Report No. 253

A. The 188th Report of the Law Commission

1.2 In the year 2003, the Law Commission suo motu took up the issue of proposing the constitution of Commercial Divisions in High Courts, in view of the vast changes in the economic policies of the country post-1991; the perception that the Indian judicial system had "collapsed" due to inordinate delays; and the need to ensure the fast disposal of high value commercial disputes to provide assurance to domestic and foreign investors.

1.3 In its 188th Report titled "Proposals for Constitution of Hi-tech Fast-Track Commercial Divisions in High Courts", the Commission examined the international practice of setting up commercial courts to deal with high value or complex commercial cases, and the need for such commercial courts in India.

Its aim was to give a clear assurance to investors that high value commercial suits would directly go before the Commercial Division to be constituted in all High Courts, which would follow fast track procedures similar to those recommended in the 176th Report on "Arbitration and Conciliation (Amendment) Bill, 2002". These Commercial Divisions would also be equipped with high-tech video conferencing facilities along the lines used in commercial courts abroad.

1.4 The Law Commission carried out an in-depth study of the commercial courts in the United Kingdom (hereinafter "UK"); the United States of America, specifically the States of New York and Maryland; Singapore; Ireland; France; Kenya and nine other countries to examine the procedures followed and the kinds of cases handled by the commercial courts in such countries. 1

1. Law Commission of India, Proposals for Constitution of Hi-tech Fast-Track Commercial Divisions in High Courts, Report No. 188 (2003), at 20 - 59 (hereinafter "Law Commission of India, 188th Report"). These countries were Philippines, Pakistan, United Arab Emirates, Poland, Scotland, Russia, Romania, Ukraine, and Ghana.

1.5 Finding that there was indeed a necessity for such courts in India, the Commission recommended setting up a Commercial Division in each of the High Courts of India. The purpose of the Commercial Division would be to expedite commercial cases of high pecuniary value. Briefly, the salient features of the Commercial Division recommended by the Law Commission in its 188th Report were as follows:2

(a) Each Commercial Division was to be comprised of a Bench of two judges, and there could be more than one such Bench if needed. In fact, the Commercial Division would have as many Benches as may be required to ensure the expeditious disposal of commercial cases

(b) The Commercial Division of a High Court would have jurisdiction over "commercial disputes" which were defined in the Report by adopting and modifying the definition of "Commercial Cause" as contained in Rule 1 of Part D of Chapter III (Part V) of the Delhi High Court (Original Side) Rules, 1967.

(c) The pecuniary jurisdiction of the Commercial Division was to be Rupees One Crore, or a higher figure as determined by the High Court in question, although not in excess of Rupees Five Crore.

(d) A "fast track procedure" was prescribed for the disposal of suits in the Commercial Division, providing timelines for the filing of pleadings; recording of evidence; and delivery of judgment by the Bench.

(e) The judges of the Commercial Division would conduct "case management conferences" with the lawyers for the purposes of filing written submissions and completion of evidence, which would form a part of the procedure adopted by the Commercial Division.

(f) A statutory appeal from the orders and judgments of the Commercial Division could be preferred to the Supreme Court of India.

2. Law Commission of India, 188th Report, supra note 1, at 164-180.