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 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       1

(For Academy Purpose Only)

PRACTICAL

GUIDE 

ON 

COMMERCIAL COURT

ACT

Respectfully Submitted To
 Hon'ble Gujarat State Judicial Academy

PREPARED BY 
A .P. RANDHIR
PRINCIPAL SR. CIVIL JUDGE
& ACJM, BORSAD 
DISTRICT : ANAND

A P RANDHIR,  PR.SR.CIVIL JUDGE BORSAD, DISTRICT: ANAND
 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       2

SUBJECT INDEX
SR INDEX PAGE

1 The Commercial Court Act, 2015 3­21

2 Pre­Institution   Mediation   And 22­52

Settlement   Section   12­A   Of   The


Commercial Court Act.

3 Case Managment Hearing 53­72

4 Important   Amendments   To   Cpc   And 73­76

Projected Timeline Of Litigation
 
5 Judgment On Commericial Court Act 77­138

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 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       3

1. The Commercial Court Act, 2015 
“Improving The Ease Of Doing Business Ranking Of

India.”

Law  Minister Sri. Ravi Sankar Prasad

1. Introduction

India   is   infamous   for   having   an   overburdened   legal   system


that leads to indefinite delays in the disposal of cases. Inefficiencies
in   its   legal   infrastructure  have  made   it  all  the  more   difficult  for
foreign as well as domestic investors to protect their investments in
India.   In   fact,   as   seen   in   the   famous   case   of  White   Industries

Australia Ltd. vs Union of India,  inordinate delays in the legal

process   was   viewed   as   breach   of   investment   treaty   obligation   by


India. 

For a government that likes report cards, the World Bank’s

ease   of   doing   business   rankings  has  been  a   crucial   grade.

India’s   recent   spike   in   rankings   has   been   attributed   to   business


reforms introduced by this government since it took over. One such
reform was the constitution of the designated commercial courts for
dealing with commercial disputes of a specified value. Thus, there
has   always   been   a   long   standing   requirement   for   a   stable   and
efficient   dispute   resolution  system  ensuring  quick  enforcement  of
contracts,   easy   recovery   of   monetary   claims   and   award   of   just
compensation   for   damages   suffered,   all   of   which   are   critical   in

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 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       4

encouraging investment and economic activity. 

BACKGROUND TO THE REPORT

The 188 th Report of the Law Commission

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  post­1991;  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.

In its 188 th Report titled “Proposals for Constitution of

Hi­tech   Fast­Track   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 176 th Report on

“Arbitration and Conciliation (Amendment) Bill, 2002”. These

Commercial Divisions would also be equipped with high­tech video
conferencing   facilities   along   the   lines   used   in   commercial   courts

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abroad.
The   Law   Commission   carried   out   an   in­depth   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

Scheme   of   the   Provisions   of   the   Commercial   Division   of

High Courts Bill, 2009 

The   Law   Commission’s   proposal   on   the   constitution   of   a


dedicated   Bench   of   the   High   Court   (the   Commercial   Division)   to
decide commercial cases above a certain monetary limit on a fast
track   basis   was   considered,   and   accepted,   by   the   ‘Conference   of
Chief Ministers of the States and Chief Justices of the High Courts’
on   16   th   August   2009   in   New   Delhi.   On   the   basis   of   the   above
recommendations of the Commission, the Lok Sabha introduced the
Bill as “Bill No. 139 of 2009” on 16 th December 2009, and passed it
on   18   thDecember   2009.   Report   of   the   Select   Committee   on   the
Commercial Division of High Courts Bill, 2009 The Bill was passed
in the Lok Sabha without being referred to Standing Committee.
After its passage in the Lok Sabha, the Rajya Sabha took up the
Bill for consideration on 22 nd December 2009, pursuant to which
the Bill was referred to the Select Committee on the Commercial
Division   of   High   Courts   Bill,   2009   (hereinafter   “the   Select

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Committee”). The Select Committee presented its Report on 29 th
July 2010 and suggested certain changes to the Bill. Based on the
above   recommendations   of   the   Select   Committee,   the   Bill   was
redrafted,   accepting   all  the   Select   Committee’s   recommendations,
and placed before the Rajya Sabha for its consideration. During the
course of the debate on 13 th December 2011.

Mandate of the Present Law Commission 

In view of the concerns raised by the Members of the Rajya
Sabha,   the   Government   withdrew   the   Bill.   Subsequently,   the
Ministry   for   Law   and   Justice   vide   letter   dated  7   th   March   2013
referred   the   Bill   to   the   Law   Commission   in   light   of   the   various
shortcomings   observed   in   its   provisions.   The   Ministry’s   letter
expressed   the   view   that   certain   provisions,   especially   those
regarding   the   scope   of   the   definition   of   “commercial   dispute”,
needed reconsideration and a fresh study. Accordingly, a reference
was   made   to   the   20   th   Law   Commission   for   its   views   on   the
proposed Bill. The present Report seeks to re­examine and suggest
changes   to   the  2009   Bill, which  empowers  the Chief  Justice  of  a
High   Court   to   set   up   a   dedicated   Bench   in   the   High   Court   for
deciding commercial cases above a certain monetary limit. Certain
defects have been pointed out in the structure of the Bill, which has
prompted the present rethink.
After more than a decade of extended deliberations, and given
a   fresh  impetus  by  the current Government’s mission  to improve

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India’s image as an investment destination, the Commercial Courts,
Commercial   Division   and   Commercial   Appellate   Division   of   High

Courts Ordinance, 2015 (“Ordinance”) was recently cleared by the

Cabinet and received Presidential assent on October 23, 2015. The

Ordinance is in line with international trends, aided by the in­depth
study   of   Commercial   Courts   of   the   United   Kingdom,   the   United
States of America, Singapore, France etc. carried out by the Law

Commission   of   India   (“Commission”)   in   their   188th  report   and

253rd report.

The   government   on  May   3,   2018  promulgated   the

Commercial   Courts,   Commercial   Division   and   Commercial

Appellate Division of High Courts (Amendment) Ordinance,

2018,   amending   the   Commercial   Courts   Act.   A   small   but   very

significant change made by the government is in the appointment of
judges to commercial courts. The Commercial Courts Act was based
on the recommendations made in the  253rd Report of the Law

Commission of India. The Law Commission had suggested that

the judges of commercial courts be appointed by the high courts. 

The Commercial Courts Act as passed by Parliament diluted
the suggestion of the Law Commission. It provided for appointment
of   judges   by   the   state   governments   but   with   the   mandatory
concurrence of the chief justice of the high court. However, pursuant
to the new ordinance, this has been further diluted. Now even the
concurrence of the chief justice of the high court is not mandatory.

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Thus,   the   government   is   now   the   sole   authority   for   appointing


judges to commercial courts. 

Coupled with such change is the reduction in the pecuniary
threshold for invoking the jurisdiction of commercial courts. Earlier,

commercial courts exercised jurisdiction in relation to claims of

Rs   10   million   or   above.   Now,   any   commercial   dispute

exceeding   Rs   3,00,000   in   value   will   be   heard   by   the

commercial courts. This figure of Rs 300,000 has been chosen

as the World Bank, while evaluating the enforcement of contracts
in India, takes the sample claim value as $5,000. 

This sample claim value led to the World Bank evaluating city
civil courts for their efficiency in dealing with commercial claims, as
opposed   to   commercial   courts   specifically   constituted   under   the
Commercial   Courts   Act.   Therefore,   the   government   has   now

reduced   the   pecuniary   jurisdiction   of  commercial   courts   to   Rs

300,000. However, the effect of this is that a wide array of disputes

will now be decided by courts where the judges are appointed by the
government itself.

Now   in   Gujarat   and   other   States   has   notified   commericial


Court   as   Prinicipal   Sr.   Civil   Judges   and   Small   cause   Judges   in
Metro Cities, and Additional District Judges ( For arbitration and
IPR Related Matters).

1.1 Salient Features of the Act 

1. Constitution of commercial court 

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2. Jurisdiction 
3. Fast Track procedure 
4. Amended CPC for commercial suit 
5. Transfer of pending cases 
6. Revision and Appeal 
1.2 Salient Features of 2018 Amendments 

1. Change of title of Act 
2. Reduction of specified value 
3. Establishment of commercial appellate court 
4. Pre­institution Mediation and Settlement 
5. Amendment the Schedule 

1.3 Commercial Division Jurisdiction Clarified

• All commercial disputes stipulated by an Act to lie in a court
not   inferior   to   a   District   Court   and   filed   or   pending  on   the
original side of the High Court 

a) Shall be heard by the Commercial Division; 

b) Shall be heard irrespective of its pecuniary value; 

• Intellectual Property Right matters which are filed or pending
on the original side of the High Court, shall be heard by the
Commercial Division irrespective of the pecuniary value. 

It now remains to be seen whether this amendment will withstand
a   challenge   in   court.   The   ordinance   requires   the   appointment   of
persons   at   or   below   the   level   of   district   judge   as   the   judge   of   a

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commercial   court.   The   Constitution   of   India   provides   that   the


appointment   and   posting   of   district   judges   shall   be   made   by   the
governor   in   consultation   with   the   high   court.   This   consultative
process has been held by the Supreme Court to be mandatory (See

Registrar   (Admn.),   High   Court   of   Orissa,   Cuttack   v.   Sisir

Kanta Satapathy, (1999) 7 SCC 725). 

Further, the high court determines the posting and promotion
of judges below the level of district judges. The control of the high
court   over   the   subordinate   judiciary   is   supposed   to   be
comprehensive, exclusive and effective, and it is to sub­serve a basic
feature   of   the   Constitution   —   independence   of   the   judiciary

( Prakash Singh Badal v. State of Punjab, (2007) 1 SCC 1). It

seems that the position of the high court and the independence of
the   judiciary   is   being   undermined   through   the   constitution   of
commercial courts and appointment of judges thereof. 

1.4 End of Endless Litigation.

• Establishment of specialized commercial courts for speedy and
effective dispute resolution 

• Total time from filing of Suit till final decree prescribed to be
approximately 16 months.

• ‘Cost to follow event’ concept introduced 

• Arbitration matters to go before specialized commercial courts.

•  Compulsary Pri­Mediation Rules apply,  

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II. Constitution of Commercial Courts, Commercial Division

and Commercial Appellate Division (“Special Courts”): 

The Ordinance provides that the Commercial Courts are to be
established by notification by the State Government, in consultation
with   the   concerned   High   Court.   For   territories   where   the   High
Court   itself   is   vested   with   the   original   jurisdiction   i.e.   where
particular   suits   may   directly   be   filed   before   the   High   Court,   the
Chief   Justice   of   such   High   Court   may   constitute   a   Commercial
Division   within   such   High   Court.   Once   the   Commercial
Division/Commercial Court is established, the Chief Justice of the
High   Court   would   be   required   to   constitute   the   Commercial
Appellate Division. In order to ensure that commercial matters are
dealt   with   by  persons   with   the  requisite   skillsets,  the   Ordinance
specifically   requires   that   judges   of   such   courts/divisions   be
experienced in dealing with Commercial Disputes.

1.4 The Need for the Act

The  Indian   judicial  system  today   is  burdened  with  lakhs  of
pending cases, most of which are pending since long periods of time.
This   high   amount   of   pendency   is   ascribable   to   cumbersome
procedures,   adjournments   and   attempts   by   parties   to   stall
proceedings. There are thousands of instances where justice delayed
has   meant   justice   denied.   Given   that   many   of   the   pending   civil
cases are of a commercial nature, the Indian legislature hopes to

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rectify   the   slow   disposal   of   rates   of   ‘commercial   disputes’   of   a


‘specified   value’   by   enacting   the   Commercial   Courts,   Commercial
Division   and   Commercial   Appellate   Division   of   High   Courts   Act,
2015 (Act). Additionally through the Act, which provides for speedy
disposal of commercial disputes the Government of India hopes to
create   a   positive   image   of   the   Indian   judiciary   in   the   minds   of
foreign investors and aims at increasing the ease of doing business
in India.

1.5 Commercial Disputes and Specified Value

The   Ordinance   provides   that   the   Commercial   Courts   shall


have the jurisdiction to try all suits and applications relating to a
Commercial   Dispute  of   a  Specified   Value.   Suits   and   applications
filed in the High Court having original civil jurisdiction would be
brought before the Commercial Division of the said High Court. 

The definition of “Commercial Disputes” as defined in section
2(c)   of   the   Ordinance   is   very   wide   and   essentially   covers   every
commercial   transaction   including   general   commercial   contracts,
shareholder   &   joint   venture   agreements,   intellectual   property
rights,   contracts   relating   to   movable   and   immovable   property,
natural resources etc.. 

“Specified   Value”   as   defined   in   section   2(j)   the   Ordinance


pertains  to  the  value  of the subject matter in respect of  the suit

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which shall not be less than ten (10) million rupees [about USD

150,000] or such higher value, Now Specified value revised not

less   than   3,00,000/­   (   Three   Lac)   notified   by   the   Central


Government.     The   purpose   of   such   segregation   of   Commercial
Disputes   of   the   given   Specified   Value   from   other   disputes   is   to
ensure   that   the   selected   disputes   are   speedily   and   efficiently
resolved by the Special Courts. 

 Limited right to appeal/revision 

The   Ordinance   in   section   13   provides   that   appeals   against


decisions of the Commercial Courts/Commercial Division can only
be   brought   before   the   Commercial   Appellate   Division   of   the
concerned   High   Court  within   sixty   (60)   days  from   the   date   of

decision and that Commercial Appellate Division should endeavor
to dispose it within six (6) months. 

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A number of interlocutory/interim orders of a court are currently
subject   to   an   appeal   or   revision   petition   leading   to   delay   in
adjudication  of  principal dispute. The Ordinance has reduced the
ability of defaulting parties to use such appeal/revision provisions
as delaying tactics. It is now specifically provided that: 

1. An appeal would lie against only certain identified orders of
the   Commercial   Court/Division   and   that   no   other   appeal
under any law including the Letters Patent of a High Court
could   be   preferred   against   the   orders   of   Commercial
Court/Division.

2. No   civil   revision   application/petition   shall   lie   against   any

interlocutory   order   of   a   Commercial   Court   and   any   such


grievance   against   the   order   may   only   be   raised   in   appeal

against the final decree.

The Act governs the manner in which ‘Commercial Disputes’ of
a   ‘Specified   Value’   are   to   be   tried   and   disposed   of.   The   term
‘Commercial   Disputes’ has been  defined under Section  2(c)  of  the
Act by providing an exhaustive list of subjects which includes all
disputes   arising   out   of   commercial   transactions.   It   also   includes
disputes   arising   out   of   transactions   of   merchants,   bankers,
financiers,   construction   and   infrastructure   contracts,   immovable
property   used   in   trade   or   commerce,   joint   venture   agreements,

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shareholders’   agreements,   intellectual   property   rights,   among


others. ‘Specified Value’as per Section 2 (i) read with Section 12 of
the Act relates to the value of the subject matter of the commercial
dispute which shall not be less than one crore rupees or such higher
value as may be notified by the central government.

1.6. Structure of Courts

The Act, at its very essence, changes the structure of forums
that   will   hear   ‘Commercial   Disputes’.   It   provides   for   the
establishment   of   Commercial   Courts/   Commercial   Division   and
Commercial Appellate Division.

Commercial Courts are to be established by the State Government
at the district level where High Courts do not exercise an ordinary
original   civil   jurisdiction.   Where   there   are   High   Courts   that
exercise   an   ordinary   original   civil   jurisdiction,   Commercial
Divisions are to be established in the said High Courts by the Chief
Justice of such High Courts. The Chief Justices of High Courts are
also   required   to   constitute   a   Commercial   Appellate   division   and
appoint judges of the High Court to be judges of the Commercial
Appellate Division.

Under   Section   13   of   the   Act,   all   appeals   from   the   Commercial


Courts   and   Commercial   Division   will   lie   with   the   Commercial

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Appellate Division provided they are filed within a period of 60 days
from the date of judgment or order. This is inconsistent with Article
116 of the Limitation Act, 1963, which provides a limitation period
of 90 days to file a first appeal to a High Court from any decree or
order. However, Section 21 of the Act provides that the provisions of
this   Act   shall   have   effect   notwithstanding   anything   inconsistent
contained in any other law for the time being in force.

The Commercial Appellate Division is required to dispose of appeals
filed before it within a period of 6 months from date of filing. The
Act   also   provides   that   all   suits   and   applications   relating   to
‘Commercial   Disputes’   which   are   of   the   ‘Specified   Value’   and   are
pending  in   a  High   Court  must be transferred  to the Commercial
Division of such a court and which are pending in any civil court in
any district in which a commercial court has been set up should be
transferred to such court unless the final judgment in such a matter
has   been   reserved   before   the   constitution   of   such   Commercial
Division or Commercial Court as the case may be. This may lead to
practical and logistical difficulties initially as the Courts will have
to deal with transferring a substantial number of cases, which in
turn may lead to cases being delayed until the correct courts receive
the proceedings in suits that now would fall within the definitions
of ‘Commercial Courts’ being above the ‘Specified Value’.

1.7 Applicability of the Act to Arbitrations

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The   Act   is   also   applicable   to   all   applications   and   appeals


under the Arbitration and Conciliation Act, 1996 (Arbitration Act)
arising   out   of   arbitrations   where   the   subject   matter   of   the
arbitration is a ‘Commercial Dispute’ of a ‘Specified Value’.

By virtue of an amendment to the Arbitration Act (effective
from   23   October,   2015)   all   international   commercial   arbitrations
can only be heard by High Courts. If these international commercial
arbitrations fall within the definition of ‘Commercial Disputes’ and
are of a ‘Specified Value’, then the same have to be heard by the
Commercial   Division   of   such   High   Courts.   Further,   all   domestic
commercial arbitrations, provided they are ‘Commercial Disputes’ of
a ‘Specified Value’ which have been filed in the High Court shall be
heard   by   the   Commercial   Division   of   such   court,   whereas   all
domestic commercial arbitrations which would ordinarily lie before
a civil court shall be filed before a Commercial Court of the district,
provided they are ‘Commercial Disputes’ of a ‘Specified Value’.

 1.8 Definitions.—

(1) In this Act, unless the context otherwise requires,— 
2 (c) “commercial dispute” dispute arising out of means a 

(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; 

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(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 agreements; and licensing 
(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 mercantile usage; agency and 
(xv) partnership agreements; 
(xvi) technology agreements; development 
(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

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including electromagnetic spectrum; 
(xx) insurance and re­insurance; 
(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 realisation 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; 
(i) “Specified Value”, in relation to a commercial dispute, shall mean
the value of the subject­matter in respect of a suit as determined in
accordance   with   Section   which   shall   not   be   less   than   three   lakh
rupees   rupees   or   such   higher   value,   as   may   be   notified   by   the
Central Government.” 
(2) The words and expressions used and not defined in this Act but
defined  in   the  Code  of  Civil Procedure, 1908 (5 of 1908)  and the
Indian   Evidence   Act,   1872   (1   of   1872),   shall   have   the   same
meanings respectively assigned to them in that Code and the Act. 
1.9 Section 12. Determination of Specified Value.— 

(1)   The   Specified   Value   of   the   subject­matter   of   the   commercial


dispute in a suit, appeal or application shall be determined in the

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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; 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

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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.

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2. Pre­Institution Mediation and Settlement­ Section

12­A of the Commercial Court Act. 
By   way   of   an   Amendment   to   the   Commercial   Courts,
Commercial   Division   and   Commercial   Appellate   Division   of   High
Courts   Act,   2015,   Chapter   III­A   titled   Pre­Institution   Mediation
and   Settlement   ­   (PIMS)   was   introduced   and   was   made

retrospectively applicable from 03.05.2018.  Section 12A of the

the Commercial Court Act (for short the Act) reads as under:­ 
2.1 Pre­Institution Mediation in Commercial Matters

The   Commercial   Courts,   Commercial   Division,   Commercial


Appellate   Division   of   High   Courts   Act,   2015,   was   enacted   in   the
year   2015   with   the   objective   of   achieving   speedy   adjudication   of
Commercial   Disputes.   Moreover,   the   Commercial   Courts   (Pre
Institution Mediation and Settlement) Rules, 2018 were also framed
in   line   with   the   aforesaid   act   for   the   purpose   of   resolving   the
matters   relating   to   commercial   disputes   in   an   efficacious   and
expeditious manner.

As   per   the   said   enactments,   all   disputes   falling   within   the


definition   of   “Commercial   Dispute”   under   Section   2(1)(c)   of   the
Commercial Courts Act, which are valued Rupees 3 Lakhs or more,
shall not be instituted unless the plaintiff mandatorily exhausts the
remedy of Pre­Institution Mediation, to be conducted by the Legal
Services   Institutions.   Accordingly,  the  Legal   Services  Institutions
are conducting Pre Institution Mediation in respect of Commercial

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Disputes across the country.

