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Report No. 188

"Commercial Dispute Cases'

We shall, initially, refer to the classification of 'commercial cases' by the Delhi High Court in its Rules. We have extracted the Rules in Chapter VI already but we again extract that definition:

"Commercial cases" include cases arising out of the ordinary transactions of merchants, bankers and traders, such as those relating to the construction of mercantile documents, export or import of merchandize, affreightment, carriage of goods by land, insurance, banking and mercantile documents, mercantile agency, mercantile usage and infringements of trade marks and passing off actions. Suits on ordinary loans and mortgages are not "Commercial cases"."

The above definition is wide and, in fact, has to be widely construed. However, we propose to modify it and add certain Explanations to cover some specific type of cases referred to below.

Can disputes concerning 'commercial property' be brought before the Commercial Division if they involve 'immovable property', such as where, for example, it is partnership property or where there is a mortgage or charge or lien created on immovable property as collateral security for performance of obligations under a commercial contract? Take a case where the partnership deed treats immovable property as partnership property or where an equitable mortgage is created in respect of immovable property as collateral security by one businessman in favour of another businessman or a commercial firm or company? In our view, these cases must also come before the Commercial Division, provided the main transaction is a commercial one.

Though it is obvious that cases of eviction from commercial property like a premises falling within the purview of rent-control legislation, cannot be filed before the High Court and be brought before the Commercial Division, cases of suits for eviction from immovable property covered by the Transfer of Property Act, can be brought before the Commercial Division if the value of the subject matters is of Rs.1 crore or more. For example, in Delhi, tenants paying rent upto Rs. 3500 p.m. have the protection of the Delhi Rent Control Act.

In some States, after expiry of ten years from date of construction, the building comes under the rent control law for eviction cases to be filed after the expiry of such period. Obviously, such eviction matters cannot be dealt with by the Civil Court nor by the proposed Commercial Division. In some States, where the tenants have protection under rent control legislation, the proceedings are indeed filed in a Civil Court as a civil suit (and not before rent control tribunals) but the Civil Court will deal with the matter under the rent control legislation and not as a Civil Court dealing with a normal eviction suits relating to immovable property governed by the Transfer of Property Act.

Obviously, such suits cannot come before the proposed Commercial Division, even if the property is used for commercial purposes. In the case of commercial premises not governed by the rent control legislation, the tenant may be a businessman but the landlord may not necessarily be a businessman. Still, the matter has to go to the Commercial Division if the value of the property is of the minimum prescribed value stated above.

Take then the cases which arise out of insurance policies - life insurance or general insurance, where the claim is Rs.1 crore or more (or such higher figure as may be fixed by the High Court). These cases can be included in the definition, though the policy holder is or is not a businessman. In the case of general insurance covering fire or marine insurance, the case involves indemnity for damage or injury on account of torts or due to natural causes like flood, earthquake or cyclone etc.

Question is whether such disputes should also go before the Commercial Division? In our view, yes, even though the policy holder is not a businessman. So far as motor accident cases are concerned, the Motor Accident Claims Tribunal is a tribunal of exclusive jurisdiction and those cases, even if they are of the prescribed high commercial value and contain claims against insurance companies, they cannot obviously go before the Commercial Division.

So far trademark disputes are concerned, section 83 of the Trade Marks Act, 1999 has constituted an Appellate Board. Section 91(1) provides for an appeal to the Board by aggrieved parties against orders of the Registrar and section 93 bars the jurisdiction of Civil Courts 'in relation to the matters referred to in subsection (1) of section 91'. That would still mean that suits for injunction and damages in matters relating to passing off and infringement can still go before Civil Courts and are not barred. Likewise, the other commercial disputes arising under the Patents Act, 1970, the Copyright Act, 1957 and Designs Act, 2000 can go before the Commercial Division except to the extent that any specific class of disputes are ousted from the jurisdiction of Civil Courts.

We have also considered whether matters falling within the admiralty jurisdiction of the High Court should go before the Commercial Division. In fact, there may be other subjects of a commercial nature which according to the High Court, may go before the Commercial Division. For this purpose, we recommend that a residuary clause may be introduced in the definition enabling the High Court to notify other disputes to be included in the definition of 'commercial disputes'.

After due deliberation, we are inclined to adopt the definition of 'Commercial Cause' as stated in Rule 1 of Part D of Chapter III (Part V) of the Delhi High Court Rules, with modifications, as follows:

'Commercial disputes' mean disputes arising out of transactions of trade or commerce and, in particular, disputes arising out of ordinary transactions of merchants, bankers and traders such as those relating to: enforcement and interpretation of mercantile documents, export or import of merchandise, affreightment, carriage of goods, franchising, distribution and licensing agreements, mercantile agency and mercantile usage, partnership, technology development, maintenance and consultancy agreements, software, hardware, networks, internet, website and intellectual property such as trademark, copyright, patent, design, domain names and brands, and such other commercial disputes which the High Court may notify.

Explanation I: A dispute which is commercial shall not cease to be a commercial dispute merely because it also involves action: for recovery of immovable property or for realization of monies out of immovable property given as security or for taking other action against immovable property.

Explanation II: A dispute which is not a commercial dispute shall be deemed to be a commercial dispute if the immovable property involved in the dispute is used in trade or put to commercial use.

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