How The Government Used A Flawed Ordinance To Expedite Cases Dealing With Rs 1 Crore Or More While Other Cases Remain Pending

06 November 2015
Arun Jaitley who, as the leader of the opposition in 2011, vehemently opposed transferring commercial disputes to the high courts, introduced the new version of the Commercial Courts Bill recommended by the Law Commission in the Rajya Sabha earlier this year.
FREDERIC FLORIN/AFP/Getty Images
Arun Jaitley who, as the leader of the opposition in 2011, vehemently opposed transferring commercial disputes to the high courts, introduced the new version of the Commercial Courts Bill recommended by the Law Commission in the Rajya Sabha earlier this year.
FREDERIC FLORIN/AFP/Getty Images

There is an old saying that politics is all about perception. A good policy, is therefore, not necessarily one that is perfect in the technocratic sense but one which complements the larger political agenda. For a government defending allegations of being a suit-boot ki sarkar—a government serving the interests of the rich—a good policy would be one which appears inclusive of all sections of society and not just the “suits and boots.” Paying little heed to this prescription, on 21 October 2015, the Modi sarkar advised President Pranab Mukherjee to promulgate an ordinance that put into effect the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015.

This ordinance, which was promulgated by the President of India on 23 October, aims to fast-track the resolution of disputes valued at upwards of Rs 1 crore. It aims to do so by creating special commercial bench divisions at the level of the high courts, special commercial courts at the district level and a special appellate commercial division in high courts. These courts will be required to follow a special, abridged procedure, and appeals against the orders of these courts will be curtailed to only final judgments and not all interim orders. In other words, the ordinance would hasten the speed of crorepati litigation—litigation with a net worth higher than one crore.

In a statement to Outlook magazine, the commerce minister Nirmala Sitharaman said, “We see no hurdle in getting approval for the draft legislation, as like fast-track courts, these dedicated courts will take care of all commercial issues. This is to make doing business easy for big and small companies.” However, Sitharaman might be highly mistaken in thinking that there will be “no hurdle” in getting the approval of Parliament for this law. The last time this law was in Parliament, members of parliament (MP) cutting across party lines objected to the very purpose of the bill: to prioritise high-value commercial litigation over other forms of litigation. To understand the opposition and objection to this law, it is necessary to first start with the manner in which this law evolved through the legal system.

The first version of this law was proposed in the 188th report of the Law Commission as far back as December 2003. At the time, the Law Commission had suo moto—begun a legal process on its own—taken up this issue without a request from either the Supreme Court or the Central Government. In his letter to the then Law Minister Arun Jaitley, retired Supreme Court Justice M Jagannadha Rao, then the chairperson of the Law Commission, justified the bill on the grounds that it would send “a clear message that such high value commercial disputes will be disposed of quite fast in India.” He argued that it was necessary to send such a message due to “a recent spate of judgments of the US and UK Commercial Courts declaring that the Indian Court system has ‘collapsed’ because there are delays upto twenty years or more.” As a result of this perceived “collapse” of the Indian litigation system, Rao wrote, American and English judges, in a deviation from the conventional principles of jurisdiction in civil litigation, had been assuming jurisdiction over Indian defendants as long as these defendants had a branch or local representative or were trading in that foreign country.

This version of the bill drafted by the 188th Report of the Law Commission was introduced in Parliament by the Congress-led United Progressive Alliance (UPA) government in its second term, as the Commercial Division of High Courts Bill, 2009. The only major legal reform in the UPA’s first term was the Gram Nyayalayas Act, 2008, a legislation aimed at changing litigation in rural India. This version of the Commercial Division of High Courts Bill was passed by the Lok Sabha in 2009. It was one of the 4 bills that were cleared within 5 minutes without debate in December that year, when parliamentary proceedings were log-jammed due to protests over the demand for Telangana. However when the bill went to the Rajya Sabha, it was referred to a select committee, whose report on the bill was tabled on 29 July 2010. While a majority of the committee approved of the bill, two MPs filed strong dissent notes.

Prashant Reddy Thikkavarapu studied law at the National Law School of India University and Stanford Law School, and is currently a research associate at the school of law at Singapore Management University. He tweets as @preddy85.

COMMENT