 2.2.   Mandatory   Pre­Institution   Commercial   Mediation   In

India: Premature Step In The Right Direction?

The Indian parliament passed the Commercial Courts,

Commercial Division and Commercial Appellate Division of

High   Courts   (Amendment)   Bill,   2018   (“Bill”)   on   10   August,

2018. In a potentially significant development, section 12A of the

Bill stipulates mandatory pre­institution mediation i.e. the plaintiff
is mandatorily required to exhaust the remedy of mediation prior to
filing   a   suit   in   accordance   with   the   Commercial   Courts   (Pre­
Institution Mediation and Settlement) Rules, 2018 (“Rules”), unless
the suit contemplates any urgent interim relief under the parent
Commercial Courts Act, 2015 (“Act”) 
2.3 Why is this Bill potentially significant?

Mediation has long been considered the poorer cousin to litigation
and   arbitration   in   India.   In   particular,   commercial   disputes
constitute   only   a   fraction   of   mediations   conducted   by   existing
institutions,   which   largely   mediate   family,   matrimonial   and
property   disputes.   Given   that   commercial   disputes   constitute   a
significant proportion of disputes involving Indian parties, urgent
legislative,   institutional   and   attitudinal   reforms   are   required   to
promote commercial mediation. In light of this, the introduction of
mandatory   pre­institution   mediation   could   provide   much­needed
impetus to promote commercial mediation, enhance the acceptance

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of   mediation   as   a   viable   and   preferred   dispute   resolution


mechanism   in   India   and   further   larger   objectives   of   improving
India’s   Ease   of   Doing   Business   ranking   (currently   100)   and
facilitating quicker resolution of commercial disputes.
2.4 Key features

The   Bill   envisages   the   opt­out   model   of   mediation,   which   has


enjoyed considerable success in countries like Italy and Turkey in
the  recent  past.   In   this  model,  parties  are required  to  attend  an
initial   information   session  with  a  mediator.  The  session   provides
them an opportunity to learn more about mediation and make an
informed decision about whether to attempt it or initiate litigation.
Voluntariness   of   the   process   is   protected   as   parties   are   not
obligated   to   participate   in   an   actual   mediation   session.   Any
mediated settlement assumes the status of a deemed arbitral award
under  section   30(4)   of  the Arbitration  and Conciliation  Act, 1996
and can accordingly be enforced as an arbitral award.
The   Rules   appear   to   prescribe   the   facilitative   model   of
mediation   as   they   expressly   refer   to   the   principles   of   self­
determination   and   voluntariness.   Further,   confidentiality   of   the
mediation   as   well   as   the   principal   ethics   to   be   abided   by   the
mediator   are   also   prescribed.   The   mediation   is   required   to   be
completed   within   three   months   from   the   date   of   the   plaintiff’s
application   to   initiate   mediation,   which   can   be   extended   by   two
months upon both parties’ consent.
 2.4 Premature step?

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Although a step in the right direction, there is no denying that the
implementation   and   success   of   the   envisaged   mechanism   remain
highly questionable. Perhaps the biggest hindrance could prove to
be   the   authorisation   of   the   State   Authorities   and   District
Authorities (constituted under the Legal Services Authorities Act,
1987)   as   the   relevant   authorities   to   conduct   the   pre­institution
mediation.The   object   of   the   Legal   Services   Authorities   Act   is   to
“provide free and competent legal services to the weaker sections of
the society to ensure that opportunities for securing justice are not
denied to any citizen by reason of economic or other disabilities”. To
this   end,   State   Authorities   and   District   Authorities   (“LSA
Authorities”)   provide   legal   services   to   eligible   persons   and
periodically   conduct   Lok   Adalats   (“people’s   courts”),   among   other
functions   and   services.   While   an   analysis   of   the   Legal   Services
Authorities Act is beyond the scope of this post, it suffices to state
that   the   LSA   Authorities   are   already   immensely   overburdened.
This problem only amplifies when you consider (1) the fact that the
Bill lowers the required pecuniary threshold of a suit from one crore
Indian rupees (approximately USD 142,000) to three lakh Indian
rupees (approximately USD 4,285); and (2) the broad definition of
“commercial dispute” under section 2(1)(c) of the Act. While a lower
pecuniary threshold is an arguably well­intentioned amendment to
allow   more   people   to   access   commercial   courts   and   facilitate
resolution   of   more   commercial   disputes,   it   is   likely   to   adversely
impact   the   pre­institution   mediation.   A   broad   definition   of

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“commercial dispute” combined with a lower pecuniary threshold is
more   likely   than   not   to  result  in   more  suits  filed  under the  Act,
which   in   turn   means   more   pre­institution   mediations   –   the   LSA
Authorities are simply not equipped with the appropriate capacity
currently   to   effectively   deal   with   this,   especially   without
compromising on the justice administered to the weaker sections of
society, which is of course an undesirable outcome.
Moreover, it is likely that the LSA Authorities lack adequate
and   relevant   experience   and   expertise   to   mediate   commercial
disputes as the disputes they typically address pertain to labour,
family   and   insurance   matters.   Experience   and   training   in
commercial mediation is always preferable as the issues involved
can   be  fairly  technical  and a skilled  mediator  in  this regard can
ensure  effective  dialogue and a workable settlement.  Even  if  one
were   to   legitimately   reason   that   facilitative   mediation   does   not
necessarily require a mediator to be trained in the area of dispute,
there   is   no   guarantee   that   the   officers   and   members   of   the   LSA
Authorities   have   any   experience   at   all   in   any   sort   of   facilitative
mediation,   let   alone   any   training.   Efficient,   useful   and   effective
mediation of commercial disputes requires, at the very least, some
basic minimum training in and exposure to mediation. This is all
the   more   essential   in   a   country   like   India   where   awareness   of
mediation is minimal and, therefore, parties rely on the mediator to
effectively guide the process. In my opinion, in this respect, the Bill
reflects a widely­held perception in India that anyone can mediate

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and  that mediation  is not a distinct discipline which requires its


own skills­set. Ideally, the successful implementation of any reform,
such   as   pre­institution   mediation   in   this   case,   requires   adequate
infrastructure and resources to be established and available prior to
its   introduction.   Italy   and   Turkey   invested   in   resource­building
prior   to   their   respective   pre­institution   mediation   reforms,   which
have   played   a   pivotal   role   in   the   success   of   the   reforms.   India’s
mediation   machinery   is   minimal   –   there   is   no   pool   of   certified
accredited mediators,  no central statute governing mediation and
opportunities to be trained are limited. The legislature should have
taken   into   account   these   constraints   and   designated   external
institutions and centres dedicated to ADR and mediation as well as
mediation centres attached to courts as the
responsible   authorities.   Such   institutions   and   centres   have
empanelled mediators who are certified and have undergone certain
minimum   training.   In   addition,   they   are   likely   to   have   more
experience   and   skills   in   commercial   mediation   than   the   LSA
Authorities.
Further,   section   12A   creates   a   carve­out   from

mandatory mediation for “urgent interim relief” – neither the

Act nor the Bill clarifies what constitutes an “urgent” interim relief.
This   could   potentially   be   misused   by   parties   and/or   counsel   to
wriggle   out   of   participating   in   mediation   or   delaying   the   same,
which in turn would defeat the overall objective of the statute. In
addition,   it   is   not   clear   if   pursuit   of   the   urgent   interim   relief

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temporarily   delays   the   mediation   or   eliminates   the   mandatory


requirement to mediate altogether. 
Lastly, there are two important questions to consider – 
(1)should there be any monetary sanction if either party does not
appear   for   mediation   or   participate   in   the   mediation
seriously?; and
(2)  is the three­month time period (extendable by two months)
for completion of the mediation too long? 
  Mediators   and   practitioners   in   India   agree   that   these   are
relevant issues, however these are complex issues to which there
are no easy/straight­forward answers and merit detailed analysis.
This is all the more so in India where mediation is nascent, and
resources and awareness limited. 
  For   instance,   who   would   determine   whether   or   not   a   party
participated   seriously   and   on   what   basis?   And   would   a   penalty
actually guarantee serious participation or only encourage parties
to pretend to be participating seriously? 
Likewise, would a shorter time period actually be feasible given the
capacity   crunch   highlighted   above   and   instead   have   an   adverse
impact   on   the   quality   of   mediation?   While   a   detailed   analysis   of
these   issues   is   beyond   the   scope   of   the   post,   they   are   definitely
worth deliberating and examining in the context of the Bill. 
2.5 Concluding thoughts

While urgent reforms are required to promote mediation in India,
and in particular commercial mediation, any such reform requires

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an enabling environment to succeed, which India currently lacks.
Allocation   of   the   responsibility   to   the   LSA   Authorities   reflects
short­sightedness   and   lack   of   careful   thought   on   the   part   of   the
legislature.   Now   that   only   the   President’s   assent   is   required   to
make   the   Bill   into   law   (which   will   almost   certainly   be   given),   it
remains to be seen how this reform will work in practice. A silver
lining, perhaps, is that this Bill may hopefully generate discussion
and   awareness   about   commercial   mediation,   which   could   lead   to
more sensible initiatives and reforms in the future.
2.6 Section 12A of the aforesaid Act states as follows:

NOTE: NOTIFICATION : Noti. No. S.O. 3232(E), dated July 3,

2018.—In   exercise   of   the   powers   conferred   by   sub­section   (2)   of

Section   12­A   of   the   Commercial   Courts   Act,   2015,   the   Central


Government   hereby   authorises   the   State   Authority   and   District
Authority   constituted   under   the   Legal   Services   Authorities   Act,
1987 (39 of 1987), for the purposes of pre­ institution mediation and
settlement under Chapter IIIA of the Commercial Courts Act, 2015. 

12A. Pre­Institution 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   pre­institution   mediation   in   accordance   with   such
manner and procedure as may be prescribed by rules made by the
Central Government.

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(2)   The   Central   Government   may,   by   notification,   authorise   the


Authorities   constituted  under  the  Legal  Services   Authorities   Act,
1987 (39 of 1987), for the purposes of pre­institution mediation.

(3)   Notwithstanding   anything   contained   in   the   Legal   Services


Authorities Act, 1987 (39 of 1987), the Authority authorised by the
Central   Government   under   sub­section   (2)   shall   complete   the
process of mediation within a period of three months from the date
of application made by the plaintiff under sub­section (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 pre­institution 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
sub­section (4) of section 30 of the Arbitration and Conciliation Act,
1996 (26 of 1996).

1. Short   title   and   commencement. (1)   These   rules   may   be

called the Commercial Courts (Pre­Institution Mediation and
Settlement) Rules, 2018. 

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(2) They shall come into force on the date of their publication
in the Official Gazette. 

2.   Definitions. ­   (1)   In   these   rules   unless   the   context   otherwise

requires,­ 

(a)"Act"means the Commercial Courts Act, 2015 (4 of 2016); 

(b)"applicant"means   a   person   who   approaches   the   Authority


under rule 3 for the initiation of mediation process; 

(c)  "Authority"  means   the   Authority   notified   by   the   Central


Government under sub­section (2) of section 12A of the Act; 

(d)  "commercial   dispute"  means   the   commercial   dispute   as


defined in clause (c) of sub­section (1) of section 2 of the Act; 

(e)  "Form"  means   the Form specified in  the Schedule to these


rules; 

(f)  "mediation"  means   a   process   undertaken   by   a   Mediator   to


resolve, reconcile and settle a commercial dispute between the
parties thereto. 

(g)  "Mediator"  means a person empanelled by the Authority for


conducting the mediation; 

(h) "opposite party" means a party against whom relief is sought
in a commercial dispute; 

(i) "Schedule means the Schedule appended to these rules; and 

(j)  "settlement"  means   the   settlement   of   commercial   dispute

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arrived at by the parties to the mediation; 

(2) The words and expressions used and not defined in these rules,
shall have the same meanings respectively as assigned to them in
the Act or the Legal Services Authorities Act, 1987 (39 of 1987) or in
any other law for the time being in force. 

3. Initiation of mediation process. ­

(1) A party to a commercial dispute may make an application to the
Authority as per Form­1 specified in Schedule­I, either online or by
post or by hand, for initiation of mediation process under the Act
along with a fee of one thousand rupees payable to the Authority
either by way of demand draft or through online; 

(2)   The   Authority   shall,   having   regard   to   the   territorial   and


pecuniary jurisdiction and the nature of commercial dispute, issue a
notice, as per Form­2 specified in Schedule­I through a registered or
speed post and electronic means including e­mail and the like to the
opposite   party   to   appear   and   give   consent   to   participate   in   the
mediation process on such date not beyond a period of ten days from
the date of issue of the said notice. 

(3) Where no response is received from the opposite party either by
post or by e­mail, the Authority shall issue a final notice to it in the
manner as specified in sub­rule (2). 

(4)   Where   the   notice   issued   under   sub­rule   (3)   remains


unacknowledged or where the opposite party refuses to participate
in the mediation process, the Authority shall treat the mediation

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process   to   be   a   non­starter   and   make   a   report   as   per   Form   3


specified in the Schedule­I and endorse the same to the applicant
and the opposite party. 

(5) Where the opposite party, after receiving the notice under sub­
rule (2) or (3) seeks further time for his appearance, the Authority
may, if it thinks fit, fix an alternate date not later than ten days
from the date of receipt of such request from the opposite party. 

(6) Where the opposite party fails to appear on the date fixed under
sub­rule (5), the Authority shall treat the mediation process to be a
non­starter and make a report in this behalf as per Form 3 specified
in   Schedule­I   and   endorse   the   same   to   the   applicant   and   the
opposite party. 

(7) Where both the parties to the commercial dispute appear before
the   Authority   and   give   consent   to   participate   in   the   mediation
process,   the   Authority   shall   assign   the   commercial   dispute   to   a
Mediator   and   fix   a   date   for   their   appearance   before   the   said
Mediator. 

(8)   The   Authority   shall   ensure   that   the   mediation   process   is


completed within a period of three months from the date of receipt
of   application   for   pre­institution   mediation   unless   the   period   is
extended for further two months with the consent of the applicant
and the opposite party. 

4. Venue for conducting mediation. ­ The venue for conducting

of the mediation shall be the premises of the Authority. 

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5.   Role   of   Mediator. ­   The   Mediator   shall,   on   receipt   of   the

assignment   under   sub­rule   (7)   of   rule   3,   facilitate   the   voluntary


resolution of the commercial dispute between the parties and assist
them in reaching a settlement. 

6. Representation of parties. ­ A party to a commercial dispute

shall appear before the Authority or Mediator, as the case may be,
either personally or through his duly authorised representative or
Counsel. 

7.   Procedure   of   mediation. ­   (1)   The   mediation   shall   be

conducted as per the following procedure­ 

(i)   At   the   commencement   of   mediation,   the   Mediator   shall


explain to the parties the mediation process; 

(ii) The date and time of each mediation sitting shall be fixed by
the   Mediator   in   consultation   with   the   parties   to   the
commercial dispute. 

(iii)   The   Mediator   may,   during   the   course   of   mediation,   hold


meetings with the parties jointly or separately, as he thinks fit;

(iv) The applicant or opposite party may share their settlement
proposals with the Mediator in separate sittings with specific
instruction   as   to   what   part   thereof   can   be   shared   with   the
other party; 

(v)   The   parties   to   the   mediation   can   exchange   settlement


proposals   with   each   other   during   mediation   sitting   either

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orally or in writing; 

(vi) During the process of mediation, the Mediator shall maintain
confidentiality   of   discussions   made   in   the   separate   sittings
with each party and only those facts which a party permits can
be shared with the other party; 

(vii)   Once   both   the   parties   reach   to   a   mutually   agreed


settlement,   the   same   shall   be   reduced   in   writing   by   the
Mediator and shall be signed by the parties to the commercial
dispute   and   the   Mediator   as   per   Form­4   specified   in   the
Schedule­I; 

(viii)   The  Mediator shall provide the settlement agreement, in


original, to all the parties to a commercial dispute and shall
also forward a signed copy of the same to the Authority; and 

(ix) Where no settlement is arrived at between the parties within
the time specified in the sub­section (3) of section 12A of the
Act or where the Mediator is of the opinion that the settlement
is   not   possible,   the   Mediator   shall   submit   a   report   to   the
Authority, with reasons in writing, as per Form­5 specified in
Schedule­I. 

(2) The Authority or the Mediator, as the case may be, shall not
retain the hard or soft copies of the documents exchanged between
the parties or submitted to the Mediator or notes prepared by the
Mediator beyond a period of six months other than the application
for mediation under sub­rule (1) of rule 3, notice issued under sub­

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rule (2) or (3) of rule 3, settlement agreement under clause (vii) of
sub­rule (1) of rule 7 and the Failure report under clause (ix) of sub­
rule (1) of rule 7. 

8. Parties to act in good faith. ­ All the parties to a commercial

dispute shall participate in the mediation process in good faith with
an intention to settle the dispute. 

9. Confidentiality of mediation. ­ The Mediator, parties or their

authorized   representatives   or   Counsel   shall   maintain


confidentiality   about   the   mediation   and   the   Mediator   shall   not
allow   stenographic   or   audio   or   video   recording   of   the   mediation
sittings. 

10. Maintenance and publication of mediation data. ­ (1) The

District Legal Services Authority shall forward the detailed data of
the mediation dealt by it under the Act to the State Legal Services
Authority. 

(2) The State Legal Services Authority shall, maintain the data of
all mediations carried out by it or under its jurisdiction and publish
the same, on quarterly basis, on its website as per Form­6 specified
in the Schedule­I. 

11. Mediation Fee. ­ Before the commencement of the mediation,

the parties to the commercial dispute shall pay to the Authority a
one­time mediation fee, to be shared equally, as per the quantum of
claim as specified in Schedule­II. 

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12. Ethics to be followed by Mediator. ­ The Mediator shall­ 

(i) uphold the integrity and fairness of the mediation process; 

(ii) ensure that the parties involved in the mediation are fairly
informed   and   have   an   adequate   understanding   of   the
procedural aspects of the mediation process; 

(iii)   disclose   any   financial   interest   or   other   interest   in   the


subject­matter of the commercial dispute; 

(iv) avoid any impropriety, while communicating with the parties
to the commercial dispute; 

(v)   be   faithful   to   the   relationship   of   trust   and   confidentiality


reposed in him; 

(vi) conduct mediation related to the resolution of a commercial
dispute,   in   accordance with  the applicable  laws for the time
being in force; 

(vii) recognise that the mediation is based on the principles of
self­determination by the parties and that mediation process
relies   upon   the   ability   of   parties   to   reach   a   voluntary
agreement; 

(viii) refrain from promises or guarantees of results; 

(ix) not meet the parties, their representatives, or their counsels
or   communicate   with   them,   privately   except   during   the
mediation sittings in the premises of the Authority; 

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(x)   not   interact   with   the   media   or   make   public   the   details   of
commercial dispute case, being mediated by him or any other
allied  activity  carried out by him as a Mediator, which  may
prejudice the interests of the parties to the commercial dispute.

Schedule­I 

Form­1: Mediation Application Form 

[See Rule 3(1)] 

Name of the Authority and address 

Details of Parties: 

1. Name of applicant : 

2. Address and contact details of applicant: 

Address:­  Telephone.   No.__________


Mobile.________E­mail ID:______________ 

3. Name of opposite party: 

4. Address and contact details of opposite party: 

Address:­ 

Telephone.No.   __________   Mobile.   ________E­mail   ID:


______________ 

Details of Dispute: 

1.  Nature  of   dispute  as per  section  2 (1)(c)  of  the Commercial


Courts Act 2015 (4 of 2016): 

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2. Quantum of claim: 

3. Territorial jurisdiction of the competent court: 

4.   Brief   synopsis   of   commercial   dispute   (not   to   exceed   5000


words): 

5. Additional points of relevance: 

Details of Fee Paid: 

Fee paid by DD No. _________ dated ________ Name of Bank and
branch ____________. 

Online transaction No. _______ dated _________. 

Date: 

Signature of Authority 

Note:Form shall be submitted to the Authority with a fee of one

thousand rupees. 

For Office Use: 
Form received on : 
File No. allotted: 
Mode of sending notice to the opposite party: 
Notice to opposite party sent on: 
Whether Notice acknowledged by opposite party or not: 
Date  of  Non­starter  report/ Assignment of  commercial dispute to
Mediator: 

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Form­2: Notice/Final Notice to the Opposite party for

Pre­Institution Mediation 

[See Rule 3(2) and Rule 3(3)] 

Name of the Authority and address 

1. Whereas a commercial dispute has been submitted to (name of
Authority)   by   (name   of   applicant)   against   (name   of   opposite
party)   requesting   for   pre­institution   mediation   in   terms   of
section 12A of Chapter IIIA of Commercial Courts Act, 2015. A
copy of the mediation application Form is attached herewith. 

