Before delving upon the issue of jurisdiction of arbitral tribunals, let us read the section 16 of the Arbitration and Conciliation Act, 1996 (in short here in after referred to as “Act“)to understand its scope and repercussions during the arbitral proceedings.

Section 16. Competence of arbitral tribunal to rule on its jurisdiction.–

(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-

(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.

(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34.

Genesis:

Section 16 of the Act has been framed in terms and in spirit of Article 16 Chapter IV of UNCITRAL Model Laws on International Commercial Arbitration (1985) (as adopted by the United Nations Commission on International Trade Law on 21 June 1985)

“Article 16 – Competence of arbitral tribunal to rule on its jurisdiction

1. The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

2. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.

3. The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.”

Rationale

Principles of Kompetenz Kompetenz or “Competence de la recognized” applies to the arbitration tribunal, which is a jurisprudential Doctrine whereby a legal body, such as a court or arbitration tribunal, may have jurisdiction to rule as to the extent of its competence or jurisdiction on an issue before it.

Idea behind the insertion of Section 16 was to stipulates the timeline for raising the issue with regard to the Jurisdiction of an arbitral tribunal, in order to save the time and money of the parties to dispute. However the language of Section 16 especially sub-section (2), (4) & (5) creates an ambiguity with regard to the fact that it gives options to the arbitral tribunal to decide the issue of jurisdiction either as a preliminary issue or at the time of passing of the award. Sub-section 2 stipulates that “the plea of jurisdiction shall not be raised later than statement of defence“, however at the same time a window has been left open in Sub-section 4 the tribunal has been vested power to condone the delay in taking plea of jurisdiction at belated stage on being satisfied by the justification of such delay, though this will be dependent upon the factual matrix of each case.

The Act is silent with regard to the fact as to whether the issue of jurisdiction is to be mandatorily decided as a preliminary issue, even the opinion of the Hon’ble Courts as well as interpretation by the Hon’ble Courts on issue of jurisdiction has been divided.

However I personally feel, that the benefit of treating the jurisdiction issue as a preliminary issue will result in quick culmination of arbitral proceedings and shall be cost effective as well, whereas if the decision on the issue of jurisdiction is taken at the time of passing of the award by the tribunal and ultimately tribunal comes to the conclusion that it lacks jurisdiction, it results in wastage of the time of the parties to dispute and tribunal as well and also increases the cost of litigation and effective adjudication of the claim is delayed. Such flexibility in the decision making process not only hampers the growth in International business, FDI but also hampers India from becoming an International hub for Commercial Arbitration.

Section 16 further creates another ambiguity, if the in terms of sub-section 5, the tribunal decides the plea of jurisdiction treating as preliminary issue than an appeal would lie to court in terms of Section 37(2)(a) of the Act, however if the tribunal decides to adjudicate upon the plea of jurisdiction at the stage of passing of Award than recourse under Section 34 shall be applicable as the award can only be challenged under Section 34 of the Act.

Important Judgments:

M/s Uttarakhand Purv Sainik Kalyan Nigam Limited v. Northern Coal Field Limited (Special Leave Petition (C) No. 11476 of 2018) decided on 27.11.2019

All other preliminary or threshold issues are left to be decided by the arbitrator under Section 16, which enshrines the Kompetenz-Kompetenz principle. 9.9. The doctrine of “Kompetenz-Kompetenz”, also referred to as “Competence-Competence”, or “Competence de la recognized”, implies that the arbitral tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional 5 (2017) 9 SCC 729.

In Bhushan Steel Ltd. v. Singapore International Arbitration Centre 2010 SCC OnLine Del 2236 relying on Kvaerner Cementation India Limited supra (2012) 5 SCC 214 and Roshan Lal Gupta supra holding, that once it is held there is a valid Arbitration Agreement between the parties, a suit for declaration that the Arbitral Tribunal has no jurisdiction or for permanent injunction to restrain arbitration would not be maintainable; (ix) the ICC Rules are akin to Section 16 of the Arbitration Act; and, (x) that Kvaerner Cementation India Limited supra has recently been cited with approval in National Aluminium Company Ltd. v. Subhash Infra Engineers Pvt. Ltd. 2019 SCC OnLine SC 1091 holding that if the plaintiff therein wanted to raise an objection with regard to existence or validity of the Arbitration Agreement, it was open for it to move an application before the Arbitrator but with such plea he cannot maintain a suit for declaration and injunction.

In Pandey & Co. Builders Private Limited v. State of Bihar, AIR 2007 SC 465, held forum of appellate court must be determined with reference to definition of court in section 2(1)(e) of the Act. If a High Court does not exercise the Original Jurisdiction, it would not be a `Court’ within the meaning of the said provision.

M/s Lion Engineer Consultants v. State of Madhya Pradesh 2018 AIR (SC) 1895. In this Judgment Hon’ble Supreme Court held that even if the objection of jurisdiction is not taken before the arbitral tribunal, than also the same can be raised during the challenge to the arbitral award under section 34 of the Act. The Hon’ble Court overruled its own judgement delivered in the case of MSP Infrastructure Ltd. v. Madhya Pradesh Road Development Corporation Ltd. (2015) 13 SCC 713 wherein it was held that all objections of jurisdictions must be raised at the submission of the statement of defence and must be dealt with under Section 16 of the Act.

