Of Flawed Considerations and Failed Legislations: Observations from the Implementation of the Commercial Courts Act, 2015
Introduction: The Promise of 2015
When the Commercial Courts, Commercial Division, and Commercial Appellate Division of
High Courts Act was enacted in 2015, it was hailed as a "game-changer" for India’s ease of
doing business. The legislative intent was clear: to create a specialized fast-track mechanism
for high-value commercial disputes, thereby boosting investor confidence and reducing the
notorious backlog in Indian courts. However, nearly a decade later, the gap between the
statutory promise and the ground reality remains vast. While the Act introduced sophisticated
procedural tools, it arguably failed to account for the systemic fragility of the Indian
subordinate judiciary.
The Structural Flaw: Specialized Courts without Specialized Infrastructure
True specialization requires a dedicated cadre of judges trained specifically in complex commercial laws—Intellectual Property, Insolvency, and Maritime Law. By failing to create a separate, independent infrastructure and instead "tagging" existing judicial officers with additional commercial responsibilities, the legislation ignored the reality of judicial over- burdening. The result is a system where "commercial" status is often just a label on a folder rather than a shift in judicial approach.
The Pecuniary Tug-of-War
The evolution of the "Specified Value" under the Act reveals a legislative trial-and-error
approach that has caused significant confusion. Initially, the threshold was set at ₹1 Crore.
When this failed to clear enough of the backlog, the 2018 Amendment drastically lowered the
threshold to ₹3 Lakhs.
This move was widely criticized as a "failed consideration." By lowering the value so
significantly, the legislature flooded the newly formed Commercial Courts with small-scale
recovery suits. This diluted the "specialized" nature of these courts, turning them into high-
volume recovery centers rather than forums for complex legal adjudication. The very
bottleneck the Act sought to remove was simply relocated to a lower pecuniary level.
Pre-Institution Mediation: A Hurdled Gateway
Section 12A, which mandates Pre-Institution Mediation and Settlement (PIMS), was intended
to be the Act’s crown jewel for Alternative Dispute Resolution (ADR). The Supreme Court’s
ruling in Patil Automation Pvt. Ltd. v. Rakheja Engineers made this mandate "mandatory,"
stating that suits filed without exhausting PIMS (unless urgent interim relief is sought) must
be rejected.
While the intent is noble, the implementation has been flawed. In many districts, the
mediation infrastructure is understaffed or lacks the commercial sophistication required to
settle complex business disputes. Consequently, Section 12A often becomes a "procedural
hurdle" that litigants seek to bypass by claiming "urgent interim relief," regardless of whether
such urgency truly exists. Instead of fostering settlement, it has created a new theater for
preliminary litigation.
Procedural Rigidity vs. Cultural Inertia
The CCA introduced strict timelines for filing written statements (the famous 120-day hard
limit) and mandated the "Case Management Hearing." On paper, these are excellent tools. In
practice, they clash with a legal culture accustomed to frequent adjournments.
The "failed" aspect of this legislation lies in its inability to change the culture of litigation.
While the courts have become stricter regarding timelines, the lack of "Costs and
Consequences" implementation means that many litigants still find ways to protract
proceedings. The Act’s provision for "Summary Judgment" (Order XIII-A) is also
underutilized, as judges remain hesitant to decide cases without a full trial, fearing appellate
reversal.
The Digital Deficit
The 2015 Act arrived at the cusp of India’s digital revolution, yet it did not mandate the end-
to-end digitization of commercial disputes. Electronic filing, digital evidence management,
and virtual hearings—which should be the backbone of a modern commercial court—remain
inconsistent across different states. For a legislation aimed at global investors, the lack of a
uniform, tech-enabled "e-court" experience across all Commercial Divisions is a significant
oversight.
Conclusion: The Road to Redemption
1. True Specialization:Establishing permanent, exclusive commercial benches with specialized training.
2. Threshold Correction: Re-evaluating the ₹3 Lakh limit to ensure that "commercial" remains synonymous with "complex."
3. Mandatory Costs: Implementing "Follow the Event" costs to discourage frivolous litigation.
4. Incentivized Mediation: Moving PIMS from a "tick-box" exercise to a robust, private-sector-led ADR mechanism.