2. The opposite party is hereby directed to appear in person or
through   his   duly   authorised   representative   or   Counsel
on   ...............................(Date)   ............................(Time)   at   the
(Authority   address)  and  convey   his  consent  to   participate   in
mediation process. 

3. Failure to appear before the Authority by opposite party would
be deemed as his refusal to participate in mediation process
initiated by the applicant. 

4. In case, the date and time mentioned in para 2 is sought to be
rescheduled the same can be done by the opposite party either
on its own or through its authorised representative or counsel
by making a request in writing at­least two days prior to the
scheduled date of appearance. 

Signature of the Authority Date: 

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Form 3:Non­Starter Report 

[See Rule 3 (4) and (6)] 

Name of the Authority and address 

1. Name of the applicant: 

2. Date of application for Pre­Institution mediation: 

3. Name of the opposite party: 

4. Date scheduled for appearance of opposite party: 

5. Report made under rule 3(4) or 3(6): 

6.   Non   Starter   Report


reason:___________________________________________________
__________________________________________________________
_________________________________________________________

Date: 

Signature of the Authority 

Copy to: 

Applicant. 

Opposite Party. 

Form 4: Settlement 

[See Rule 7 (1) (vii)] 

Name of the Authority and address 

1. Name of the Mediator: 

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2. Name of the applicant: 

3. Name of the opposite party: 

4. Date of application for Pre­Institution mediation: 

5. Venue of mediation: 

6. Date(s) of mediation: 

7. No. of sittings and duration of sittings: 

8. sTerms of settlement:

Date:
Signature of Applicant 

Signature of Opposite Party

Signature of Mediator 

Form 5: Failure Report 

[See Rule 7 (1) (ix)] 

Name of the Authority and address 

1. Name of the Mediator: 

2. Name of the applicant: 

3. Name of the opposite party: 

4. Date of application for Pre­Institution mediation: 

5. Venue of mediation: 

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6. Date(s) of mediation: 

7. No. of sittings and duration of sittings: 

8. Reasons for failure: 

Date:
Signature of Applicant 

Signature of Opposite Party

Signature of Mediator 

Simple reading of the Section 12A(1) of the Act makes it clear
that, a suit, which does not contemplate any Urgent Interim Relief
under the Act, shall not be instituted, unless the plaintiff exhausts
the remedy of the pre­institution mediation.Under the wrong notion
that,   once   an   application   for   an   interim   relief/injunction   is   filed,
plaintiff will be in a position to obliterate the process of exhausting
the remedy of pre­institution mediation and agitate the suit prayers
before the Competent Commercial Court.
2.7   Whether   such   notion   is   legally   sustainable   or   not   that

has to be checked up.

To decide this, the difference between Urgent Interim Relief
and Interim Relief needs to be understood.At this stage reference is
required   to   be   made   to   the   famous   observations   made   by   Lord

Granworth in Grundy v/s. Pinniger – 1852(1) LJ Ch 405. This

is referred to in LIC v/s. Shree Meena, 2019 (4) SCC 479 (FB)

and Dr. K. Babapai v/s. Dr. K.V.R. Murthy, 2016 SCC Online

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Guj 4702.“...to adhere as closely as possible to the literal meaning

of the words used, is a cardinal rule from which if we depart we
launch into a sea of difficulties which it is not easy to fathom.”
2.8   What   does   the   phrase   “URGENT   INTERIM   RELIEF”

means?

The   phrase   “URGENT   INTERIM   RELIEF”   has   not   been


defined   anywhere.   But   is   just   similar   to   the   cases   where   court
passes order u/O 39 R.3 of the CPC. Guidelines with respect to, in
which circumstances an order u/O 39 R.3 of the CPC can be passed,
is seen in the ratios laid down in the cases of 
(1) Desk to Desk Courier & Cargo v/s. Union of India, 2005 (7)

SCC 491 

(2)   Shiv   Kumar   Chadha   v/s.   Municipal   Coprpotation   of

Delhi, 1993 (3) SCC 161.

The   next   question   which   comes   up   for   consideration   is,   as   to


whether a plaint can be rejected u/O. VII Rule 11 of the CPC, on the
count that though plaintiff has not sought Urgent Interim Relief he
has not exhaust remedy of the pre­institution mediation?
The answer is in affirmative. And the reason is mandatory bar
contained   u/s   12­A   of   the   Act.The   ‘Doctrine   of   Exhaustion   of
Statutory   Remedies’,   needs   to   be   bear   in   mind.   the   ‘Doctrine   of
Exhaustion   of   Statutory   Remedies’,   would   squarely   apply   in   the
case   where   without   exhausting   the   remedy   of   pre­institution
mediation, the Commercial Suit is filed.Reference is required to be
made to the ratio laid down in the case of Anant Shankar Bhave

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v/s. Kalyan Dombivali Municipal Corpn., reported in 2019(4)

SCC 348, wherein it has been observed that when plaintiff has filed

misconceived   suit   and   sought   improper   and   ameliorative   reliefs,


liberty may granted to file fresh suit seeking proper reliefs and with
the clarification that present proceedings would not operate as res­
judicataDuty of the the judge does not end here. Ld. Judge while
passing and order of rejection of the plaint u/O. VII Rule 11 of the
CPC is also required to pass an order directing the plaintiff to the
exhaust remedy of the pre­ institution mediation. And, subject to
the final out come of the said mediation process, another suit may
be filed, subject to the second proviso of Section 12­A (3) of the Act
.In pursuant to Section 12A(2) of the Act, Central Government has
framed   the   Commercial   Courts   (Pre­   institution   Mediation   and
Settlement)   Rules,   2018.If   during   the   court   proceedings   Ld.
Commercial Court Judge comes to the conclusion that there exist an
element   of   settlement,   in   such   a   case   scenario,   case   may   be
transferred   to   the   Mediation   Centre   and   Civil   Procedure
Appropriate Dispute Resolution (Gujarat) Draft Rules, 2007 along
with Mediation Rules, 2015 shall apply.

2.9 Pre­Institution Mediation Defined

Section   12A   of   the   Commercial   Courts   Act   provides   parties


with an alternative means to resolve disputes through discussions
and negotiations with the help of a mediator. The provision states
that a plaintiff must initiate mediation before filing a suit, with a
limited carve out for suits filed with applications for urgent interim

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relief. Courts in India frequently refer ongoing patent infringement
suits to mediation when there exists a possibility for the parties to
arrive at a settlement. However, in the absence of a law imposing a
time limit for completion of such court­referred mediations, in many
cases,   mediations   of   patent   infringement   suits   go   on   for   months
with   no   resolution.   Mediation   under   the   Commercial   Courts   Act
bridges   this   gap   by   making   mediation   a   time­bound   process.   In
India,   most   IP   infringement   suits   are   filed   with   an   application
seeking   a   preliminary   injunction.   This   would   qualify   as   "urgent
interim relief" under Section 12A and initiation of mediation prior
to filing of the suit would not be mandatory. However, in disputes
where a patentee is not seeking a preliminary injunction and wants
to use litigation as a  tool to negotiate terms for granting limited
rights to their IP, pre­initiation mediation is a viable option.

2.10 rocedure for Initiating Pre­Institution Mediation

The procedure to be followed in such mediation proceedings is set

out in the Commercial Courts (Pre­Institution Mediation and

Settlement) Rules, 2018 ("Rules"). 

1. As per the Rules, the plaintiff must file an application with
the   State   Legal   Services   Authority   or   the   District   Legal
Services   Authority   constituted   under   the   Legal   Services
Authorities Act, 1987 ("Authority") to initiate mediation. O

2. Once an application is received, the Authority will issue notice
to the opposing party to appear within 10 days of receipt of

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notice   and   give   consent   to   participate   in   the   mediation


proceedings.

3. The   Rules   provide   for   issuance   of   a   final   notice   if   the


Authority does not receive a response within 10 days of the
initial notice. 

4. If the opposing party fails to appear following the final notice
or   refuses   to   participate   in   the   mediation   proceedings,   the
Authority   will   treat   the   mediation   process   as   a   non­starter
and prepare a report to that effect. 

5. If the opposing party agrees to participate, then the mediation
process begins. Following negotiations and meetings with the
mediator,   if   the   parties   arrive   at   a   settlement,   it   will   be
recorded in a settlement agreement.

2.11 The Pros

Instituting pre­initiation mediation holds many advantages

over out­of­court interparty negotiations:

1. Time and cost­effective. Pre­institution mediation initiated

under the Commercial Courts Act must be completed within a
period of three months from the date of application made by
the plaintiff, with a possible extension of two months with the
consent of the parties. The time bound process saves time and
costs incurred by the parties involved. 
2. Patent litigations in India are known to be lengthy. Exploring

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the possibility of a settlement before filing a suit could avoid
such lengthy litigation. 
3. Confidentiality.   Confidentiality   of   negotiations   with   a

potential   licensee   is   key   to   prevent   disclosure   of   important


business   strategies   to   competitors.   The   Rules   ensure
confidentiality   by   providing   that   the   mediator,   the   parties,
and   their   counsels   must   maintain   confidentiality   about   the
mediation.   Stenographic   or   audio   or   video   recording   of   the
mediation proceedings is prohibited under the Rules. 
4. No threat of a validity challenge. A patentee must always

assess the strength of their patent before filing a suit since a
defendant can challenge the validity of a patent. Even at the
interim   stage,   a   defendant   can   avoid   an   injunction   being
granted  against   them by raising a credible challenge to  the
validity   of   a   patent.   When   the   patent   is   susceptible   to   a
challenge,   pre­initiation   mediation   can   be   a   good   choice   to
negotiate a license without the threat of a validity challenge. 
5. Assessing the strength of the opponent's case. Through

negotiations in a mediation proceeding, a patentee can get a
sense of the opponent's strengths and weaknesses and prepare
for   the   possibility   of   contesting   a   suit.   The   opponent   might
reveal that  their product is covered by another patent or is
based   on   technology   available   in   the   public   domain.   The
patentee then has time to assess the likelihood of its success in
a suit. There is no bar on seeking interim relief if a suit is filed

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in the event of a failure of mediation proceedings. Depending
on the patentee's assessment of its case, a patentee may still
seek an interim injunction even after trying mediation. 
6. Negotiating   in   good   faith.   Licensee   negotiations   between

parties   can   often   go   on   for   months.   During   this   time,   a


potential licensee may at time engage in infringing acts. The
threat   of   possible   litigation   that   could   result   due   to   an
unsuccessful   mediation   under   the   Commercial   Courts   Act
would   possibly   motivate   a   potential   infringer/   licensee   to
negotiate license terms in good faith. The Rules also provide
that parties shall participate in the mediation process in good
faith with an intention to settle the dispute. 

2.12 The Cons

Section 12A imposes a mandatory obligation upon the plaintiff to
initiate mediation. However, the Rules give the opposing party the
right to refuse to participate in the mediation proceedings. If the
opposing party does not appear, it will also result in the mediation
proceedings   being   deemed   a   non­starter.   This   optional   approach
arguably results in the provision lacking teeth.

2.12.  Powers of the Court in a Case Management Hearing.

   4 July,
The Supreme Court in Rameshwari Devi v Nirmala Devi 

 2011 CIVIL APPEAL NOS.   4912­ 4913 OF 2011   had observed

that at the time of filing of a suit the trial court should finalize a
timeline for all filings and pleadings and all parties should adhere

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to these timelines. 

The   observations   of   the   Supreme   Court   follow   the   best   practices


from different jurisdictions like United States and Australia where
Case   Management   is   an   essential   and   integral   part   of   the   legal
system.   The   Ordinance   has   in   Section   7   of   its   Schedule   inserted
Order   XV   in   the   CPC,   providing   for   the   concept   of   Case
Management whereby the Court would mandatorily have to hold a
meeting  between   the  parties where the Court  will decide  upon  a
timeline for most important stages in a proceeding like recording of
evidence,   filing   of   written   arguments,   commencement   and
conclusion of oral arguments.  The Court is further empowered to
dismiss a petition, foreclose the right to make certain pleadings or
submissions   or   order   payment   of   costs   in   the   event   of   non­
compliance of the orders passed 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 XIII­A;

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;

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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;

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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.

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3. Order XV­A Case Management Hearing

3.1. 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.

“Rules of procedure are not by themselves an end, but are a means to
achieve the ends of justice, and the tools forged are not intended as
hurdles to obstruct the pathway to justice…Procedure is meant to

subserve and not rule the cause of justice.”  –Justice, Courts and

Delays by Arun Mohan, Senior Advocate.

The   Commercial   Courts,   Commercial   Division   and   Commercial


Appellate Division of High Courts Act, 2015 was widely hailed as a

seminal legislation and a significant step towards enhancing

India’s stature in the Ease of Doing Business index.

The said Act was recently re­christened as ‘The Commercial Courts
Act, 2015’ (“the Act”) by way an ordinance which ushered in certain
significant amendments to the statute as it was originally enacted.

The   Act,   amongst   others,   provides   for   the   constitution   of


Commercial Courts, Commercial Appellate Courts and Commercial
Divisions of High Courts to adjudicate commercial disputes having

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a value, originally of at least one crore rupees, which has since been
reduced to three lakh rupees by the Ordinance.

The Commercial Courts are to be constituted at the district level by
the state government, after consultation with the concerned High
Court.

As   far   as   the   High   Courts   having   ordinary   civil   jurisdiction   are


concerned, the Chief Justice is required to constitute a Commercial
Division having one or more Benches consisting of a Single Judge
for exercising jurisdiction under the Act. The Chief Justice is also
required to constitute Commercial Appellate Divisions having one
or more Division Benches for purposes of exercising the jurisdiction
and powers conferred on it under the Act.

The   term   ‘Commercial   Dispute’   is   defined   in   the   widest   possible


terms so as to cover within its ambit almost all kinds of disputes in
relation to a ‘commercial transaction’, including disputes relating to
transactions   between   merchants,   bankers,   financiers,   traders,
etc. and   in   relation   to   shareholders   agreements,   mercantile
documents, and partnership agreements, amongst others.

The Act  further provides that the provisions of the Code of  Civil


Procedure,   1908   (“CPC”)shall,   in   its   application   to   any   suit   in
respect of a commercial dispute of a specified value, stand amended

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in the manner specified in the Schedule.

It   is   worthwhile   to   note   that   the   Act   contemplates   certain


significant departures from the CPC, which appear to be aimed at
expediting the procedure of resolution of suits involving commercial
disputes. Some of these provisions are as under:

3.2 Order XI (introduced in substitution of Order XI of the

CPC)

A plaintiff or a defendant is required to file a list of  all documents
(and copies) in its power, possession, control and custody pertaining
to the suit, including not only documents relied upon in the plaint
or   the   written   statement,   but   also   documents   relating   to   any
matters in question in the proceedings, irrespective of whether they
are   in   support   of   or   adverse   to   the   plaintiff   or   defendant’s   case
[Rules 1(1) and 7 of Order XI].

Further,   the   plaint   and   written   statement   should   contain   a


mandatory declaration on oath from the plaintiff or defendant, as
the case may be, that all such documents in its power, possession,
control  and custody  have been  disclosed and that the plaintiff  or
defendant does not have any other documents [Rules 1(3) and 1(9)
of Order XI].

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It is also provided that the duty to disclose documents which come
to the notice of a party shall continue till the disposal of a suit [Rule
12 of Order XI].

3.3. Order XIII A 

The Court is entitled to decide a claim (or part thereof) pertaining
to any Commercial Dispute without recording oral evidence [Rules
1(1) and 1(2) of Order XIII A].

Such summary judgment may be granted where,on an application
filed  in   that  regard,   the Court considers that: (a) the plaintiff  or
defendant   has   no   real   prospect   of   succeeding   or   successfully
defending a claim; and (b) there is no other compelling reason why
the claim should not be disposed of before recording of oral evidence
[Rule 3 of Order XIII A].

The   Court   also   has   the   power   and   discretion   to   do   any   of   the
following:

 pass orders directing judgment on the claim;

 pass a conditional order;

 dismiss the application;

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 dismiss   part   of   the   claim   and   pass   a   judgment   on   the


remaining part of the claim;

 strike out the pleadings;

 pass   further   directions   to   proceed   for   a   Case   Management


Hearing.

3.4 Order XV A

The Court shall hold the first Case Management Hearing not later
than four weeks from the date of filing of affidavits of admission or
denial of documents by the parties [Rule 1 of Order XV A].

In   a   Case   Management   Hearing,   the   Court,   after   hearing   the


parties and once it finds that there are issues of fact and law that
require to be tried, may pass an order [Rule 2 of Order XV A]:

 framing issues between the parties after examining pleadings,
documents   and   documents   produced   before   it,   and   on
examination conducted by the Court under Rule 2 of Order X,
if required;

 listing witnesses to be examined by the parties;

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 fixing the date by which affidavits of evidence are to be filed
by the parties;

 fixing   the   dates   on   which   evidence   of   the   witnesses   of   the


parties are to be recorded;

 fixing   the   date   by   which   written   arguments   are   to   be   filed


before the Court by the parties;

 fixing the date on which oral arguments are to be heard by the
Court; and

 setting time limits for parties and their advocates to address
oral arguments.

3.5 Order XVIII 

Parties are required to file succinct written submissions within four
weeks prior to commencing oral arguments. No adjournments are to
be ordinarily allowed for purposes of filing the written submissions
unless   the   Court,   for   reasons   recorded   in   writing   considers   it
necessary. The Court also has the power to limit the time for oral
submissions   having   regard   to   the   nature   and   complexity   of   the
matter.

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3.6. Order XIX 

The Court has the power to regulate the evidence as to the issues on
which it requires evidence and the manner in which such evidence
may be placed before the Court. Further, the affidavit of evidence
has to comply with certain requirements, as prescribed.

3.7 Order XX 

The   Commercial   Court,   Commercial   Division,   or   Commercial


Appellate Division shall pronounce judgments and issue copies to
all   parties   within   ninety   days   of   conclusion   of   arguments.
Unfortunately, the construct and manner of implementation of the
Act has, figuratively speaking, turned out to be a case of old wine in
a new bottle.

Firstly, the ‘constitution’ of a new hierarchy of Courts under the Act
is   a   misnomer,   since   all   that   the   Act   does   is   to   entrust   this
specialized   jurisdiction   of   Commercial   Disputes   to   the   existing
hierarchy   of   High   Courts   exercising   ordinary   original   civil
jurisdiction and district courts in other States.

Secondly,   although   the   Act   provides   that   the   CPC   will,   in   its
applicability   thereto,   stand  amended  in  several  respects,   the  fact
that   the   same   hierarchy   of   Courts   has  been   entrusted   with   both

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commercial   and   non­commercial   matters   (often   appearing   in   a


common cause list on a given day), has seriously whittled down the
efficacy of the Act.

Further,   on   a   practical   level,   it   is   generally   observed   that   these


Courts even deploy a common diary of dates while deciding upon
the scheduling of a commercial matter.

Given the said practical challenges, it is indeed doubtful whether
the   salutary   objectives   of   the   Act   can   be   achieved.   Our   past
experience with similarly progressive statutes (the curious case of
the   Arbitration   and   Conciliation   Act,   1996   immediately   comes   to
mind) cautions us not to be overly optimistic on that front.

In the author’s view, it is of utmost importance that a database of
Judges   who   have   ‘real’   experience   in   dealing   with   commercial
disputes is prepared and maintained. On a pedantic and perhaps
more   expedient   view   of  this  essential   pre­requisite,   judges  of  the
High Court and district judges are often presumed to possess such
experience by dint of their seniority alone.

However,   that   may   appear   to   be   a   rather   simplistic   view   of   the


matter. In fact, experienced litigators would attest that one of the
most prevalent and oft­repeated comments heard in Court, when a
plaintiff embroiled in commercial disputes seeks to expedite his/its

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matter, is on the lines of ‘there is no urgency in your matter; you
can always be compensated by interest and costs’.

Therefore, the need of the hour is to man the Courts constituted
under the Act with judges who have proven specialized experience,
knowledge   and   expertise   of   handling   commercial   disputes   in   an
adjudicatory   capacity   or   as   legal   practitioners,   coupled   with
‘training   and   continuous   education’   of   the   judges   so   selected   in
terms of Section 20 of the Act.

If implemented in right earnest, this could become the impetus for
the Act to become a game changer as it would not only ensure that
the Courts constituted under the Act would be better equipped to
approach its implementation in an organized and concerted manner
but   would   also   allow   for   formulation   of   a   consensus   on   the   ‘best
practices’ to be adopted by such Courts.

Further,   the   conventional   view   of   the   Court   as   being   a   ‘passive’


arbiter of commercial disputes will have to give way to a ‘pro­active’
approach if the provisions of the Act are to be given full amplitude
and play in their implementation.

