are to be heard by the
Court; and
(g) setting time limits for parties and their advocates to address
oral arguments.
3. Time limit for the completion of a trial.—In fixing dates or setting
time limits for the purposes of Rule 2 of this Order, the Court shall
ensure that the arguments are closed not later than six months from
the date of the first Case Management Hearing.
4. Recording of oral evidence on a day-today basis.—The Court shall,
as far as possible, ensure that the recording of evidence shall be carried
on, on a day-to-day basis until the cross-examination of all the
witnesses is complete.
5. Case Management Hearings during a trial.—The Court may, if
necessary, also hold Case Management Hearings anytime during the
trial to issue appropriate orders so as to ensure adherence by the
parties to the dates fixed under Rule 2 and facilitate speedy disposal of
the suit.
6. Powers of the Court in a Case Management Hearing.—(1) In any Case
Management Hearing held under this Order, the Court shall have the power
to—
(a) prior to the framing of issues, hear and decide any pending application
filed by the parties under Order XIII-A;
(b) direct parties to file compilations of documents or pleadings relevant and
necessary for framing issues;
(c) extend or shorten the time for compliance with any practice, direction or
Court order if it finds sufficient reason to do so;
(d) adjourn or bring forward a hearing if it finds sufficient reason to do so;
(e) direct a party to attend the Court for the purposes of examination under
Rule 2 of Order X;
(f) consolidate proceedings;
(g) strike off the name of any witness or evidence that it deems irrelevant to
the issues framed;
(h) direct a separate trial of any issue;
(i) decide the order in which issues are to be tried;
(j) exclude an issue from consideration;
(k) dismiss or give judgment on a claim after a decision on a preliminary
issue;
(l) direct that evidence be recorded by a Commission where necessary in
accordance with Order XXVI;
(m) reject any affidavit of evidence filed by the parties for containing
irrelevant, inadmissible or argumentative material;
(n) strike off any parts of the affidavit of evidence filed by the parties
containing irrelevant, inadmissible or argumentative material;
(o) delegate the recording of evidence to such authority appointed by the Court for this
purpose;
(p) pass any order relating to the monitoring of recording the evidence by a
commission or any other authority;
(q) order any party to file and exchange a costs budget;
(r) issue directions or pass any order for the purpose of managing the case and
furthering the overriding objective of ensuring the efficient disposal of the suit.
(2) When the Court passes an order in exercise of its powers under this Order, it may—
(a) make it subject to conditions, including a condition to pay a sum of money into
Court; and
(b) specify the consequence of failure to comply with the order or a condition.
(3) While fixing the date for a Case Management Hearing, the Court may direct that the
parties also be present for such Case Management Hearing, if it is of the view that
there is a possibility of settlement between the parties.
7. Adjournment of Case Management Hearing.—(1) The Court shall
not adjourn the Case Management Hearing for the sole reason that
the advocate appearing on behalf of a party is not present:
Provided that an adjournment of the hearing is sought in advance by
moving an application, the Court may adjourn the hearing to another
date upon the payment of such costs as the Court deems fit, by the
party moving such application.
(2) Notwithstanding anything contained in this Rule, if the Court is
satisfied that there is a justified reason for the absence of the
advocate, it may adjourn the hearing to another date upon such terms
and conditions it deems fit.
8. Consequences of non-compliance with orders.—Where any
party fails to comply with the order of the Court passed in a Case
Management Hearing, the Court shall have the power to—
(a) condone such non-compliance by payment of costs to the
Court;
(b) foreclose the non-compliant party’s right to file affidavits,
conduct cross-examination of witnesses, file written
submissions, address oral arguments or make further
arguments in the trial, as the case may be, or
(c) dismiss the plaint or allow the suit where such non-
compliance is wilful, repeated and the imposition of costs is
not adequate to ensure compliance.”