The Commercial Courts Act 2015 And Jurisdiction

The Commercial Courts Act  2015 was introduced by the government to reduce the pendency of the Commercial Disputes which earlier were dealt with under the category of regular suits. This step taken by the government has well enabled both domestic and foreign investors to gain trust in the Indian markets.

The Commercial Courts Act 2015 came into force on 23rd October 2015, section 2(b) of the Commercial Courts Act, 2015 says that the Commercial Court is what is defined under section 3(1) of the said act.

According to this section, the government may constitute commercial courts at the District level by notification after consultation with the High Court, Commercial Disputes having a specific value of fewer than 3 lakhs and not more than 1 crore come under the jurisdiction of district courts.

Commercial Disputes are defined under section 2(c) of the Commercial Courts Act, 2015.

  1. In the routine transactions of merchants, bankers, financiers, and traders, there is a debate over the enforcement and interpretation of papers.
  2. Export and import of goods and services.
  3. Admiralty and marine law issues.
  4. Transactions involving aircraft, aircraft engines, aircraft equipment, and helicopters, such as sales, leasing, and financing.
  5. Carriage of goods is a term that refers to the transportation of things.
  6. Tenders and contracts connected to building and infrastructure.
  7. Agreements for the use of immovable property in trade.
  8. Agreements for franchising.
  9. Agreements regarding distribution and licensing.
  10. Agreements for management and consulting.
  11. Agreements forming a joint venture.
  12. Agreements between shareholders.
  13. Agreements relating to subscriptions and investments in the services business, such as outsourcing and financial services.
  14. Mercantile agency and mercantile use are two terms that are used interchangeably.
  15. Partnership Agreements.
  16. Agreements on technological advancements
  17. Trademarks, copyright, patents, domain names, geographical indications, and semiconductor integrated circuits are all examples of intellectual property rights.
  18. Contracts for the sale of products or the rendering of services.
  19. The exploitation of natural resources such as oil and gas deposits, as well as the electromagnetic spectrum.
  20. Insurance and reinsurance are two types of insurance.
  21. Any of the following can be covered by an agency contract.
  22. Other business conflicts that the Central Government has been made aware of.

Types of Commercial Disputes:

  1. Disputes arise between two businesses because of a breach of the contractual relationship or any other contract-related issue which does not fit with the existing contract and leads to disagreement between the parties.
  2. Customers whose expectations do not match with the product quality or services provided by the company or matters related to unfair trade practices are covered under this type.
  3. Matters which give rise to IPR infringements between two businesses or issues regarding the land dispute in which the said land is used for commercial purposes are also covered under commercial disputes.

 Jurisdiction of The Commercial Courts:

The Commercial Courts’ Jurisdiction is covered in Section 6. All cases and petitions of commercial disputes arising out of the full territory of the State over which it has been conferred territorial jurisdiction are resolved by the Commercial courts. The requirements of Sections 16, 17, 18, 19, and 20 of the Code of Civil Procedure 1908 apply to business disputes.

Jurisdiction of Commercial Division of High Courts is defined under section 7 of The Commercial Courts Act, 2015.

Jurisdiction of the Commercial Court is discussed in detail in the case of Daimler Financial Services India Pvt. Limited Vs. Vikash Kumar and Ors. 2020

In this case, the petitioner is a non-banking financial company from which the respondents obtained a loan and later on failed to repay the same. As per the agreement of the parties the matter was referred to the sole arbitrator, judgement was passed but the petitioners were not satisfied with it so they filed a petition at the Commercial Court Dhanbad the presiding officer dismissed the petition and concluded that the pecuniary jurisdiction of the said court is 1 crore and above and there is no such notification from the state government about any amendment.

The petitioner filed a petition at the High Court of Jharkhand in Ranchi under Article 227 of the Constitution of India which says that the High Court has supervisory authority over all courts and tribunals in the territory over which it has jurisdiction.

The said amendment which is being discussed above contains the following:

  • Section 3(1-A) of the Commercial Courts Act, 2015 as amended by the Amendment Act of 28 of 2018, which became retrospectively effective from 3rd May 2018.

“3. [(1-A) Notwithstanding anything in this Act, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for the whole or part of the State, as it may consider necessary, after consultation with the concerned High Court.]”

  • Section 2(1) (i) of the Commercial Courts Act, 2015 as amended by the said Amendment Act of 28 of 2018 which reads as under:-

“2(1)(i) “Specified Worth” refers to the amount of the subject matter in a suit as determined under section 12 [which must not be less than three lakh rupees] or such higher value as the Central Government may notify regarding a commercial dispute.”

Based on the above mentioned amendments the learned counsel for the petitioner submitted that the impugned order passed by the Presiding Officer of the Commercial Court of Dhanbad, should be quashed and set aside.

The Hon’ble High Court found force in the submissions of the Counsel for Petitioner and  held the following:

  • That Section 2(1) (i) of the Commercial Courts Act, 2015 post Amendment Act 28 of 2018, the specified value given in section 3(1) of the Commercial Courts Act, 2015 to be determined by Section 12 is “not less than 3 lakhs.”
  • The order, passed by the presiding officer of the Commercial Court in Dhanbad, dismisses the petition because the Commercial Courts and Dhanbad had no pecuniary jurisdiction and was said to be non-sustainable by the Hon’ble High court of Ranchi.
  • Hence, Hon’ble Court quashed and set aside the order passed by the Presiding officer of The Commercial Court, Dhanbad, and further disposed of the written petition by directing the Commercial Court, Dhanbad, to proceed with the case.
  • The Hon’ble High Court made it very clear that it will make no remarks or express no opinions on the counter-affidavit raised by the respondents in this case and the Commercial Court, Dhanbad is free to pass its independent order without being prejudiced.

Conclusion:

Commercial Courts are courts that deal with commercial issues that arise in the workplace. The Commercial Courts Act 2015 was presented by the government to create a new form of court for business matters at the district level. In 2018, the Commercial Courts Act 2015 Act was amended, bringing with it a slew of improvements aimed at ensuring the smooth operation of commercial courts with a minimum of unresolved cases.

Author: Ashita – a student of BVP New Law College, Pune,  in case of any queries please contact/write back to us via email chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

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