The   Court   will   have   to   be   cognizant   of   the   trade   practices,


transactional models and structures, customs and usages typical to
particular categories of commercial disputes and in many cases, the

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approach   taken   by   Courts   in   foreign   jurisdictions   on   similar


disputes/issues.

The  Court  will  also  have to  subject every  case to  a rigorous and


critical scrutiny at every stage and employ the ‘tools’ provided by
the statute, even  suo motu  (wherever permissible), with the over­
riding objective being speedy and just resolution.

Lastly,   and   perhaps,   most   importantly,   since   every   hearing   in   a


matter means expending of valuable public time by the Court and
cost   by  the  exchequer  and  the parties concerned,  it  is necessary,
nay  imperative, that any adoption of deleterious and time­wasting
tactics   be   curbed   with   an   iron   hand   and   that   the   time   lines
prescribed   in   the   statute   are   uncompromisingly   treated   as
sacrosanct.

In   his   celebrated   treatise  Justice,   Courts   and   Delays,   Mr  Arun

Mohan argues that in addition to costs which are compensatory in

nature, and often only notional, actual reform requires “removal of
incentives   for   delay   or   the   advantages   gained   thereby”.   This
requires   the   Court   to   strike   an   equitable   balance   between   the
relative   disadvantage   that   a   plaintiff   is   already   burdened   with
while   approaching   the   Court   and   the   natural   tendency   of   a
defendant to stall an effectual adjudication of a matter by resorting
to hyper­technical and dilatory tactics.

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3.8   Some  important  changes   arising   out  of  this  Ordinance

are listed below:

 Section 35 of the CPC is amended to add wider powers with
respect   to   ordering   costs   in   relation   to   proceedings.   While
deciding   costs,   the   court   can   consider   the   conduct   of   the
parties,   result   of   the   proceeding,   whether   the   claim   or
counterclaim was frivolous, whether settlement procedure was
unreasonably refused, whether the frivolous claim resulted in
wasting time of the court, and such other matters. This will
definitely   bring   a   welcome   change   in   terms   of   litigation
strategies and tactics, with frivolous and delay tactics being
penalized.

 New   forms   introduced   for   submission   of   pleading   and


verification of pleading.

 Order   8   Rule   1   is   amended   whereby   on   expiry   of   120   days


after receipt of service of summons, written statement shall
not be taken on record.

 If   Defendant   disputes   jurisdiction   of   the   commercial   court,


s/he should narrate the reasons for doing so and shall state
which   court   ought   to   have   jurisdiction.   If   the   Defendant
disputes   Plaintiff’s   valuation,   he   should   give   his   own

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statement of value.

 Any allegations in Plaint that are not denied as stipulated in
Rule   3A   shall   be   considered   as   admitted.   If   any   facts   are
denied,   defendant   should   state   reasons   for   denial   and   if   he
intends to put forth a different version, s/he must state his/her
own reason.

 Order   11   of   CPC   has   been   extensively   amended.   All


documents relating to the case shall be filed along with the
Plaint.   Plaintiff   is   even   mandated   to   produce   documents
relating to the matter in question irrespective of whether the
same is in support of or adverse to the Plaintiff’s case. In case
of urgent filings, the court can grant leave to file documents.
Plaintiff shall not be allowed to rely on any documents which
are not produced along with the Plaint. Similarly, Defendants
are allowed to produce all documents along with the written
statement and not thereafter. Parties are allowed to deliver
interrogatories to the other. Court may impose exemplary cost
if anyone willfully or negligently fails to disclose documents.
Parties  should make a statement of admissions and denials
explicitly   with   respect   to   correctness   and   contents   of
documents,   existence   and   execution   of   documents,   issuance
and custody of document. Each party shall set out reasons for
denying   the   document.   Bare   and   unsupported   denials   shall

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not be deemed to be denials of the document.

 With   respect   to   electronic   records,   specific   provisions   have


been   made   stating   that   furnishing   of   printouts,   supported
with an oath, shall be sufficient compliance.

 Many   sections   of   CPC   have   been   made   not   applicable   to


commercial   courts.   A   new   Order   13A   has   been   inserted
whereby  court   can  decide  a  claim   even  without  having  oral
evidence.

 A new Order 15A has been added whereby courts shall hold a
“case management” hearing within 4 weeks immediately after
admission   or   denial   of   documents   by   all   the   parties.   “Case
management” is a new approach in India. The intent of “case
management”   hearings   is   for   the   court   to   come   up   with   a
timetable after consulting all parties. (In the current scenario,
each   party   operates   independently   of   the   others).   After
hearing the parties, the court will pass an order for framing of
issues, listing witnesses to be examined by the parties, fixing
date   of   submitting   evidence,   fixing   date   of   oral   arguments,
setting time limit for lawyers to make oral submissions etc. In
every   “case”,   arguments   must   be   closed   not   later   than   6
months   from   the   first   “case   management”   hearing.   If
successful, this is a significant step towards streamlining the

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process of justice delivery in India, specifically by reducing the
scope  for  time­wasting tactics that often drag litigations for
years.

 Non­appearance   of   an   advocate   on   the   case   management


hearing shall not be a reason for adjourning the hearing. Only
time   will   tell   how   successful   this   laudable   step   will   be   in
curbing a commonly­used tactic.India is infamous for having
an overburdened legal system that leads to indefinite delays
in   the   disposal   of   cases.   Inefficiencies   in   its   legal
infrastructure have made it all the more difficult for foreign as
well   as   domestic   investors   to   protect   their   investments   in
India. In fact, as seen in the famous case of  White Industries
Australia Ltd. vs Union of India, inordinate delays in the legal
process was viewed as breach of investment treaty obligation
by   India.Thus,   there   has   always   been   a   long   standing
requirement   for   a   stable   and   efficient   dispute   resolution
system ensuring quick enforcement of contracts, easy recovery
of   monetary   claims   and   award   of   just   compensation   for
damages   suffered,   all   of   which   are   critical   in   encouraging
investment and economic activity. 

3.9 Fresh procedure for hearing suits

The Code of Civil Procedure, 1908 (“CPC”) has been amended by

the   Ordinance,   with   a   view   to   streamline   the   processes   and

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completely   alter   the   prevalent   litigation   culture.   Global   practices


such as holding of case management hearing have been introduced.
Indicative timelines have been prescribed such as a six (6) month
period for completion of trial post first case management hearing to
bring about efficient and faster dispute resolution. 

The amendments to the CPC are a welcome change. However, the
government may need to provide clarifications on various practical
difficulties   which   may   arise   in   its   application   to   ongoing
proceedings.   Further,   based   on   section   16(1)   of   the   Ordinance,
arguments   may   be   raised   to   apply   such   amended   provisions   to
ongoing suits before various courts till such time the Commercial
Court/Division are constituted and the suits are transferred. 

3.10. Strict Timelines  

3.11. Summary Judgment 

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On   many   occasions   certain   disputes   linger   on   in   courts   without


there being any substance in them as the entire process envisaged
in the CPC has to be followed by the Court and all stages need to be
completed before a judgment can be passed. Courts are duty bound
to   follow   the   principles   of   natural   justice   and   afford   to   the
defendants   all  kinds  of statutory remedies available. The process
envisaged by the Ordinance for a summary judgment is akin to the
existing   procedure   of   Summary   Suits15  in   the   CPC.   Principal
difference   being   the   ability   of   parties   to   request   for   summary
judgments in all commercial disputes of Specified Value irrespective
of   the   nature   of   relief   sought   and   ability   to   request   for   such
summary judgment at any stage prior to framing of issues. 

Ordinance   has   inserted   Order   XIII­A   in   the   CPC   according   to


which, if a party approaches the Court before the issues have been
framed,   then   the   Court   would   consider   the   other   party’s   real
prospect of succeeding. On this basis, it has the discretion to pass a
summary judgment. There are various considerations which are to
be   taken   into   account   by   the   Court   to   decide   as   to   whether   a
summary   judgment   can   be   passed.   However   the   Ordinance   has
struck a balance in providing equal opportunity and protection for
litigants.   The   Ordinance   has   ensured   that   all   facets   of   natural
justice are  met with, wherein both litigants are asked to provide
their individual explanations including documentary evidence as to
why   a   summary   judgment   should   or   should   not   be   passed.   The
Ordinance  has   also  empowered   Courts   to  pass  conditional  orders

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which are akin to interim measures. When a Court believes that a
particular entity may succeed but it is improbable for it to do so, it
can pass a conditional order against that litigant including but not
limited to deposit of a sum of money. Practically, putting a party to
such terms will work to bring about an amicable resolution of many
disputes. 

3.12 Arbitration v/s Commercial Courts

A crucial question arises in context of whether parties should select
Commercial Courts over arbitration. 

The   Arbitration   and   Conciliation   (Amendment)   Ordinance,   2015


(“Arbitration   Ordinance”)   has   brought   in   changes   such   as   a

twelve (12) month deadline for completion of arbitration, deeming
interim   orders   passed   by   arbitral   tribunals   as   orders   of   court,
ability to involve third parties in arbitrations seated in India, which
have in fact taken India beyond the global standards. 

Further, Section 10 of the Ordinance prescribes that applications
and   appeals   arising   out   of   arbitration   are   to   be   heard   by
Commercial Court/Commercial Appellate Division. Thus, the intent
is to look at the two regimes as complementing each other. 

Section   10(1)   and   10   (2),   provide   that   applications   and   appeals


arising out an International Commercial Arbitration and any other
arbitration proceedings which would have been filed in the original
side of the High Court shall be heard by the Commercial Appellate

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Division   i.e.   a   division  bench   (2   judge   bench)   of   the   High   Court.


Appeals under Section 37 of the Arbitration and Conciliation Act,
1996 against an order passed by the Commercial Appellate Division
may then directly lie before the Supreme Court. Further, Section 15
of the Ordinance provides that applications under the Act that are
pending before the High Court where a Commercial Division has
been   constituted   shall be transferred  to  the Commercial  Division
and not the Commercial Appellate Division. 

However, in scenarios where party may not have preferred opting
for arbitration such as in case of back to back transactions, but still
opted to do so, deterred by delays prevalent in the Indian courts,
would   now   be   bolstered   to   adopt   a   pure   court   process   over
arbitration. 

3.13 Summary Judgments And Case Management Hearings

The   Act   by   amending   the   Code   critically   for   the   first   time
introduces   Summary   Judgements   (Order   XIII­A)   and   Case
Management Hearings (Order XV­A).

1. A   Summary   Judgement  is   one   which   is   pronounced   by   the


Court   without   recording   oral   evidence.   However   it   does   not
apply to disputes originally filed as summary suits, the Act
and consequentially the amendments to the Code came into

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force. For the purposes of Order XV­A, the word claim includes
a part of a claim or even a counter claim.

2. An   application   for   a   Summary   Judgement   can   be   filed   any


time   after   summons   has   been   served   on   the   defendant   but
before   the   issues   have   been   framed.   A   court   can   give   a
Summary Judgement against the plaintiff or defendant if it
believes  that plaintiff  has no real prospect of  succeeding on
the   claim   or   if   the   defendant   has   no   real   prospect   of
successfully defending the claim, or if there is no compelling
reason   why   the   claim   should   not   be   disposed   of   before
recording oral evidence. Summary Judgement helps with the
quick disposal of cases.

3. The   Court   is   required   to   hold   the   first  Case   Management


Hearing  not   later   than   4   weeks   from   the   date   of   filing   of
affidavit of admission or denial of documents.

4. The orders which are to be passed in such a hearing include
framing   of   issues,   listing   witnesses   to   be   examined   by   the
parties,   fixing   the   dates   by   which   affidavit   of   evidence   and
written   arguments are to be filed, fixing the date  on  which
evidence   of   the   witnesses   should   be   recorded   and   oral
arguments are to be heard and setting time limits for parties
to address oral arguments.

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5. The   courts   must   ensure   that   the   arguments   are   closed   not
later   than   6   months   from   the   date   of   the   first   case
management   hearing.   It   must   also   ensure   that   the   oral
evidence is recorded on a day­to­day basis.

The  amendments   to the Code provide a planned approach to the


litigation   process   making   it   quick   and   efficient.   In   fact   it   is
theoretically   possible   to   have   a   ‘Commercial   Dispute’   heard   and
disposed of in the regular course within 1 year and 15 days from its
institution, as more particularly explained by the following table:

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4. IMPORTANT AMENDMENTS TO CPC AND PROJECTED

TIMELINE OF LITIGATION : SALIENT FEATURES 

1.   Creation   of   a   specialized   forum   for   disposal   of   commercial


disputes of a 
specified value. 
2.     Suitable   amendments   to   the   provisions   of   CPC   providing
timelines for completion of various processes thereby ensuring that
the whole process of adjudication is time bound. 
3. In terms of the amended provisions of Section 35(2) of CPC as a
general rule the unsuccessful party will be ordered to pay costs to
the successful party and in case the court seeks to deviate from the
general   rule   than   it   has   to   record   the   reasons   for   the   same   in
writing. 
4.  Written Statement has to be filed within a period of 30 days and
can be extended by the court to a maximum of 120 days from the
date of service of the summons. 
5.   The   provisions   regarding   making   denial   of   submissions   in   the
Written   Statement   have   been   made   more   stringent   by   inserting
rule 3A to the provisions of Order VIII Rule 3 of the CPC. 
6.   Stringent   provisions   pertaining   to   disclosure,   discovery   and
inspection   of   documents   in   suits   before   commercial   division   of   a
High   Court   or   a   commercial   court   (Order   XI   CPC)   introduced   in
order to ensure that all documents in the power, possession, control
or   custody   of   the   parties   is   filed   along   with   the   Plaint/Written

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Statement   respectively   with   specific   provisions   disallowing   the


Plaintiff/Defendant from relying on documents which were in their
power, possession, control and custody but not disclosed along with
the   Plaint/Written   Statement   or   within   the   extended   period
provided with the leave of the court. 
7.   Inspection   of   documents   (Order   XI   Rule   3(1))   disclosed   by   the
parties   to   be   completed   within   30   days   of   filing   the   Written
Statement to the Counter Claim whichever is later. The court may
extend this time limit by a maximum of 30 days but not beyond. 
8.   Each   party   to   submit   a   statement   of   admission   or   denial   of
documents within 15 days of completion of inspection or any later
date as fixed by the court (Order XI Rule 4(1)). 
9.   Provisions of Order VIII Rule 1, Order VII Rule 14 and Order
VIII   Rule   1A   CPC   shall   not   apply   to   suits   or   application   before
commercial divisions of High Court or commercial courts. 
10   The court may decide a claim without recording oral evidence
(Order VIII – A Rule 1(1)).
11. A party may apply for summary judgment at any time after the
summon has been served upon the Defendant taking into account
the amendment made to Order XIII­A Rule 2 CPC. 
12     Amendment   to   CPC   to   bring   in   fresh   procedure   for   dispute
resolution by holding management hearings. 
13. Courts to hold first case management hearing not later than 4
weeks from date of filing of affidavit of admission or denial by all
parties to the suit (Order XV – A Rule 1). 

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14  Courts to ensure that all arguments are closed not later than 6
months from the date of the first case management hearing (Order
XV – A Rule 3). 
15.   Recording of evidence to be carried out on a day to day basis
until cross examination of all the witnesses is complete (Order XV –
A Rule 4). 
16.  Stringent provision to the effect that case management hearing
shall not be adjourned for the sole reason that advocate appearing
on behalf of a party is not present (Order XV – A Rule 7) subject to
application for adjournment of hearing being moved in advance and
the   court   adjourning   the   matter   on   such   an   application   upon
payment of such cost as the court deems fit. 
17. Party to file written arguments four weeks prior to commencing
oral arguments (Order XVIII Sub­Rule 3A). 
18.   Commercial   Court,   Commercial   Division   or   Commercial
Appellate Division shall within 90 days of conclusion of arguments
pronounce judgment (Order XX (Substitution for Rule 1)). 
19.  Provisions of Section 8 of the Act provide that no Civil Revision
Application   or   Petition   shall   be   entertained   against   any
interlocutory   order   passed   by   the   commercial   court   including   an
order on the issue of jurisdiction and any such challenge shall be
raised only in an appeal against the decree of the commercial court. 
20.     An   appeal   against   any   decision   of   the   commercial   court   or
commercial division is to be filed before the Commercial Appellate
Division   of   the   High   Court   within   60   days   from   the   date   of

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judgment of order. 
21.  The Commercial Appellate Division shall endeavour to dispose
of the appeals filed before it within a period of 6 months from the
date of filing of such an appeal. 
22. No  suit where the final judgment has been reserved shall be
transferred to the commercial court/ commercial division.

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5.   RECENT   JUDICIAL   TREND   IN   COMMERICIAL   COURT

ACT.

5.1 2018 3 AllMR 10; 2018 4 MhLJ 457; 2018 0 Supreme(Mah)

378;   M/s.   D.M.   Corporation   Pvt.   Ltd.   Versus   The   State   of

Maharashtra,

Admittedly, in the present case, the dispute pertains to arbitration
matter. The Petitioner is seeking the relief of injunction not under
any other law but under Section 9 of the Arbitration Act, the subject
matter of the arbitration is admittedly not less than Rs.1 crore and
therefore,   the   subject   matter   of   arbitration   being   a   'commercial
dispute'   of   a   'specified  value', it has to  be held that, Commercial
Court will alone have the jurisdiction to entertain this arbitration
application. If the submissions advanced by learned counsel for the
Petitioner that this being an application simpliciter for injunction,
Civil Court alone will have the jurisdiction to entertain it, is to be
accepted,   then   the   very   object   of   enacting   Section   10(3)   and   of
establishing the Commercial Courts will be frustrated. As a matter
of fact the ingenuity of the legal profession is such that any dispute
can be brought under the wide umbrella of the injunction suit with
the   claim   that   the   relief   claimed   is   not   susceptible   to   monetary
value. 
However, the Court has to see the real nature of the relief,
which is sought and decide the jurisdiction of the Court accordingly.
Here, in the case, the real nature of the dispute is the arbitration

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agreement, the subject matter of which is above Rs.1 crore; it is a
dispute of commercial nature. Hence, even if, the relief claimed is
simpliciter   for   injunction,   as   the   subject   matter   of   dispute   falls
within the jurisdiction of Commercial Court, in view of provisions of
Section 10(3) of the Commercial Courts Act, the learned Principal
District   Judge,   Satara,   has   rightly   transferred   the   arbitration
application to the Commercial Court.
 5.2  Ascot Estates Pvt. Ltd. vs Bon Vivant Life Style Pvt. Ltd.

 on 10 December, 2015   Date of Decision : December 10, 2015

OMP (I) (Comm.) 16/2015

Para 36. A simple analysis of the above extracted provision lends
support to the conclusion that all applications under the Arbitration
and Conciliation Act , 1996 relating to a Commercial dispute of the
specified value has to be adjudicated by a Commercial Division and
not the Commercial Appellate Division. The said provision, unlike
Section   10   of   the   Ordinance,   does   not   mandate   adjudication   of
applications under the Arbitration and Conciliation Act , 1996 by
Commercial   Appellate   Division   and   thus,   the  valuable   remedy   of
appeal   as   envisaged   under   Section   37   of   the   Arbitration   and
Conciliation Act , 1996 does not stand immutably foreclosed. 

Para  37. We may also take cognizance of amendments effected in
the  Arbitration   and  Conciliation  Act  , 1996 vide 'The Arbitration
and   Conciliation   (Amendment)   Ordinance,   2015'   promulgated   on
October 23, 2015. Section 2 of the said Amendment Ordinance has
retained Section 37 of the Arbitration and Conciliation Act , making

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minor amendments as under:­ 

"20. In  Section 37  of the principal Act, in sub­section (1),


for   clauses   (a)   and   (b),   the   following   clauses   shall   be
substituted, namely:­ 

(a) refusing to refer the parties to arbitration under Section
8 ; 

(b)   granting   or   refusing   to   grant   any   measure   under


Section 9; 

(c) setting aside or refusing to set aside an arbitral award
under Section 34 ." 

Para  38.   The   inescapable   conclusion   is   that   the   law   makers


consciously   chose   to   retain  Section   37  of   the   Arbitration   and
Conciliation Act  , 1996 despite affecting numerous amendments in
the said Act recently goes a long way to negate the hypothesis of its
implied repeal. 

Para  39.  Furthermore, there exists a strong presumption against


ouster of jurisdiction of superior Courts. 

