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Report No. 188

Chapter V

Allocation of Cases to Commercial Division of High Courts by Parliamentary Statute - Constitutionally permissible

As stated in the earlier chapters, Commercial cases of high pecuniary value deserve and require to be disposed of faster. The existing procedures in our trial courts have to be changed to deal with such high-value cases by providing a Commercial Division in the High Court, (Original side) consisting of Division Benches with fast track procedure, in a separate division. These judgments of the Commercial Division would be subject to a statutory appeal to Supreme Court. The Supreme Court rules may provide for appeals being listed for preliminary hearing as is done in all cases where a statutory appeal is available at present.

The more important question is whether Parliament can, by law create such a 'Commercial Division' in the High Court, in the context of the powers of the High Court as they exist today, in regard to formation of a Division and powers of the Chief Justice of the High Court to constitute Division Benches and nominate Judges to those Benches.

It is well known that it is the prerogative of the High Court to constitute a separate Division and the privilege of the Chief Justice of the High Court to constitute the required number of Benches and to assign judicial work to the Judges in those Benches of the High Court. As to whether particular types of cases have to be heard by a Single Judge or a Division Bench is generally contained in the High Court rules or is based on resolutions of the Full Court of the High Court.

In as much as it is proposed that each High Court should have a 'Commercial Division' within the High Court (and it is not our proposal that separate 'Commercial Courts' as such have to be created de-hors the High Court), it is necessary to take care to see that the constitutional provisions in this behalf are complied with in letter and spirit. As the power of creation of Divisions is the function of the High Court and as the power of allocation of judicial work is vested in the Chief Justice of the High Court, it is to be absolutely assured that the present proposals do not adversely impinge on that powers of the High Court or the powers of the Chief Justices of the High Courts.

Our proposals are intended to advance these powers, by creation of a separate Commercial Division in the High Court, on the lines it has been done in UK and in USA. As will be seen, the Constitution of India permits Parliament to enact laws for constitution of the Commercial Division and for laying down its procedure and as regards appeals against decrees/orders passed by the Commercial Division.

It may be useful in this connection to refer to section 6 of the (UK) Supreme Court Act, 1981. Section 1 states that in UK, the Supreme Court consists of the Court of Appeal as well as the High Court with its specialist divisions and other Courts and the Crown Court headed by the Lord Chancellor; the constitution of the Court of Appeal is mentioned in section 2 and the Divisions of the Court of Appeal are set out in section 3. The Constitution of the High Court is referred to in section 4.

The Divisions of the High Court are referred to in section 5, namely, the Chancery Division, the Queen's Bench Division and the Family Division. Then comes section 6 which refers to the Patents, Admiralty and Commercial Courts. Subsection (2) of section 6 refers to the power of the Lord Chancellor to nominate Judges of the High Court to the Commercial Division from time to time. It is worthwhile extracting section 6:

"The Patents, Admiralty and Commercial Courts Sec.6 (1) There shall be

(a) as part of the Chancery Division, a Patents Court; and

(b) as part of the Queen's Division, an Admiralty Court and a Commercial Court.

(2) The Judges of the Patents Court, of the Admiralty Court and of the Commercial Court shall be such of the puisne Judges of the High Court as the Lord Chancellor may from time to time nominate to be Judges of the Patents Court, Admiralty Judges and Commercial Judges respectively."

In India, as stated earlier, the classification of Divisions in the High Court is done by the Rules of the High Court framed by the Full Court or by resolutions of the Full Court. The power of assigning judicial work to different Judges of the High Court is vested in the Chief Justice of the High Court. In every High Court, Judges sit either single or in panels of two or more Judges, as per the roster prepared by the Chief Justice to hear and dispose of various types of cases.

Some Judges are required by the Chief Justice of the High Court to sit in Writ Jurisdiction, some in Civil jurisdiction, others in Criminal jurisdiction and so on. In High Courts such as Delhi, Bombay, Calcutta and Madras, where the High Courts have regular original side jurisdiction where suits and other original civil proceedings are tried, the Chief Justice nominates particular judge/judges on the original side jurisdiction, from time to time.

But, though we do not have a separate 'Commercial Division' in India as in UK, US and other countries, we find that the Rules of Delhi High Court in Chapter IV refer to cases being classified as 'commercial cases' for purposes of Appeal as also for purposes of decision on the original side. Such a classification is not available in all the High Courts. This system of commercial cases being decided separately, has to be introduced in all our High Courts.

Our proposals are further for a "fast track" procedure on the original side of the High Court before a Bench of two Judges where the value of the subject-matter is (say) as high as Rs.1 crore, with a single statutory appeal to the Supreme Court. High Courts may fix a figure above Rs. 1 crore as being the minimum valuation for being dealt with by the Commercial Division. But, the High Court while fixing such a higher minimum limit should, in our view, not fix a figure in excess of rupees five crores.

Our proposals also are that Commercial cases pending before the High Court on the original side and also appeals which are pending in the High Court and are of a pecuniary value of Rs. 1 crore or more should also be disposed on 'fast track' by a Bench of two Judges. Execution proceedings arising therefrom, should also go before the Commercial Division.

However, the crucial question is whether by making a statutory provision to designate a Division of the High Court as a 'Commercial Division' to deal with commercial cases of value of (say) more than Rs.1 crore on the original side of the High Court, or in respect of pending appeals of that value, we would be interfering with any of the powers of the High Court or the powers vested in the Chief Justice of the High Court to constitute such a division and to assign different categories of judicial work to different Judges in a manner inconsistent with the provisions of the Constitution.

The Constitutional position: High Courts existing as on 26.1.50 and those constituted thereafter



Proposals for Constitution of Hitech Fast Track Commercial Divisions in High Courts Back




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