ORDER 8 RULE 1 AND 10 

5.3   State   of   Bihar   and   others   vs   Bihar   rajya   Bhumi   vikas

bank samiti, (2018) 9 SCC 472 as well as Canara bank Vs N G

Subbaraya setty and anr. AIR 2018 SC 3395 for the proposition

that the amendments so made now provide for the consequence of

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nonfiling of written statement, and as this is so, the provisions of
Order VIII Rules 1 and 10 can no longer be said to be directory but
can only be said to be mandatory. In this view of the matter, since a
statutory prohibition now exists, the doctrine of res judicata cannot
be availed. 
5.4   Latin   Media   Corporation   Vs   Zee   Entertainment

 Enterprises   ...   On   27   February,   2019   Commercial   Division

No. 196 Of 2018

QUESTION OF LAW:

1. The present Order deals inter alia with the interpretation of an
amendment to Order VIII of the CPC introduced by the Commercial
Courts Act, 2015 ("Commercial Courts Act"). The amended Order
VIII Rule 1 is in respect of taking on record a written statement of
the Defendant in a Commercial Suit after the expiry of 120 days
from the date of service of summons. 

Para 80.  In so far as Order VIII Rule 9 is concerned, the leading

authority in this respect is the Apex Court's decision in Nankhu. At

this   stage,   it   is   pertinent   to   note   that   the  Apex   Court   in

paragraph no. 9 of M/s SCG Contracts India Pvt. Ltd. Vs. K.S.

Chamankar Infrastructure Pvt. Ltd. & Ors. (supra), has noted

that Nankhu was passed in context of the provisions of the CPC
prior to their substitution by the Commercial Courts Act. Nankhu
was based on findings that the proviso to Order VIII Rule 1 prior to
its substitution by the Commercial Courts Acts did not (i) provide

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for any consequences on not filing the written statement within the
stipulated period; and (ii) specifically take away the power of the
court to take on record the written statement. 

 I would find that my decision would be directly in the teeth of the
legislative   mandate   of   the   Commercial   Courts   Act,   its   provisions
and legislative intent. I would have to agree with Mr. Kohli that
what   has   been   prohibited   from   being   done   directly,   cannot   be
allowed   to   be   done   indirectly.   If   this   Court   has   been   expressly
divested of its powers to take on record ' the'  written statement

after the expiry of 120 days, allowing the same to be taken on

record   in   another   way   i.e.   under   the   cover   of   it   being   '   a'

written statement would be a travesty of procedure as well as

a mockery of the legislative mandate.

Clearly,   the   clear,   definite   and   mandatory   provisions   of   Order   V


read   with   Order   VIII   Rule   1   and   10   cannot   be   circumvented   by
recourse to the inherent power under Section 151 to do the opposite
of what is stated therein." 

Para  81.   As   can   be  seen  from the aforesaid decision  of  the Apex


Court,  legislative mandate of the Commercial Courts Act cannot be
circumvented   by   resorting   to   this   Court's   inherent   powers   much
less another procedural rule within the same order and/or another
procedural   provision   such   as   Order   XV­A.   This   would   violate   all
settled principles of statutory interpretation and would render the
provisions of the Commercial Courts Act as well as the legislative

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intent otiose. 

Para  84. The question which has arisen before me is that, if the
CPC, as it stood prior to its amendment and as applicable to non­
commercial suits, provided for stringent measures on a Defendant
vis­à­vis  filing  of  a written statement, then what purpose does it
serve   for   the   legislature   to   introduce   a  further   time   limit   of  120
days by way of 3 amendments to the CPC viz. to Order V Rule 1,
Order VIII Rule 1 and Order VIII Rule 10. I am afraid that if the
courts hold in even  one instance that a written statement can

be taken on record after the period of 120 days, this would

lead   to   a   slippery   slope   and   would   eventually   result   in   a

situation where written statements will be taken on record

on   frivolous   and   ingenious   grounds  and   that   to   only   in   the

Commercial Division of Chartered High Courts. It is also pertinent
to note that Justice Bhosale (as he then was), in Shailaja, has held
that   powers   under   Rule   9   of   Order   VIII   should   be   used   only   in
exceptional cases and that too for reasons to be recorded in writing
and cannot be exercised by a Defendant as a matter of right. Today,
I am being asked to render the same finding to the CPC as amended
by the Commercial Courts Act and if I were to do so, I would render
the promulgation of the Commercial Courts Act completely otiose as
there   would   remain   no   difference   between   non­commercial   suits
and commercial suits. 

  CPC   as   applicable   to   Commercial   Suits   has   been  brought

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about by a special act, a general rule under Order VIII Rule

9 would have to yield to it. Whilst on this argument, I also note

that   as   argued   by   Mr.   Kohli;   Shailaja,   Chintaman   and   Nankhu


were delivered on a holistic reading of Order VIII as it stood prior to
its amendment by the Commercial Courts Act. In so far as these
judgements are concerned, the same are admittedly in respect of a
period prior to the coming in force of the Commercial Courts Act
and would still be applicable to non­commercial suits. In so far as
the submissions of Mr. Pooniwalla are concerned, I am unable to
agree with the submissions that the provisions of Order VIII Rule 1
subsequent to its amendment by the Commercial Courts Act, are
still discretionary, for the reasons set out hereinabove, I am of the
considered opinion that the newly introduced provisions are indeed
mandatory in nature and cannot be extended. In this respect, I am
bound by the decision of the Apex Court in M/s SCG Contracts India
Pvt.   Ltd.   Vs.   K.S.   Chamankar   Infrastructure   Pvt.   Ltd.   &   Ors.
(supra). 

86. However, I must clarify that Order VIII Rules 9 and 10 would
continue   to   be   discretionary   powers   in   non­commercial   suits   to
condone the delay in filing of a belated written statement as the
provisions introduced by the Commercial Courts Act will not apply
to non­commercial suits. 

99. I find that ever since its introduction, the Commercial Courts
Act   has   already   instilled   a   sense   of   urgency   amongst   the   legal
fraternity. Litigants alike, are now conscious that they are required

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to   move   in   an   expeditious   and   vigilant   manner   as   their   earlier


available remedy of filing applications for condonation of delay, has
now been taken away. In light of the aforesaid and in view of the
stand   currently   being   taken   by   the   Apex   Court   and   Delhi   High
Court,   I   see   no   reason   as   to   why   our   Court   should   fall   behind
merely because it is a Chartered High Court. Our Court must also
commence all necessary steps to ensure that Commercial Suits are
disposed of expeditiously in line with the statutory mandate of the
Commercial Courts Act. To begin with, furthering the intent and
object   of   the   Commercial   Courts   Act   viz.  expeditious   disposal   of
commercial   cases   would   be   the   need   of   the   hour.   I   believe   that
whilst on this, there is another aspect that requires consideration.
This Court has seen innumerable instances where a Plaintiff has
filed a suit in this Court and the same continues to remain under
objections   for   several   months.   Obviously,   the   office   of   the   Ld.
Prothonotary   &   Senior   Master   of   this   Court   does   not   proceed   to
issue the summons unless and until the Plaintiff removes all office
objections.   This   conduct   is   deplorable   and   will   only   increase   the
pendency of Commercial Suits in this Court. 

Keeping   in   view   the   scheme,   object   and   purpose   of   the


Commercial   Courts   Act,   I   am   of   the   considered   opinion   that   the
provisions of the Commercial Courts Act will be given full credence,
only   in   the   event   strict   timelines   are   imposed   not   only   on
Defendants but also on Plaintiffs invoking the Commercial Courts
Act.   If   a   Defendant's   right   to   file   its   Written   Statement   stands

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forfeited   after   the   expiry   of   120   days,   the   Plaintiff   too   ought   to
adhere   to   strict   timelines.   Hence,   it   is   recommended   that   such
provisions   and   rules   are   introduced   so   as   to   ensure   that   in   a
Commercial   Suit   filed   before   a   Commercial   Court   /   Commercial
Division, the Plaintiffs are directed to remove all office objections
and have the Commercial Plaint numbered within the time limit so
prescribed.   Further,   the   office   of   every   Commercial   Court   /
Commercial   Division   ought   to   be   directed   to   render   all   possible
assistance   to   the   Plaintiffs'   advocates   to   ensure   that   all   office
objections   are   removed   and   intimated   to   the   advocates   for   the
Plaintiffs'. Thereafter, upon due registration of the Plaint, it ought
to   be   necessary   for   the   Plaintiff   to   forthwith   take   steps   to   serve
upon   the   Defendant(s)   the   writ   of   summons.   In   the   event   the
Plaintiff is unable to serve the summons within the time limit so
prescribed, all steps should be taken including those of substituted
service etc. so as to effect due service expeditiously. In the event the
Plaintiff   and   its   Advocates   fail   to   adhere   to   these   timelines,   the
Commercial Suits so filed and belatedly numbered/served ought to
be   dismissed   without   any   further   reference   to   the   Commercial
Court / Commercial Division. 

Para  100.   Having   answered   the   question   of   law   as   above,   I   also


clarify that there may be instances wherein the Plaintiff is ready
and willing for a belated written statement to be taken on record
subject to payment of costs. However, it is important to note that
parties   cannot   by   consent,   vest   the   court   with   discretion/

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jurisdiction/   powers   which   it   otherwise   is   barred   from   exercising


under statute. Jurisdiction can be vested only by statute and not by
consent and acquiescence. It is well settled that jurisdiction cannot
be conferred on a court by consent, acquiescence or waiver where
there is none, nor can it be ousted where there is.

Para 102. In view of the above notification, it may be argued that in
Commercial Suits before this Court, where the Defendant enters its
appearance prior to receipt of the summons, the period of 120 days
ought to commence from such earlier date viz. the date a Defendant
enters its appearance. However, as has been recorded above, this
Court is mandated to follow the provisions of the CPC as amended
by   the   Commercial   Courts   Act   whilst   adjudicating   Commercial
Disputes. Hence, as the amendments to Order V Rule 1 and Order
VIII   Rule   1   now   state   "...but   which   shall   not   be   later   than   one
hundred twenty days from the date of service of summons..." the
period of 120 days ought to be calculated from the date of service of
summons   and   not   the   date   on   which   a   Defendant   enters   its
appearance as provided for in the above notification. 

This   will   not   only   ensure   that   the   provisions   of   the   Commercial
Courts Act are implemented uniformly but also that a Defendant
will be made aware of the case it has to meet after being served
with the Plaint duly registered with this Court after the removal of
all  office  objections   etc.  In  fact,  the Writ  of   Summons now  being
served by our Court have the following endorsement: 

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"And you are hereby summoned to file a written statement
within 30 days of the service of the present summons and
in case you fail to file the written statement within the said
period of 30 days, you shall be allowed to file the written
statement on such other day, as may be specified by the
court for reasons to be recorded in writing and on payment
of such costs as the court may deem fit, but which shall not
be   later   than   120   days   from   the   date   of   service   of
summons. On expiry of one hundred and twenty days from
the date of service of summons, you shall forfeit the right
to file the written statement and the court shall not allow
the written statement to be taken on record." 

"Summary Suit" and "Summary Judgment"

5.5   Hubtown Limited Vs Idbi Trusteeship Service Limited

 On   24   October,   2016   Commercial   Appeal   No.   7   Of   2016   In

Summons For Judgment No. 111 Of 2014

In   the  summary   suit,   though   it   is  an   interlocutory   order   of


granting   Defendants   conditional   leave   to   defend   such   summary
suit,   as   it   directly   affects   and   loses   the   valuable   rights   of   the
Defendant without giving full opportunity and as transferred and
as   heard   by   the   learned   Commercial   Division   Bench/Judge,   the
Commercial   Appeal   against   such   "Judgment"   is   maintainable.
Therefore, we are of the view that there is no reason to hold that
the Commercial Appeal as filed is not maintainable. 

A P RANDHIR,  PR.SR.CIVIL JUDGE BORSAD, DISTRICT: ANAND
 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       88

"Summary Suit" and "Summary Judgment"­ 

Para 24 The conceptual position of "summary suit" as contemplated
under Order XXXVII of CPC and its specific provisions are governed
as per the original provisions of CPC. 

The amended CPC, in view of Section 16 of the Commercial Courts
Act   inserted   the   provision   for   a   "summary   judgment",   through
Order   XIII­A   which   is   made   applicable   to   the   classes   of   Suits
(commercial suits) which required to be decided by the Commercial
Division/Court.   It   prescribes   the   procedure   and   stages   for
application for summary judgment. This also includes and provides
the   powers   of   a   Commercial   Judge   to   pass   conditional   order
including  for evidence for hearing of summary judgment. We are
concerned   with   Order   XIII­A,   Rule   1(3)   of   CPC,   whereby   it   is
specifically provided "notwithstanding anything to the contrary, "an
application" for summary judgment under this Order shall not be
made   in   a   Suit   in   respect   of   any   commercial   disputes   that   is
originally filed as a summary suit under Order XXXVII.". Therefore,
once   the   summary   suit   as   originally   filed,   prior   to   the
commencement   of   the   and   as   now   transferred,   being   commercial
dispute   matter,   the   original   procedure   as   provided   under   Order
XXXVII shall be applicable to such summary suits. The parties are
not entitled to prayer for summary judgment under XIII­A in view
of the specific ssm/dgm 28 comap­7­16­judgment­24­10­16­final.sxw
provision   so   referred   above.   This   also   means   that   the   judgments
and the issues so decided in summary suit shall for all purposes be

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governed   by   the   CPC,   even   after   such   suits   are   transferred   as


commercial   suits.   The   Commercial   Division   Judge   is   required   to
follow   the   original   C.P.C.   and   is   required   to   keep   in   mind   the
position in law revolving around all the facets of summary suits.
The provisions of Section 13 , therefore, is required to be interpreted
and/or  considered   accordingly, when   any  decision  is given   by the
Commercial Division/Court in such summary suit. The proviso to
Secion 13 (1), will not affect the maintainability of such Appeal so
filed   against   such   order/judgment   passed   by   the   Commercial
Division/Court in such summary suit. 

25   The   submission   that   Section   13   proviso   has   extinguished,


expressly  and/or by  necessary intentment the Appeal against the
order passed by the Commercial Judge in summary suit granting
the   Defendant   conditional   leave   to   defend   a   summary   suit   is
unacceptable.   Section   13   itself   contemplates   that   an   Appeal   is
maintainable   against   the   decision/judgment   or   order   which   has
effect of "judgment", though it falls outside the purview of Order
XLIII as observed above. 

The right of appeal is creation of statute­ 

26 It is settled that a right of Appeal is not a matter of procedure,
but it is a matter of a substantive right which accrues to the litigant
and   as   exists   on   the   date   of   suit   being   instituted   (see   The
Constitutional   Bench   decision   in   Garikapati   Veeraya   Vs.   N.
Subbiah   Choudhry   &   Ors   4.,   para   23)   Such   right   of   Appeal   is

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governed by the law prevailing at the date of the institution of the
suit or proceedings and not by the law that prevails at the date of
its decision or at the date of filing of the Appeal. It is equally settled
that a vested right of Appeal is not absolute; and that it can in fact
be  abrogated  either explicitly or by implicit intendment. [ Kamal
Kumar Dutta vs Ruby General Hospital ]. The Commercial Courts
Act provides for an Appeal against the decision, judgment and order
so   referred   above.   An   Appeal   is   available   if   the   commercial
suit/dispute is dealt with by the Commercial Division/Commercial
Court   and   passes   order/judgment   and/or   take   decision.   This
statutory   Appeal   as   provided,   therefore,   cannot   be   taken   away
notwithstanding anything contained in any other law for the time
being in force or Letters Patent of a High Court [ section 13(2)]. The
Commercial   Courts   Act   or   special   Statute,   if   empowers,   the
Appellate   Division   Court   to   deal   with   the   Appeal   against   the
Judgment/order   passed   by   the   Commercial   Division   or   the
Commercial Court, the bar so submitted of proviso to section 13(1)
is   not   applicable   in   each   and   every   matter   specifically   when   the
subject   matters   are   commercial   disputes   as   defined   under   the
Commercial   Courts   Act   and   are   also   governed   by   the   Special
Act/Statute   other   than  the  CPC.   The  specific   provisions/  Statute/
Act   will   prevail   as   substantial   rights,   if   are   created   over   the
provisions  of  Order XLIII CPC, as provided in  proviso to Section
13(1) of the Commercial Courts Act. 

Para   29  There   is   no   scope   to   any   authority,   not   to   transfer   the

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 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       91

commercial   suits,   having   one   crore   and   above   valuation,   for   the
purpose of pecuniary jurisdiction under the Commercial Courts Act,
in  case  of   a  commercial dispute. The State Government needs to
take   steps   as   contemplated   under   Sections   19   and   20   of   the
Commercial   Courts   Act.   All   and   every   concerned   authority   are
bound to aid and assist to give effect to these provisions to all the
pending Suits/Applications, to achieve the object of the Commercial
Courts   Act.   All   are   bound   by   the   provisions,   including   amended
CPC   to   expedite   the   pending   Suits   filed   prior   or   post   the
Commercial   Courts   Act.   The   Appeals   are   also   expedited   by   the
provisions   so   also   pending   Arbitration   Petitions/Appeals   as
specified, though filed prior to the enforcement of the Commercial
Courts Act. Section 10,13, and 15 deal with the pending Arbitration
matters, including Appeal under Section 37 of the Arbitration and
Comcilation Act. The Supreme Court in a recent decision in Arun
Dev Upadhyaya Vs. Integrated Sales Service Ltd. & Anr., now has
expanded   and   included   even   the   Appeal   under   Section   50   of   the
Arbitral   Act   in   the   facts   of   the   case.   It   needs   to   be   subject   to
valuation of the Suit/Appeal. 

30 We are also inclined to observe that the vested right of Appeal is
not   taken   away   by   the   Commercial   Courts   Act.   However,   it   is
subject to Section 13 so recorded above and/or Section in no manner
takes   away   and/or   extinguishes   right   of   Appeal   in   pending
summary   suits   which   are   transferred   and   dealt   with   by   the
Commercial Division/Court. 

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Conditional Or Unconditional Leave? 

46 The law with regard to Order XXXVII, Rule 2 and 3 of CPC to
grant   or   not   to   grant   conditional   and/or   unconditional   leave   is
elaborated as under, by the Apex Court in M/s. Mechelec Engineers
& Manufacturers Vs. M/s. Basic Equipment Corporation. 

"8. (a) If the defendant satisfies the Court that he has a
good defence to the claim on its merits the plaintiff is not
entitled   to   leave   to   sign   judgment   and   the   defendant   is
entitled to unconditional leave to defend. 

(b) If the defendant raises a triable issue indicating that he
has a fair or bona fide or reasonable defence although not a
positively good defence the plaintiff is not entitled to sign
judgment   and  the   Defendant   is   entitled   to   unconditional
leave to defend. 

(c) If the defendant discloses such facts as may be deemed
sufficient to entitle him to defend, that is to say, although
the affidavit does not positively and immediately make it
clear that he has a defence, yet, shows such a state of facts
as leads to the inference that at the trial of the action he
may be able to establish a defence to the plaintiff's claim
the Plaintiff is not entitled to judgment and the defendant
is entitled to leave to defend but in such a case the court
may in its discretion impose conditions as to the time or
mode of trial but not as to payment into court or furnishing

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security. 

(d) If the defendant has no defence or the defence set up is
illusory or sham or practically moonshine then ordinarily
the plaintiff is entitled to leave to sign judgment and the
defendant is not entitled to leave to defend.

(e) If the defendant has no defence or the defence is illusory
or sham or practically moonshine then although ordinarily
the plaintiff is entitled to leave to sign judgment, the court
may protect  the  plaintiff  by only allowing the defence to
proceed   if   the   amount   claimed   is   paid   into   court   or
otherwise secured and give leave to the defendant on such
condition,   and   thereby   show   mercy   to   the   defendant   by
enabling him to try to prove a defence." 

"9.   The   case   before   us  certainly   does   not   fall   within   the
class (e) set out above. It is only in that class of case that
an   imposition   of   the   condition   to   deposit   an   amount   in
Court before proceeding further is justifiable." 

47   The   Apex   Court   in   this   regard   has   further   reiterated   above


principle   and   on   facts   as   case   was   made   out   granted   an
unconditional   leave.   This   makes   the   position   of   law   clear,   which
need   to   be   kept   in   mind   while   granting   and/or   refusing   leave   to
defend. The case in hand, in our opinion, falls within the ambit of

clauses   (a)   and   (b)   as   expressed   in  Mechelec   Engineers   &

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Manufacturers (supra). [Sunil Enterprises and Anr. Vs. SBI

Commercial & International Bank Ltd. 16 and State Bank of

Saurashtra   Vs.   Ashit   Shipping   Services   (P)   Ltd.   17,   R.   ,

Savarna   Prabhu   and   Anr.   Vs.   Videocon   Leasing   and

Industrial Finance Limited & Anr.18] 48 The learned Single

Judge, S.G. Kathawalla, as recorded in 16 (1998) 5 SCC 354

17 (2002) 4 SCC 736 18 (2013)14 SCC 606 earlier Suit filed by the

IDBI, dealt with the same documents and transactions between the
parties   and   has   granted   the   conditional   leave.   Therefore,   taking
note of the reasons so given and recorded, we see there is no case to
discard these reasons by overlooking the above basic principles of
law.   We  have  to  keep in  mind the basic principles so laid down,
while considering the present case/Appeal also. We have taken note
of the facts and circumstances, as well as the reasons given by the
learned   Single   Judge,   S.G.Kathawalla,   and   the   Supreme   Court
Judgments so referred above, interpreting the transactions and the
documents between the same parties and we are inclined to observe
that a sufficient case is made out by the Appellant that they have a
good defence to claim on its merits. This itself means, in the trial,
they  may  be able to establish the defence to the Plaintiff's claim
therefore, the Appellant­Defendant, at this stage, is entitled for the
unconditional leave. The discretion so exercised and order so passed
by imposing condition while granting leave, is unsustainable in the
facts and the law and is liable to be interfered with. 

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49   Therefore,   taking   overall   view   of   the   matter,   we   are   of   the


opinion   that   this   is   a   case   where   on   merit,   unconditional   leave
required to be granted to the Appellant on similar line as granted
by the learned Single Judge dated 8 May 2015. 

Order   Vii   Rule   14   Read   With   Section   151   Of   The   Code   Of

Civil Procedure, 1908 

 5.6  State Of Gujarat Vs Union Of India On 7 May, 2018  Cav

Judgment,  High Court Of Gujarat At Ahmedabad R/Special

Civil Application No. 737 Of 2018

Plaintiffs   which   was   preferred   under  Order   VII   Rule   14   read

with Section 151 of the Code of Civil Procedure, 1908 ("CPC"

for   short)   for   seeking   permission   to   place   certain   documents   on


record and further to seek permission to exhibit those documents,
which were produced vide list at Ex.72. 
Ultimately, the Court will have to ensure that all documents
which assist it to resolve the controversy before it in an efficient
manner   are   available   for   perusal.   Unless   the   Court   comes   to   a
conclusion that the facts are so gross that the only inference that
can be drawn from the conduct of the party is that the documents
which   are   sought   to   be   produced   are   manufactured,   the   Court
should   not   generally   deny   leave   to   produce   documents   because
ultimately, it is always open to the other side to cross­examine the
party   who   produces   the   documents   to   establish   that   the   said
documents   are   not   relevant   or   that   the   case   based   on   the   said

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documents is not true. 

In   our   opinion   and   more   particularly,   considering   the


documents which are sought to be produced which are Government
documents, at this stage, it is not possible to come to a conclusion
that   the   documents   sought   to   be   produced   are   manufactures.
However, that does not preclude the defendants, if they so desire, to
cross­   examine   the   plaintiffs   and   persuade   the   Court   to   hold   so.
Therefore, in the facts and circumstances of the case, we are of the
opinion   that   if   the   plaintiffs   are   not   permitted   to   produce   the
aforesaid  documents,  grave injustice is likely to be caused to the
plaintiffs.   Therefore,   we   are   of   the   opinion   that   in   the   facts   and
circumstances of the case, the learned Commercial Court has failed
to exercise jurisdiction vested in it, more particularly, contained in
Order   XII   Rule   1(5)   of   the   CPC   (applicable   to   the   Commercial
Courts   Act   and   the   commercial   disputes).   On   imposition   of
reasonable cost and subject to proving the same in accordance with
law,   the   learned   Commercial   Court   ought   to   have   permitted   the
plaintiffs to produce the documents sought to be produced vide list
Ex.72 and ought not to have allowed the application Ex.71. 

5.7  Madhuram Properties Versus Tata Consultancy Services

 Ltd   Appeal   From   Order     No.   210   Of   2017   10   July,   2017

Hon'ble High Court of Gujarat.

        The   agreement   /   indenture   between   the   plaintiff   and   the


defendant in respect of aforesaid 216 residential flats cannot be said

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to   be   an     agreement   relating   to   immovable   property   used


exclusively in trade or commerce. Considering the sub­section(vii) of
Section 2(c) of the Commercial Courts Act, the "commercial dispute"
means a dispute   arising out of agreements relating to immovable
property used  exclusively in trade or commerce. As observed herein
above,   the   agreements   are   relating   to   immovable   property
exclusively for residential purpose and same cannot be said to be
agreement relating to immovable property used exclusively in trade
or commerce. The immovable property in question 216 residential
flats are used exclusively for residential purpose and same cannot
be  said   to   be  used  exclusively  in  trade  or   commerce.  Under  the
circumstances,   considering   Section   2(c)(vii)     of   the     Commercial
Courts Act, the dispute arising out of the indenture / agreement in
question cannot be said to be relating to immovable  property used
exclusively in trade or commerce and therefore, said cannot be said
to   be   commercial   dispute   as   defined   under   Section   2(c)   of   the
Commercial Courts Act.  

5.8   Kandla   Container   Terminal   Pvt.   ...   vs   Doosan   Heavy

 Industries   And   ...   on   18   July,   2018   R/FIRST   APPEAL   NO.

2180 of 2018

Preliminary objection raised by the judgment­debtor that the said
execution   petition   before   the   Commercial   Court   shall   not   be
maintainable and/or that the Commercial Court, Rajkot, shall not
have any jurisdiction to adjudicate the said execution petition and
the objection that only the Commercial Division of the High Court

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shall have the jurisdiction to adjudicate the execution petition and
consequently holding that the Commercial Court, Rajkot, shall have
the   jurisdiction   to   adjudicate   the   said   commercial   execution
petition,

  We   are   of   the   opinion   that   against   the   final   judgment   and/or


decision of the Commercial Court or the Commercial Division of the
High   Court   only,   appeal   shall   be   maintainable   before   the
Commercial   Appellate   Division   of   the   High   Court.   However,   an
appeal  shall  also  lie  from such  orders passed by the Commercial
Division   or   a   Commercial  Court  that  are  specifically   enumerated
under   Order   XLIII   of   the   Code   as   amended   by   the   Commercial
Courts Act, 2015 and Section 37 of the Arbitration and Conciliation,
1996. Therefore, the submission on behalf of Shri Kamal Trivedi,
learned Senior Advocate on behalf of the respondent that an appeal
under Section 13 of the Commercial Courts Act, 2015, shall lie only
from such orders passed by a Commercial Division or a Commercial
Court   that   are  specifically  enumerated  under  Order  XLIII  of   the
Code, as amended by the Commercial Courts Act, 2015 and Section
37 of the Arbitration and Concilitaiton Act, 1996, is not acceptable.
As observed and held by the Hon'ble Supreme Court, Section 13(1)
of  the  Commercial Courts Act, 2015, is in  two parts, one is with
respect to providing appeal to the Commercial Appellate Division of
the High Court against the final decision / judgment or order of the
Commercial Court or the Commercial Division of the High Court
and the second part is with respect to providing appeal from such

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orders passed by Commercial Division or a Commercial Court that
are   specifically   enumerated   under   Order   XLIII   of   the   Code   as
amended by the Commercial Courts Act, 2015 and Section 37  of the
Arbitration and Conciliation Act 1996. However, at the same time,
Shri Trivedi,  learned Senior Advocate appearing on behalf  of the
respondent   is   justified   in   raising   the   objection   on   the
maintainability   of   the   present   appeal   under   Section   13   of   the
Commercial Courts Act, 2015 against the impugned order passed by
the  learned Commercial Court, Rajkot, overruling and /or setting
aside the objection raised by the appellant herein on the jurisdiction
of the Commercial Court, Rajkot, to entertain and adjudicate the
execution petition. 

10. In view of the above discussion, it is observed and held that the
present   appeal   under   Section   13   of   the   Commercial   Courts   Act,
2015,   against   the   impugned   order   passed   by   the   learned
Commercial   Court,   Rajkot,   shall   not   be   maintainable.   However,
considering   the   request   made   by   Shri   Modh,   learned   advocate
appearing on behalf of the appellant and considering the fact that
the issue with respect to the jurisdiction of the Commercial Court,
Rajkot, would be a pure question of law and it is with respect to the
jurisdiction, as held by the Division Bench of this Court in State of
Gujarat V Union Of India (supra), a petition under Article 227 of
the   Constitution   of   India   shall   be   maintainable   and   therefore,
learned advocate appearing on behalf of the appellant is permitted
to   convert   the   present   First   Appeal   into   a   Writ   Petition   under

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Article   227   of   the   Constitution   of   India.   Registry   is   directed   to


register the present First Appeal as Special Civil Application under
Article 227 of the Constitution of India by giving a separate, new
number accordingly. 

11. Now so far as the challenge to the impugned order on merits is
concerned, at the outset, it is required to be noted that as such, the
issue   involved   in   the   present   petition   with   respect   to   the
jurisdiction   of   the   Commercial   Court,   Rajkot,   to   decide   and
adjudicate the said execution petition is now no more res­integra in
view of the decision of the Division Bench of this Court in the case
of   M/s.OCI   Corporation   ­I   (supra).   In   the   aforesaid   decision,   in
Paragraph­63,   the   Division   Bench   of   this   Court   has   specifically
observed and held as under:­"63. The       sum     and         substance
of    the   above discussion would be,

(1) Where the subject matter of an arbitration is commercial dispute
of   a   specified   value   and   if   such   arbitration   is   international
commercial arbitration, all the applications or appeals arising out of
such   arbitration   under   the   provisions   of   the   Arbitration   and
Concilication Act, 1996 shall be heard, decided and disposed of by
the Commercial division where such Commercial Division has been
constituted in the High Court i.e. in the present case High Court of
Gujarat. 

(2)   Where   the   subject   matter   of   an   arbitration   is   a   commercial


dispute   but   not   of   a   specified   value   and   if   such   arbitration   is

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international commercial arbitration, considering the provisions of
Arbitration and Conciliation (Amendment) Act, 2015 the same shall
be heard, decided and disposed of by the concerned High Court. 

(3)   Where   the   subject   matter   of   an   arbitration   is   a   commercial


dispute   of   a   specified  value and  if  such  arbitration  is other than
international arbitration, all the applications or appeals arising out
of   such   arbitration   under   the   provisions   of   the   Arbitration   and
Conciliation   Act,   1996   shall   be   filed   in   and   heard,   decided   and
disposed   of   by   the   Commercial   Court   exercising   territorial
jurisdiction over such arbitration where such commercial Court has
been constituted." 

Therefore,   the   learned   Judge,   Commercial   Court,   Rajkot,   has


unnecessarily distinguished the decision of this Court in the case of
M/s.OCI   Corporation   ­I   (supra)   and   thereby   has   erred   in   not
following the said binding decision of this Court. The decision of this
Court in M/s.OCI Corporation 

­I (supra) which is reported to be confirmed by the Hon'ble Supreme
Court, specifically lays down that if the award is in connection with
the   international   arbitration,   execution   petition   shall   be
maintainable   before   the   Commercial   Division   of   the   High   Court
alone.   At   this   stage,   it   is   required   to   be   noted   that   as   such,  the
applicability   of   the   Commercial   Courts   Act,   2015   and/or
applicability of the Arbitration and Conciliation (Amendment) Act,
2015,   cannot   be   disputed   as   the   respondent   herein   ­   original

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applicant   itself   has   preferred   the   execution   petition   before   the


Commercial Court under the Commercial Courts Act, 2015. In the
aforesaid   decision   in   M/s.OCI   Corporation   ­   I   (supra),   after
considering the Scheme of the Commercial Courts Act, 2015, and
the object and purpose of the enactment of the Commercial Courts
Act,   2015,   and   the   Scheme   of   the   Arbitration   and   Conciliation
(Amendment)   Act,   2015,   it   is   specifically   observed   and   held   that
against any decision  and/or order where the subject­matter of an
arbitration is a commercial dispute of a specified value and if such
arbitration   is   international   commercial   arbitration,   all   the
applications   or   appeals   arising   out   of   such   arbitration   under   the
provisions   of   the  Arbitration  and Conciliation  Act, 1996, shall be
heard, decided and disposed of by the Commercial Division where
such Commercial Division has been constituted in the High Court
i.e. in the present case High Court of Gujarat. It is not in dispute
that   in   the   present   case,   the   subject­matter   of   arbitration   is   a
commercial dispute of a specified value and the arbitration is an
international   commercial   arbitration.   Even   when   the   award   is   a
domestic   award   as   the   venue   might   have   been   in   India,   the
arbitration would still be an international commercial arbitration.
Under   the   circumstances,   the   impugned   order   passed   by   the
learned Judge, Commercial Court, Rajkot, overruling / setting aside
the objections raised by the appellant herein on the jurisdiction of
the   Commercial   Court,   Rajkot,   to   entertain   and   adjudicate   the
execution   petition   with   respect   to   the   international   commercial

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arbitration and the order passed by the learned Commercial Court
that   the   said   execution   petition   shall  be   maintainable   before   the
Commercial   Court,   Rajkot,   cannot   be   sustained   and   the   same
deserves to be quashed and set aside. It is, accordingly quashed and
set   aside.   The   Commercial   Court,   Rajkot,   is   hereby   directed   to
return the said execution petition to the original applicant ­ original
claimant to present it before the Commercial Division of this Court
immediately   and   thereafter,   the   original   claimant   ­   original
applicant   to   file   the   execution   petition   before   the   Commercial
Division of this Court and if filed within a period of four weeks from
the   return   of   the   execution   petition   to   present   it   before   the
Commercial   Division   of   this   Court,   the   same   be   considered   in
accordance with law and on merits at the earliest. 

5.9   Indian   Overseas   Bank   Vs   Jason   Deckor   P   Ltd   On   5

 September, 2018  Special Civil Application No. 11710 Of 2018,

Hon'ble High Court Of Gujarat

As   noted,   the   Act   of   2015   has   been   enacted   providing   separate


Commercial   Courts   and   Commercial   Divisions   for   dealing   with
commercial   disputes   of  specified  value  in   order  to  achieve  timely
disposal thereof. In furtherance of such objective, various provisions
have   been   made   in   the   Act   of   2015;   including   making   some
significant amendments in the CPC. 

We   may   recall,   the   CPC   was   amended   extensively   by   the   Act   of


2002 which included imposition of time limit for filing the written

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statement. As per the amended Rule 1 of Order VIII, a defendant
would have thirty days' time from the date of service of summons to
present the written statement. As per the proviso, if the defendant
failed   to   file   written   statement   within   such   period,   he   would   be
allowed to file the written statement on some other day, as may be
specified by the Court, for the reasons to be recorded in writing, but
which shall not be later than ninety days from the date of service of
summons.   This   proviso   thus   envisages   time   of   thirty   days   which
could   be   further   extended   by   ninety   days   for   filing   the   written
statement.   This   and   several   other   provisions   amending   the   CPC
came up for consideration before the Supreme Court in the case of
Salem   Advocate   Bar   Association   Tamil   Nadu   v   Union   of   India,

reported in [2005] 6 SCC 344,  wherein, a three­Judge Bench of

the Apex Court held that the  use of word "shall" in Rule 1 of

Order   VIII   CPC   by   itself   is   not   conclusive   to   determine

whether the provision is mandatory or directory. A reference

was made to Rule 10 of Order VIII, which as noted, provides that
where any party from whom a written statement is required under
Rule 1 or Rule 9 fails to present the same within the time permitted
or fixed by the Court; as the case may be, the Court shall pronounce
the judgment against him or make such order in relation to the suit,
as it thinks fit. The Court was of the opinion that by virtue of the
said proviso, on failure of the defendant to file written statement,
the Civil Court had been given discretion either to pronounce the
judgment against the defendant or make such order in relation to

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the suit, as it thinks fit. Therefore, in the context of the proviso,
despite use of the word "shall", the Court has been given discretion
either to pronounce or not to pronounce the judgment against the
defendant,   even   if   the written  statement  is not filed and instead
pass   such   an   order;   as   it   thinks   fit,   in   relation   to   the   suit.
Consequently, the time limit envisaged in Rule 1 of Order

VIII   CPC   for   filing   the   written   statement   was   held   to   be

directory and not mandatory in nature.

In the present case, however, we are concerned with entirely
different   scheme   of   statutory   provisions.   Significantly,   the
legislature was conscious of decision of the Supreme Court in case of
Salem Advocate Bar Association [Supra] and interpretative process
adopted   therein.   In   the   context   of   time   limit   for   filing   written
statement  under  schedule to  the Act of  2015, the legislature has
therefore made two significant amendments in the CPC. Firstly, the
proviso to Rule 1 of Order VIII is substituted. In the substituted
form, this proviso provides that where the defendant fails to file the
written   statement   within   a   period   of   thirty   days,   he   would   be
allowed  to   file   the   written   statement   on   such   other   day   as

may be specified by the court, for the reasons to be recorded

in writing and on payment of such cost as the Court deems

fit,   but  which   shall   not  be  later  than   120  days  from  the  date   of

service of summons. The proviso further provides that on expiry of

120   days   from   the   date   of   service   of   summons,  the   defendant

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shall   forfeit   their   right   to   file   written   statement   and   the

court shall not allow the written statement to be taken on

record. Simultaneously, the schedule also amends Rule 10 of Order

VIII   CPC   by  inserting  a   proviso   which;  as  noted   above,  provides
further that no court shall make an order to extend the time limit
provided   under   Rule   1   of   Order   VIII   CPC   for   filing   the   written
statement. 

Combined effect of these amendments is clear and precise. All
the powers  of  a  Court dealing with the commercial disputes of a
specified value for extending time for filing the written statement
beyond   the   period   of   120   days   of   service   of   summons   are   taken
away. The language of the proviso to Rule 1 of Order VIII CPC has
been   materially   altered.   In   addition   to   providing   for   extension
beyond 30 days [but not beyond 120 days from service of summons]
on   payment   of   cost;   as  may   be   specified  by   the  Court,   two   more
significant changes have been made namely, that on expiry of 120
days   from   the   date   of   service   of   summons,   the   defendant   shall
forfeit the right to file written statement and that the Court shall
not allow the written statement to be taken on record. In addition to
providing   with   the   maximum   time   permissible   for   filing   written
statement upto 120 days from the date of service of summons, these
two additional elements inserted in the proviso to Rule 1 make the
legislative   intent   abundantly   clear.   There   is   no   escape   from   the
position   that   the   legislature   desired   to   put   a   ceiling   on   the
maximum time that a Court can grant to the defendant in a suit

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involving commercial dispute of a specified value to file the written
statement.  The legislature has mandated both ­ in a positive

as well as negative terms. Positively, by providing that on

completion   of   120   days,   the   defendant   shall   forfeit   their

right   to   file   the   written   statement   and   negative,   by

providing   that   the   Court   shall   not   allow   the   written

statement to be taken on record after such period.  For good

measure, the legislature has also amended Rule 10 of Order VIII by
providing   that   in   exercise   of   such   rule,   no   Court   shall   make   an
order   to   extend   the   time   for   filing   the   written   statement.   This
proviso is in the nature of an explanation, putting limitation on the
powers of a Court to make such an order in relation to the suit; as it
thinks fit. By virtue of this proviso, such power would not include
power   to   extend   the   time   provided   under   Rule   1   for   filing   the
written statement. 

The golden rule of statutory interpretation is that the statute must
be   read   in   its   plain   grammatical   manner   and   be   applied
accordingly.   In   the   case  of  Afcons  Infrastructure  Limited  v/s.

Cherian   Varkey   Construction   Company   Private   Ltd.,

reported in 2010 (8) SCC 24, it was observed that the principles

of statutory interpretation are well settled. Where the words of the
statute are clear and unambiguous, the provision must be given its
plain and normal meaning, without adding or rejecting any words.
Departure from this literal rule, by making structural changes or

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substituting words in a clear statutory provision, under the guise of
interpretation would pose a great risk, as the changes may not be
what the legislature intended or desired. It was further observed
that an exception to the general rule is ­ where the words used in
the statutory provision are vague and ambiguous or where the plain
and   normal   meaning   of   the   words   or   grammatical   construction
thereof would lead to confusion, absurdity, repugnancy with other
provisions, the Courts may use the interpretative tools to set right
the situation. 

In the present case, we find the words used in the statute have
no   ambiguity   or   possibility   of   even   two   interpretations.   We   are
conscious   that   the   use   of   word   'shall'   in   a   statute   is   not   always
conclusive of the legislative intention. Often times, the courts have
even   in   face   of   the   use   of   such   expression   held   a   proviso   to   be
directory instead of mandatory. However, in the present case, from
all   angles,   the   legislative   intent   which   emerges   is   that   the
prescription of time limit for filing the written statement applicable
to a Commercial Court is mandatory. Such an interpretation would
also be in consonance with the scheme of the Act of 2015 and the
objects for enactment of the said act. 

We may now refer to the judgments cited by learned counsel for the
petitioner. 

In case of  Kalpesh R. Jain [Supra], the Bombay High Court

was   dealing   with   different   situation.   It   was   a   case   in   which   an

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appeal   was   filed   before   the   Commercial   Appellate   Court   set   up


under the Act of 2015. Such appeal was filed beyond the period of
limitation prescribed. The Court held that applicability of section 5
of   the   Limitation   Act,   1963   is   not   ruled   out   and   delay   can   be
condoned on sufficient ground being made out. 

The  Rajasthan High Court in case of Shri Balaji Industrial

Products Ltd [Supra] has not dealt with the question of powers of

a   Commercial   Court   to   extend   the   time   limit   for   filing   written


statement in face of amended provisions of Rule 1 Order VIII CPC.
This judgment therefore does not lay down any proposition contrary
to what we have discussed. 

The learned Judge of  Delhi High Court in case of Sunil Alagh

[Supra]  came to a conclusion that the service of summons on the

defendant cannot be said to be complete unless complete paper book
of the suit is supplied. In this context, it was held that period of 120
days   for   filing   written   statement   will   not   commence,   when   the
defendant has not been supplied complete paper book of the suit. 

5.9 Vishal Exports Overseas Limited Vs State Bank Of India

 On   10   July,  High


    Court   Of   Gujarat   At   Ahmedabad   R/First

Appeal No. 1956 Of 2018

Para 33.  Hence, the possibility of plaintiffs having not acquainted

with   the   remedies   available   to   them   and   the   knowledge   thereof,


cannot   be   ruled   out   and   the   said   fact   seems   to   have   been
substantiated from several orders passed by the DRT, DRAT and

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also by the Hon'ble High Court of Gujarat and therefore, the very
conduct on the part of the plaintiffs disentitle the plaintiffs even to
continue with the proceedings of the present suit in the light of the
detailed   discussion   made   hereinabove."   However,   as   observed
hereinabove, it is not at all observed that independent suit shall not
be maintainable at all in view of the Scheme of the Finance Act,
1993. Merely because some remedy might have been available, in
the   present   case,   may   be   by   way   of   counter­claim,   which   the
plaintiff did not avail and instead, filed an independent suit, cannot
be  a  ground  to  reject  the  Plaint  under  Order  VII Rule 11 of  the
CPC, unless it is observed and found that the suit is clearly barred
by any law. 

7.5 At this stage, it is required to be noted that in the present case,
now no fruitful purpose would be served in relegating the plaintiffs
to lodge the counter­claim and/or to transfer the suit to the DRT
(the issue which is now at large before the Hon'ble Supreme Court)
as the Original Applications filed by the Bank have already been
disposed of long back much before even the application under Order
VII   Rule   11   of   the   CPC   is   decided   and   disposed   of   and   no
applications are pending before the learned DRT. It is also required
to   be   noted   that   different   Original   Applications   were   filed   by
different   Banks   against   the   plaintiffs   ­   borrowers   and   their
application   for   consolidation   of   the   Original   Applications   were
rejected which came to be confirmed by the Division Bench of this
Court. The present suit is filed by the plaintiffs jointly against the

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consortium of Bank/ Banks and therefore even if the plaintiffs could
have filed the counter­claim, it was not possible as decree is sought
against all the Banks jointly and severally and as such, a counter­
claim in different Original Applications would be possible or not is
also   a   very   serious   question.   One   can   understand   if   only   one
Original Application was pending of the consortium Banks and the
suit is either transferred and/or one counter­claim is filed in only
one Original Application, which is not so in the present case. 

8.   In   any   case,   in   absence   of   any   specific   finding   given   by   the


learned Judge, Commercial Court, that independent suit shall not
be  maintainable  and/or the same is specifically barred under the
provisions   of   the   Finance   Act,   1993,   the   learned   Judge   is   not
justified in rejecting the Plaint under Order VII Rule 11 of the CPC.
There can be a very serious dispute whether the reliefs which are
sought   in   the   Plaint   by   way   of   damages/   compensation   from   the
defendants for their various wrongful actions, including breach of
contract, actions in bad faith and acts of misfeasance and/or non­
feasance and tortuous liability can be treated as counter­claim in an
application under Section 19 of the Finance Act, 1993. Be that as it
may, as observed hereinabove, there is no specific finding recorded
by   the   learned   trial   curt   that   the   independent   suit   filed   by   the
plaintiffs is specifically barred by any law, more particularly, by the
provisions of the Finance Act , 1993 and therefore, the Plaint cannot
be rejected under Order VII Rule 11 of the CPC. Therefore, without
touching the questions which are referred to the Larger Bench of

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the Hon'ble Supreme Court in Bank of Rajasthan Limited V VCK
Share and Stoke Broking Service Limited (supra), on the aforesaid
ground   alone,   the   impugned   order   passed   by   the   learned   Judge,
Commercial Court, rejecting the Plaint under Order VII Rule 11 of
the CPC deserves to be quashed and set aside. 

Case   Laws   With   Respect   To   Commercial   Disputes   Of

Specified Value 

5.10   2016   0   Supreme(Del)   581;   Havells   India   Limited   ­

Plaintiff Versus The Advertising Standards Council of India

– Defendant 

15.   Section   2(1)(c)   of   the   Commercial   Courts   Act   defines   the


expression   “commercial   dispute”   to   mean   “dispute   arising   out
of ... ... ...”. Therefore, for a dispute to be a “commercial dispute”, it
is essential first & foremost that there has to be a “dispute”. Unless
the plaint discloses a “dispute”, the mere fact that the plaintiff may
have sought the relief which may relate to a subject matter enlisted
as clauses (i) to (xxii) of Section 2(1)(c) of the Commercial Courts
Act,   would   not   render   the   “dispute”   arising   in   the   suit   as   a
“commercial dispute”. 
16. In the present case, as noticed hereinabove, the dispute raised
by   the   plaintiff   is   in   relation   to   the   impugned   communication/
direction   dated   15.09.2015   issued   by   the   defendant/ASCI   on   the
premise that the advertisement of the defendant using the tagline
“Wires   that   don’t   catch   fire”   is   misleading   and   exaggerated.   The
defendant   has   not   sought   to   raise   any   challenge   to   the   claim   of

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trade mark or copyright laid by the plaintiff either in “HAVELLS”
or in the tagline in question. Thus, no cause of action has arisen in
favour of the plaintiff to assert its claim for a declaration that its
mark/expression “Wires that don’t catch fire” is a well­known trade
mark. As rightly argued by learned counsel for the defendant, since
the defendant has not questioned the plaintiff’s claim for a trade
mark in the said tagline, the plaintiff cannot seek the said relief in
the present suit, as the assertion of the said right would not have
any real opposition. It would eventually tantamount to grant of an
ex­parte decree if the said declaration is made in the present suit,
as is sought in relief (a) of the plaint. 
21. The submission of Mr. Lall that this Court should construe the
expression   “commercial   dispute”   widely   to  include   all   commercial
disputes, even if they do not strictly fall within clauses (i) to (xxii) of
Section   2(1)(c),   cannot   be   accepted   for   the   reason   that   the
Parliament has consciously given the precise definition as to what a
commercial  dispute “means”. It is not an  inclusive definition  and
the   specific   matters   which   qualify   as   relating   to   “commercial
disputes”   have   been   specifically   set   out   in   clauses   (i)   to   (xxii)
aforesaid. 
22. For all the aforesaid reasons, I am of the view that the present
suit does not raise a “commercial dispute” within the meaning of
Section   2(1)(c)   of   the   Commercial   Courts   Act   and   since   the
jurisdictional value of the suit is below Rs. 2 Crores, the same is
liable to be transferred to the Court of the competent 

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District Judge in view of the notification No.2718/DHC/Orgl. dated
25.11.2015,   issued   under   Section   4   of   the   Delhi   High   Court
(Amendment) Act, 2015 (Act 23 of 2015). Section­2(1)©(vi) 
5.11 2018 3 GLR 2318; 2017 0 Supreme(Guj) 1872; Jayprakash

Associates Versus State of Gujarat and Ors. 

3.2. Now, so far as the submission on behalf of the petitioner that as
dispute is arising out of the Public Works Contract and for which a
separate Tribunal has been constituted, and therefore, the dispute
arising out of such Public Works Contract cannot be said to be a
commercial   dispute   within   the   definition   of   Sec.   2(1)(c)   of   the
Commercial   Courts   Act,   and   therefore,   even   if   the   suit   value   is
above the specified value, the suit is not required to be transferred
to the Commercial Court, is concerned, the same has no substance.
There   is   no   distinction   in   Sec.   2(1)(c)   whether   the   contract   is   a
Public   Works   Contract   or   other   contract.   Section   2(1)(c)   of   the
Commercial Courts Act provides that "a dispute arising out of......
(vi) construction and infrastructure contracts, including tenders". It
is   not   in   dispute   that   the   contract   between   the   plaintiff   and   the
defendants   was   for  construction   of  Dam  etc.   Therefore,  it  can  be
said to be a commercial dispute within the definition of Sec. 2(1)(c)
of the Act. 
Section 2(C)(Vii),  "commercial Dispute"     Is Dispute Arising

Out   Of Agreements Relating  To  Immovable  Property  Used

Exclusively In Trade Or Commerce

5.12 Vasu Healthcare Private Limited v. Gujarat Akruti TCG

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Biotech. Limited and Anr AIR 2017 GUJARAT 153

Commercial   Courts,   Commercial   Division   and   Commercial


Appellate   Division   of   the   High   Courts   Act   (4   of   2016),   S.2(c)­
'Commercial   dispute'   ­  Is   dispute   arising   out   of   agreements

relating to immovable property used exclusively in trade or

commerce  ­   Plots   given   for   developing   and   establishing   Biotech

Park   ­   Though   ultimate   use   might   be   for   purpose   of   trade   or


commerce   ­   S.   2(c)(vii)   not   applicable   ­   It   cannot   be   said   that
agreement relating to immovable property used exclusively in trade
or   commerce   ­   Dispute   between   parties   not   commercial   dispute   ­
Suit before Commercial Court, not maintainable. (Paras 7.3 7.4 7.6)
Therefore,   if   the   dispute   falls   within   any   of   the   clause   2(c)   the
dispute   can   be   said   to   be   "commercial   dispute"   for   which   the
Commercial   Court   would   have   jurisdiction.   It   is   required   to   be
noted   that   before   the   learned   Commercial   Court   the   original
plaintiff   relied   upon   section   2(c)(i),   2(c)(ii)   and   2(c)(xx)   of   the
Commercial Courts Act only. Learned Counsel appearing on behalf
of the original plaintiff has candidly admitted and/or conceded that
the case shall not fall within clause 2(c)(i); 2(c)(ii) or 2(c)(xx) of the
Commercial Courts Act. It is required to be noted that before the
learned Commercial Court it was never the case on behalf of the
original plaintiff that case would fall within section 2(c)(vii) of the
learned Commercial Court. Despite the above we have considered
on   merits   whether   even   considering   section   2(c)(vii)   of   the
Commercial Courts Act, the dispute between the parties can be said

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to be "commercial dispute" within the definition of section 2(c) of the
Commercial   Courts   Act   or   not?   Considering   section   2(c)(vii),
"commercial dispute" means a dispute arising out of the agreements
relating   to   immovable   property   used   exclusively   in   trade   or
commerce. As observed hereinabove, at the time of filing of the suit
and even so pleaded in the plaint, the immovable property / plots
the   agreements   between   the   parties   cannot   be   said   to   be
agreements   relating   to   immovable   property   used   exclusively   in
trade or commerce. As per the agreement between the party after
getting the plots on lease from the GIDC, the same was required to
be  thereafter   developed  by the  original defendant  No.1 and after
providing all infrastructural facilities and sub­plotting it, the same
is required to be given to other persons like the original plaintiff. It
is  the case on behalf of the original plaintiff that as the original
defendant No.1 has failed to provide any infrastructural facilities
and   develop   the   plots   and   therefore,   a   civil   suit   for   specific
performance   of   the   agreement   has   been   filed.   There   are   other
alternative   prayers   also.   Therefore,   it   cannot   be   said   that   the
agreement   is   as   such   relating   to   immovable   property   used
exclusively   in   trade   or   commerce.   It   is   the   case   on  behalf   of   the
original   plaintiff   that   as   in   clause   (vii)   of   section   2(c),   the
pharseology   used   is   not   "actually   used"   or   "being   used"   and
therefore, even if at present the plot is not used and even if it is
likely to be used even in future, in that case also, section 2(c)(vii)
shall be applicable and therefore, the Commercial Court would have

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jurisdiction.   The  aforesaid  has  no  substance.  As  per   the  cardinal


principle   of   law   while   interpreting   a   particular   statute   or   the
provision, the literal and strict interpretataion has to be applied. It
may be noted that important words used in the relevant provisions
are "immovable property used exclusively in trade or commerce ". If
the submission on behalf of the original plaintiff is accepted in that
case, it would be adding something in the statute which is not there
in   the  statute,   which   is  not  permissible. On  plain  reading  of   the
relevant   clause   it   is   clear   that   the  expression   "used"   must   mean
"actually used" or "being used". If the intention of the legislature
was to expand the scope, in that case the phraseology used would
have   been   different   as   for   example,   "likely   to   be   used"   or   "to   be
used". The word "used" denotes "actually used" and it cannot be said
to be either "ready for use" or "likely to be used"; or "to be used".
Similar view has been taken by the Bombay High Court (Nagpur
Bench)   in   the   case   of   Dineshkumar  Gulabchand   Agrawal   (supra)
and it is observed and held that the word "used" denotes "actually
used"   and   not   merely   "ready   for   use".   It   is   reported   that   SLP
against   the   said   decision   has   been   dismissed   by   the   Hon'ble
Supreme   Court.   Even   the   submission   on   behalf   of   the   original
plaintiff that as the plots are given to original defendant No.1 for
developing and establishing Biotech Park which ultimately is to be
used for trade or commerce and therefore, section 2(c)(vii) shall be
applicable, the aforesaid has no substance and cannot be accepted.
Merely because the ultimate use might be for the purpose of trade

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or commerce and that too after developing and establishing Biotech
Park   after   providing   of   infrastructural   facilities,   section   2(c)(vii)
shall   not   be   applicable,   more   particularly   with   respect   to   the
agreement/contract between the original plaintiff and the original
defendant No.1. It cannot be said that the agreement between the
original plaintiff and the original defendant No.1 is the agreement
relating   to   immovable   property   used   exclusively   in   trade   or
commerce. Identical question came to be considered by the Division
Bench of this Court and after considering the relevant provisions of
the   Commercial   Courts   Act   more   particularly   section   2(c)   of   the
Commercial Courts  Act, in para 5.5 after considering section 2(c)
(vii)   of   the   Commercial   Courts   Act,   it   is   observed   that   merely
because the immovable property is going to be used exclusively in
trade   or   commerce,   the   dispute   would   not   become   commercial
dispute as defined under Section 2(c) of the Commercial Courts Act.
It is further observed and held in the said decision that if contention
on behalf of the applicant that as immovable property, which is the
subject­matter of the suit, is going to be used exclusively for trade
and commerce, the same would become commercial dispute as per
section   2(c)   and   therefore   the   same   is   to   be   transferred   to   the
concerned Commercial Court having jurisdiction is accepted, in that
case, the object and purpose of establishment of Commercial Courts
under   the   Commercial   Courts   Act   would   be   frustrated.   That
thereafter in paras 5.6 to 5.8, the Division Bench has observed and
held   as   under:   "5.6   The   object   and   purpose   of   establishment   of

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Commercial   Courts,   Commercial   Divisions   and   Commercial


Appellate Divisions of the High Court is to ensure that the cases
involved in commercial disputes are disposed of expeditiously, fairly
and   at   reasonable   cost   to   the   litigant.   The   Commercial   Courts,
Commercial   Divisions   and   Commercial   Appellate   divisions   of   the
High Courts are intended to serve as a pilot project in the larger
goal   of   reforming   the   civil   justice   system   in   India.   As   per   the
recommendations   made   by   the   Law   Commission   on   the   basis   of
which   the   Commercial   Courts   have   been   established,   the
Commercial Courts more particularly will benefit the litigant, other
potential litigants (especially those engaged in trade and commerce)
shall also be advantaged by the reduction in backlog caused by the
quick   disposal   of   the   commercial   disputes,   which   in   turn,   will
further   economic   growth,   increase   foreign   investment,   and   make
India an attractive place to do business. 
5.7 From the 188th report of the Law Commission it appears that
the constitution of Commercial Divisions Courts were necessitated
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.It has been aimed to give a clear assurance to
investors that high value commercial suits would directly go before
the Commercal Division/Commercial Courts / Commercial Appellate
Courts, which wouldfollow fast track procedures. 
5.8 Thus, considering the aim, object and purpose of the enactment
of the Commercial Courts Act noted hereinabove, the submission on

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behalf of the appellant that the dispute in the present suit, which as
observed hereinabove, cannot be said to be the commercial dispute
within the definition of Section 2(c) of the Commercial Courts Act, is
required   to   be  transferred  to   the  Commercial  Division,  Vadodara
cannot be accepted. If such a suit which is as such arising out of the
probate proceedings and/or is dispute with respect to the property
are   transferred   to   the   Commercial   Division/Commercial   Court,
there shall not be any difference between the Regular Civil Courts
and the Commercial Division / Commercial Courts and therefore, if
all   such   suits   are   transferred   to   the   Commercial   Division/
Commercial Courts, the object and purpose of the establishment of
the Commercial Division/Commercial Courts shall be frustrated." 
 5.13    2019 0 Supreme(Mah) 294; Kanchanganga Realtors Pvt

Ltd. Versus Monarch Infrastructure Developers Pvt Ltd. 

Para   14.   In   this   context,   reliance   placed   on   the   judgment   of   the


Gujarat   High   Court   in   the   case   of  Vasu   Healthcare   Private

Limited vs Gujarat Akruti TCG Biotech Limited and another

(supra)  on behalf of respondent no.1,would not take its case any

further. A perusal of the said judgment of the Gujarat High Court
and another judgment of the said High Court in the case of Ujwala

Raje Gaekwar vs Hemaben Achyut Shah, reported at, 2017

SCCOnLine(Guj) 583,  would show that the Gujarat High Court

has placed a narrow interpretation on the definition of commercial
dispute under Section 2(1)(c)(vii) of the Act of 2015 and there is no
reference made to Explanation (a) to the said provision. As noted

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earlier,   this   Court   is   of   the  opinion  that  the  expressions  used   in


Section 2(1)(c)(vii) read with Explanation (a) of the Act of 2015 have
to be given wide interpretation. Therefore, this Court respectfully
disagrees with the aforesaid judgment of the Gujarat High Court. It
is   also   pointed   out   by   the   learned   Counsel   appearing   for   the
petitioners   that   in   a   Special   Leave   Petition   filed   against   the
aforesaid judgment of the Gujarat High Court in the case of Vasu
Healthcare Private Limited vs Gujarat Akruti TCG Biotech Limited
and another (supra), the Hon'ble Supreme Court has granted leave
and directed the parties therein to maintain status quo. 
15. In view of the above, it becomes clear that the dispute raised by
respondent   no.1   in   the   suit   for   specific   performance   against   the
petitioners   is   covered   under   the   definition   of   commercial   dispute
under   Section   2(1)(c)(vii)   read   with   Explanation   (a)   of   the   Act   of
2015. This is particularly so, when the said agreement is read with
the Memorandum of Understanding, also of the same date, executed
between the parties showing beyond any doubt that the agreement
relates to immovable property, which is to be used exclusively in
trade or commerce. The respondent no.1 has not denied and, in fact,
it   has   accepted   before   this  Court   about   the  existence   of   the  said
Memorandum of Understanding executed between the parties. It is
evident that the parties entered into the agreement to develop the
property   in   question   by   undertaking   construction   activity   or   to
further   sell   the   same   for   commercial   gains,   in   terms   of   the   very
objects of the two parties i.e. petitioner no.1 and respondent no.1.

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There  is  no  dispute  about the fact that the "commercial dispute"


between the parties is beyond the amount of Rs. 1 Crore.
5.14   Kandla   Export   Corporation   &   Anr   v   M/s   OCI

Corporation   &   Anor   Civil   Appeal   No.   1661­1163   of   2018,

judgment dated 7 February 2018 

What are the practical implications of this judgment?
Section 50 of the  Arbitration and Conciliation Act 1996 (the Act)
allows parties to appeal against two types of orders only:

• an order refusing to refer parties to arbitration, and 
• an order refusing to enforce a foreign award 

Under   the   Commercial   Courts,   Commercial   Division   and


Commercial   Appellate   Division   of   High   Courts   Act   2015   (the
Commercial Courts Act), all applications arising out of arbitration
are to be heard by the Commercial Courts. 

Section   13(1)   of   the   Commercial   Courts   Act,   if   read   in   isolation,


could be interpreted to mean, and was contended by Kandla Export
in   this   case,   that   a   decision   of   the   Commercial   Court,   even   in
matters   not   covered   by   section   50   of   the   Act,   could   be   appealed
against. 

The Supreme Court re­affirmed its commitment to the enforcement
of foreign awards by removing this confusion and reiterating that
an   appeal   in   cases   of   foreign   awards   would   only   apply   on   the
grounds set out in section 50 of the Act and specifically no appeal
will proceed to the Commercial Appellate Division if it is against an

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order rejecting the objections to enforcement. 

An excerpt from the judgment speaks to a pro­enforcement stance
taken   by   the   Indian   judiciary   this   past   decade:   ‘Enforcement   of
foreign awards should take place as soon as possible if India is to
remain   as   an   equal   partner,   commercially   speaking,   in   the
international community.’ 

The only remedy would be to approach the Supreme Court by virtue
of a special leave to appeal. 

Conversely, parties seeking enforcement have access to a two­stage
appeal   process.   If   the   court   of   first   instance   refuses   to   enforce   a
foreign   arbitral   award   for   whatever   reason,   it   can   appeal   first—
before Commercial Appellate Division and failing there it also has
the option to approach the Supreme Court. 

What is the background to this decision?

The parties, M/s. OCI Corporation (OCI/Buyers) and Kandla Export
Corporation (Kandla Export/Sellers), had referred their disputes to
be resolved by way of arbitration under the Grain and Feed Trade
Association (GAFTA) Rules. 

An   arbitral   award   was   made   on   28   April   2014   directing   Kandla


Export   to   pay   a   sum   of   $US   846,750   together   with   compound
interest at the rate of 4% calculated on a quarterly basis to OCI.
The award was appealed to the Appellate Tribunal, which directed
Kandla Exports to pay a sum of $US 815,000 at an interest rate of

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4% on a quarterly basis to OCI by order dated 16 April 2015. 

Subsequently, Kandla Export filed series of appeals challenging the
award passed by the Appellate Tribunal, before the Queen’s Bench
in   the   Queen’s   Bench   Division   of   the   Commercial   Court.   Kandla
Export   were   faced   with   dismissal   in   both   the   appeals   in   2015.
However,   in   their   continuing   urge   to   have   the   award   set   aside
Kandla   Export   filed   another   appeal   before   the   English   Court   of
Appeal. Leave to appeal was not granted. Meanwhile in India, OCI
initiated execution proceedings on 29 June 2015, under section 48 of
the Act, before the District Court of Gandhidham, Kutch. Kandla
Export filed their objection to the petition. Thereafter, OCI filed an
application   before   the   Gujarat   High   Court   (Gujarat   HC)   seeking
transfer of the execution proceedings, with the Commercial Courts
Act   and   amendments   to   the   Act   coming   into   effect   from   October
2015.   The   Gujarat   HC   allowed   the   application   and   execution
proceedings that were transferred before the Commercial Division,
Gujarat HC on November 11, 2016. Kandla Export filed a special
leave   petition   (SLP)   before   the   Supreme   Court   challenging   the
order, which was also dismissed. 

With the SLP being dismissed, Kandla Export filed their objections
in   the   execution   proceedings.   Dismissing   their   objections,   the
Gujarat   HC  recognised   the  foreign   award  as   enforceable.  Kandla
Export   challenged   the   decision   of   the   Single   Bench   and   filed   an
appeal under section 13(1) of the Commercial Courts Act before the
Commercial Appellate Division. This appeal was dismissed by the

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Commercial   Appellate   Division   on   the   ground   of   maintainability,


ruling   that   against   an   order   rejecting   objections   to   enforcement,
there would be no appeal to the Commercial Appellate Division. 

The   decision   of   the   Commercial   Appellate   Division   was   then


challenged before the Supreme Court of India—which is the subject
matter of this article. 

The contentions of Kandla Export are the following:

• section 13(1) of the Commercial Courts Act provides a right to
file   an   appeal   against   any   decision,   judgment   and   order
passed  by  the  Commercial  Division   of  the  High  Court—and
thus   an   order   rejecting  the objections to  enforcement  would
also   be   appealable   under   section   13(1)   of   the   Commercial
Court’s Act 
• section 50 of the Act does not prohibit appeals which are not
expressly   listed   in   section   50   of   the   Act.   Since   section   50
(which deals with enforcement of foreign awards in India) did
not have the restricting language of section 37 (which deals
with domestic arbitrations), appeals which were not expressly
provided for  in  section  50, should anyway be allowed under
section 13 of the Commercial Courts Act 

On the other hand, OCI contended:

• the Act is a self­contained code which provides a substantive
as well as procedural law regarding arbitrations and should
exclude the application of general law, including provisions of

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section 13 of the Commercial Courts Act 
• section   50   of   the   Act   creates   a   specific   bar   against   appeals
from   any   orders   which   are   not   mentioned   under   the   said
provision.   An   appeal   can   only   be   made   against   an   order
refusing to enforce an award under section 48 of the Act and
not against other orders 
• section   13   of   the   Commercial   Courts   Act   cannot   be   read   in
isolation and must be read harmoniously with the provisions
of the Act to give effect to both the legislations 
• the object of both legislations is to determine arbitration and
commercial   matters   speedily   and   allowing   an   extra   appeal
under   the   Commercial   Courts   Act   2015   would   defeat   the
objective of both acts 

What did the Supreme Court decide?

The Supreme Court affirmed the Commercial Appellate Division’s
findings and ruled that section 13(1) of the Commercial Courts Act
being  a  general provision  vis­à­vis arbitration relating to appeals
arising out of commercial disputes, would not apply to cases unless
they are expressly covered under section 50 of the Act. 

The   Supreme   Court   relied   on   its   earlier   decision   in   Fuerst   Day


Lawson Limited v Jindal Exports Limited [2011] 8 SCC 333 which
dealt with the issue as to whether an order though not appealable
under section 50 of the Act would be subject to appeal under the
letters patent of the High Court. The Supreme Court in Fuerst Day

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had   laid   down   certain   broad   principles   clarifying   that   in   case   a


special   statute   is   a   self­contained   code,   the   applicability   of   the
general law procedure would be impliedly excluded. Appeals only
under section 50 of the Act are maintainable in relation to foreign
awards and not under letters patent. 

Section 13(1) of the Commercial Courts Act states that an appeal
will lie from orders passed by the Commercial Courts under section
37 (applicable only in case of India seated arbitration) of the Act. It
was silent with respect to any appeals under section 50 of the Act
(applicable in cases of enforcement of foreign awards). 

The Supreme Court in its earlier decision in Arun Dev Upadhaya v
Integrated   Sales   Services   (not   reported   by   LexisNexis®   UK)   had
widened the scope of section 13 of the Commercial Courts Act to
include appeals under section 50 of the Act too. 

5. 15 Followings Are Helds To Be Not Commercial Disputes 

1   Suit   for   recovery   of   damages   for   loss   suffered   on   account   of

damage to the Aircraft. Qatar Airways V/s Airport Authority of

India 2016 SCC online Delhi 8088 

2 Suit by landlord for recovery of possession of immovable property.

Soni Dave V/s Trance Asian Industries AIR 2016 Delhi 186

3.   Suit  for  cancellation  of  power of  attorney  Hindpal Singh V/s

Jasbir Singh 2016 SCC online Delhi 4901 214 

4.   Simple   loan   transaction   is   not   a   commercial   dispute.  Rita

Agarwal V/s Udav Medicare pvt. Ltd. 2018 SCC online Delhi

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8595 

5.   Suit   for   specific   performance   of   an   agreement   of   sale   and   for


permanent   injunction   restraining   defendant   from   selling   or
transferring   property   not   use   exclusively   for   trade   or   commerce

purpose.  Laxmi Narayan V/s Navneet 2017 SCC online Delhi

7863 Jay Bhagwan V/s Rakesh 2018 SCC online Delhi 7744 

6. Agreement/indenture of lease respect of residential flats in The
immovable   property   in   question   ­   residential   flats   are   used
exclusively for residential purpose and same cannot be said to be
used  exclusively   in   trade  or  commerce.  Under  the  circumstances,
considering   Section   2(c)(vii)   of   the   Commercial   Courts   Act,   the
dispute arising out of the indenture/agreement in question cannot
be   said   to   be   relating   to   immovable   property   used   exclusively   in
trade   or   commerce   and   therefore,   said   cannot   be   said   to   be
commercial dispute as defined under Section 2(c) of the Commercial

Courts   Act.  Madhuram   properties   V/s   Consultancy   Services

Ltd. 2017 SCC online Guj 725, 2017 (4) GLR 3327 Tata 7 

Shri.   Chruparambil   Methew   V/s   Shri.   ERIC   Eusebio   2017

SCC online Bom 8322 

Para 2. The brief facts are that the petitioner (plaintiff) is having an
agreement of agency executed by the original defendant nos. 1 to 10,
which agreement is dated 23.09.2005. There is a Power of Attorney
executed by the defendant nos. 1 to 10 in favour of the petitioner on
the same date. As per the said contract of agency and the Power of
Attorney,   the   petitioner   was   entitled   to   sell   the   suit   property

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belonging to the defendant nos. 1 to 10 and out of the consideration,
an amount at the rate of Rs. 600/­ per square metre was payable to
defendant nos. 1 to 10 and the petitioner was entitled to retain the
balance. 
8.   It   can   thus   be   seen   that   a   commercial   dispute,   within   the
meaning   of   Section   2(1)(c)(vii)   of   the   Act,   would   be   a   dispute   in
respect   of   the   agreements   relating   to   immovable   property,   used
exclusively in trade or commerce. 
9. Section 2(1)(c)(xxi) of the Act stipulates that a contract of agency,
relating to ‘any of the above’ i.e. falling within Section 2(1)(c)(i) to
(xx) of the Act, would also be covered and would come within the
ambit of a commercial dispute. It can thus be seen that disputes
arising of all contracts of agency, although, in excess of value of Rs.
1   crore,   cannot   per   se   be   termed   as   commercial   disputes.   The
subject property has not been used for trade or commerce. Thus, on
conjoint reading of Section 2(1)(c)(vii) and (xxi) of the Act, in the
context of the facts obtaining in the present case, it is clear that the
dispute   is   not   a   commercial   dispute,   requiring   the   suit   to   be
transferred to the Commercial Court. 
5.16   FOLLOWINGS   ARE   HELD   TO   BE   COMMERCIAL

DISPUTES 

1 Jagmohan Behl V/s State Bank of Indore 2017 SCC online

Delhi 10706 

The explanation in the present case has to be read as part and
parcel of clause (vii), for the language of the explanation shows the

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purpose,   and   the   construction   consistent   with   the   purpose   which


should   be   placed   on   the   main   provision.   The   main   provision,
therefore,   has   to   be   construed   and   read   in   the   light   of   the
explanation and accordingly the scope and ambit of sub­clause (vii)
to clause(c), defining the expression “commercial dispute”, has to be
interpreted.   The   explanation   harmonises   and   clears   up   any
ambiguity   or   doubt   when   it   comes   to   interpretation   of   the   main
provision. 

2.  S. Pillai v. V.R. Pattabiraman (1985) 1 SCC 591, 

it   was   observed   that   explanation   to   a   statutory   provision   can


explain the meaning and intendment of the provision itself and also
clear any obscurity and vagueness to clarify and make it consistent
with   the   dominant   object   which   the   explanation   seems   to   sub­
serve. It fills up the gap. However, such explanation should not be
construed so as to take away the statutory right with which any
person   under   a   statute   has  been  clothed   or  to  set  at   naught   the
working of the Act by becoming a hindrance in the interpretation of
the same. Clause (c) defines the “commercial dispute” in the Act to
mean a dispute arising out of different sub­clauses. The expression
“arising out of” in the context of clause (vii) refers to an agreement
in relation to an immoveable property. The expressions “arising out
of” and “in relation to immoveable property” have to be given their
natural   and   general   contours.   These   are   wide   and   expansive
expressions   and   are   not   to   be   given   a   narrow   and   restricted

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meaning. The expressions would include all matters relating to all
agreements in connection with immoveable properties. 
The immoveable property should form the dominant purpose of the
agreement   out   of   which   the   dispute   arises.   There   is   another
significant   stipulation   in   clause   (vii)   relating   to   immoveable
property, i.e., the property should be used exclusively in trade or
commerce. The natural and grammatical meaning of clause (vii) is
that all disputes arising out of agreements relating to immoveable
property   when   the   immoveable   property   is   exclusively   used   for
trade   and   commerce   would   qualify  as  a   commercial   dispute.  The
immoveable 
property must be used exclusively for trade or business and it is not
material whether renting of immoveable property was the trade or
business activity carried on by the landlord. Use of the property as
for trade and business is determinative. Properties which are not
exclusively used for trade or commerce would be excluded. 

12. The explanation stipulates that a commercial dispute shall not
cease   to   be   a   commercial   dispute   merely   because   it   involves
recovery of immoveable property, or is for realisation of money out
of   immoveable   property   given   as   security   or   involves   any   other
relief   pertaining   to   immoveable   property,   and   would   be   a
commercial dispute as defined in sub­clause (vii) to clause (c). The
expression “shall not cease”, it could be asserted, has been used so
as to not unnecessarily expand the ambit and scope of sub­clause

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(vii)   to   clause   (c),   albeit   it   is   a   clarificatory   in   nature.   The


expression seeks to clarify that the immoveable property should be
exclusively used in trade or commerce, and when the said condition
is   satisfied,   disputes   arising   out   of   agreements   relating   to
immoveable   property   involving  action  for  recovery   of  immoveable
property, realization 
of money out of simmoveable property given as security or any other
relief   pertaining   to   immoveable   property   would   be   a   commercial
dispute. The expression “any other relief pertaining to immoveable
property”   is   significant   and   wide.   The   contours   are   broad   and
should not be made otiose while reading the explanation and sub­
clause (vii) to clause (c) which defines the expression “commercial
dispute”. Any other interpretation would make the expression “any
other relief pertaining to immoveable property” exclusively used in
trade or commerce as nugatory and redundant. 
13. Harmonious reading of the explanation with sub­clause (vii) to
clause   (c)   would   include   all   disputes   arising   out   of   agreements
relating   to   immoveable   property   when   used   exclusively   for   trade
and commerce, be it an action for recovery of immoveable property
or realization of money given in the form of security or any other
relief pertaining to immoveable property. 
14. In the context of the present case, it is not disputed that the
immoveable   property   was   being   used   exclusively   in   trade   and
commerce. The said issue does not arise for consideration. 
15. The next question, which arises for consideration, is whether a

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suit   involving   action   for   recovery   of   mesne   profits   is   a   dispute


arising out of agreements relating to immoveable property. Answer
to our mind would be in favour of the appellant when we read Order
XX, Rule 12 of the Code and keep in mind the nature of the claim
for mesne profits. 
16.   The   expression   “mesne   profit”   has   been   defined   in   sub­
section(12) to Section 2 to the Code to mean those profits which a
person in wrongful possession of such property actually received or
might   with   the   ordinary   diligence   have   received   together   with
interest   on   such   profits   but   would   not   include   profits   due   to
improvements made by the person in wrongful possession. Mesne
profits can be also claimed in suits for partition and possession from
other co­owners and joint­holders. However, in the present case, we
are dealing with a property given on rent, for being exclusively used
for trade and business. 
18. Lease of immoveable property is dealt with under the Transfer
of   Property   Act   in   Chapter   V   thereof.   The   said   enactment   vide
section 105 defines what is lease, lessor, lessee and rent and vide
section 107 stipulates how leases are made and can be terminated.
Leases can be both oral or in writing. Noticeably, sub­clause (vii) to
clause   (c)   in   Section   2   of   the   Act   does   not   qualify   the   word
“agreements”   as   referring   to   only   written   agreements.   It   would
include oral agreements as well. The provisions of the Transfer of
Property Act deal with the effect of non­ payment of rent, effect of
holding over and most importantly the determination of the leases

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or their termination. It cannot be disputed that action for recovery
of immoveable property would be covered under sub­clause (vii) to
clause   (c)   when   the   immoveable   property   is   exclusively   used   in
trade or commerce. Read in this manner, we do not think that claim
for recovery of rent or mesne profit, security deposit etc., relating to
immoveable   property   which   was   used   exclusively   in   trade   or
commerce should not be treated as a commercial dispute in view of
the   language,   ambit   and  scope   of  sub­clause  (vii)   to  clause  (c)   to
Section 2 of the Act. These would qualify and have to be regarded as
commercial   disputes.   The   use   of   expression“any   other   relief
pertaining to immoveable property” would mean disputes relating
to breach of agreement and damages payable on account of breach
of agreement would be covered under sub­clause (vii) to clause (c) to
Section 2 of the Act when it is arising out of agreement relating to
immoveable property exclusively used in trade and commerce.

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APPENDIX 

 STATEMENT OF TRUTH 

(Under   First   Schedule,   Order   VI   Rule   15A   and   Order   X   Rule   1)


STATEMENT OF TRUTH BY 
[party position and name of party in full] 

I,   the   deponent   above­named,   do   hereby   solemnly   affirm   and


declare as 
under: 
1. I am [name of party and relevant details] in the above suit and
competent to swear this affidavit. 
2. I am sufficiently conversant with the facts of the case and have
also   examined   all   relevant   documents   and   records   in   relation
thereto. 

3. I say that the statements made in [mention specific paragraph
numbers]   paragraphs   are   true   to   my   knowledge   and   statements
made   in   [mention   specific   paragraph   numbers]   paragraphs   are
based   on   information   received   which   I   believe   to   be   correct   and
statements   made   in   [mention   specific   paragraph   numbers]   are
based on legal advice. 

4.   I   say   that   there   is   no   false   statement   or   concealment   of   any


material fact, document or record and I have included information
that is according to me, relevant for the present suit. 

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5. I say that that all documents in my power, possession, control or
custody,   pertaining   to   the   facts   and   circumstances   of   the
proceedings initiated by me have been disclosed and copies thereof
annexed   with   the   plaint,   and   that   I   do   not   have   any   other
documents in my power, possession, control or custody. 
6. I say that the above­mentioned pleading comprises of a total of
[number of pages] pages, each of which has been signed by me. 

7.   I   state   that   the   Annexures   hereto   are   true   copies   of   the


documents referred to and relied upon by me. 
8.   I   say   that   I   am   aware   that   for   any   false   statement   or
concealment, I shall be liable for action taken against me under the
law. 

Place 
Date 
DEPONENT 
VERIFICATION 
The statements made above are true to my knowledge. 
Verified at [place] on this [date]
DEPONENT

APPENDIX 

 STATEMENT OF TRUTH 

(Under   First   Schedule,   Order   VI   Rule   15A   and   Order   X   Rule   1)

A P RANDHIR,  PR.SR.CIVIL JUDGE BORSAD, DISTRICT: ANAND
 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       137

STATEMENT OF TRUTH BY 
[party position and name of party in full] 

I,   the   deponent   above­named,   do   hereby   solemnly   affirm   and


declare as 
under: 
1. I am [name of party and relevant details] in the above suit and
competent to swear this affidavit. 
2. I am sufficiently conversant with the facts of the case and have
also   examined   all   relevant   documents   and   records   in   relation
thereto. 

3. I say that the statements made in [mention specific paragraph
numbers]   paragraphs   are   true   to   my   knowledge   and   statements
made   in   [mention   specific   paragraph   numbers]   paragraphs   are
based   on   information   received   which   I   believe   to   be   correct   and
statements   made   in   [mention   specific   paragraph   numbers]   are
based on legal advice. 

4.   I   say   that   there   is   no   false   statement   or   concealment   of   any


material fact, document or record and I have included information
that is according to me, relevant for the present suit. 
5. I say that that all documents in my power, possession, control or
custody,   pertaining   to   the   facts   and   circumstances   of   the
proceedings initiated by me have been disclosed and copies thereof

A P RANDHIR,  PR.SR.CIVIL JUDGE BORSAD, DISTRICT: ANAND
 PRACTICAL  GUIDE ON COMMERCIAL COURT ACT       138

annexed   with   the   plaint,   and   that   I   do   not   have   any   other
documents in my power, possession, control or custody. 
6. I say that the above­mentioned pleading comprises of a total of
[number of pages] pages, each of which has been signed by me. 

7.   I   state   that   the   Annexures   hereto   are   true   copies   of   the


documents referred to and relied upon by me. 
8.   I   say   that   I   am   aware   that   for   any   false   statement   or
concealment, I shall be liable for action taken against me under the
law. 

Place 
Date 
DEPONENT 
VERIFICATION 
The statements made above are true to my knowledge. 
Verified at [place] on this [date]
DEPONENT

::::::::::::::::::::::::::::::::::::::::::::THE END:::::::::::::::::::::::::::::::::::::::::::

A P RANDHIR,  PR.SR.CIVIL JUDGE BORSAD, DISTRICT: ANAND