For understanding concept of codified laws first let us understand “What is meant by codification?”

Codification : the action or process of arranging laws or rules according to a system or plan.

Or

A systematic organization of methods, rules, etc

Or

The collection into one body of the principles of a system of law

Or

The process of codifying existing statutes or an existing body of law into a code.

Code: Book of Law

Or

In legal parlance codification is the process of collecting and restating the law of a jurisdiction in certain areas, usually by subject, forming a legal code, i.e. a codex (book) of law.

Codification is one of the defining features of civil law jurisdictions. In common law systems, such as that of English law, codification is the process of converting and consolidating judge-made law into statute law.

Ancient History:

Early system of laws is Hindu law framed by Manu and called as Manu Smriti, dating back to the 2nd century BC. The use of civil codes in Islamic Sharia law began with the Ottoman Empire in the 16th century AD.

The history of codification of modern criminal law in India generally begins from the advent of the British rule. However, its roots date back to the Vedic age and the rule of various Hindu and Muslim dynasties. The modern criminal justice system is based on English laws and practices. These practices are practical as well as contemporary. As a result, a major chunk of criminal laws that exist today still rely on the British-era laws.

In ancient India, Hindu religious laws contained many provisions for governing criminal as well as civil matters. The Vedas, Shrutis, Smritis and even other documents like Manusmriti contain provisions regulating criminal law. The practice of codifying criminal offences existed in this period as well. These laws also contained detailed procedural rules and regulations for trials. There are some records which also show the existence of principles of evidence to govern these trials.

With the advent of Islamic rule in India, criminal laws in several parts of the country saw major changes. Even prior to the Mughal rule, the Delhi sultanates had already introduced offences based on Islamic laws of Shariat. The main influence of these laws was Islamic religious texts like the Quran, Sunna, Hadis, Ijma, Qiya, etc. During the Mughal period, the codification of criminal law became more sophisticated. Muslim criminal law came under three broad categories: crimes against God, crimes against sovereignty, and crimes against individuals. The law during Mughal period even divided modes of punishments into categories. These included death, dismembering of limbs, stoning, levy of fines, confiscation of property, the punishment of exile, etc.

After the British arrived in India, they initially decided not to interfere much with existing Muslim criminal laws. They made the changes in a phased manner so as to not upset the locals and their already existing social structure. Warren Hastings introduced his Judicial Plan of 1772, he didn’t made any severe changes to substantive criminal law. In 1773, he slowly started bringing about changes in rules of procedure and evidence in existing criminal laws. For example, he abolished the practice of allowing male relatives of victims to pardon their killers. During this time, serious offences like homicide became crimes against the state instead of being private or offences against an individual. This laid the foundation of the modern practice of the state prosecuting people who commit public offences. From 1790 onwards, Lord Cornwallis extended the process of codifying criminal law. Major changes took place in the subject of sentencing and the process of levying punishments such as physically harming and dismembering convicts slowly started fading.

Lord Wellesley made even more changes to the offences of murder and homicide in the early 1800s. For example, the law now made distinctions between intentional and unintentional killing and the law relating to evidence became stricter and the threshold of proof to indicate guilt increased to next level. In presidency towns like Madras, Bombay and Calcutta, the British made many changes keeping in mind the local prevailing conditions in the area.

According to the Charter Act, 1833, India’s first law commission in 1834 recommended drafting of the Indian Penal Code. Lord Macaulay was designated as the chairman of that law commission, and spearheaded its drafting. The Code was basically a comprehensive enactment describing all major crimes in existence at that time and their respective punishments and only came into existence after a rebellion took place in the year 1852.

Indian Penal Code has seen several amendments since it first came into existence. Although it largely relied on British laws and practices, many of its provisions are still the same.

Even the Indian Evidence Act came into existence in 1872 under the guidance of Lord Macaulay. Its foundation was largely the British law of evidence, but it has seen many changes since then.

After Independence, the Law Commission made many recommendations to update CrPC. Some of these changes were the abolition of jury trials. The most important reason for these changes was to make the criminal procedure quick and effective. CrPC was finally enacted again by the Parliament in 1973, and it has been amended many times since then.

What is the need for codifying the law?

The law is codified to develop an effective and efficient organ of legislation and for bringing about one uniform law in a political community, whose various sub-divisions had developed or received divergent local laws. It helps in laying down a specific normative instruction with the objective of either innovating a legal norm, where previously none existed or for varying or amending an existing legal norm.

Advantages of codified laws:

To make laws simple and accessible to everyone, so as to enable the people to know their respective rights and duties.

It brings certainty to the laws.

It generates confidence of the citizens in law and gives them confidence about the application of the law.

Codified laws are arranged in a better and cohesive manner, so as to wipe out or minimize the chances of conflict among various provisions of law.

It brings about uniformity for its wider acceptance among people of divergent strata of society, who are governed by the same law.

Disadvantages of codified laws:

Difficulty in keeping pace with the changing conditions in the society, since bringing about a change in codified law is only by an amendment, which is a very time consuming process.

Codified law sometimes fails to foresee or anticipate certain future problems, thus causing difficulties to people and the courts as well.

Can cause hardship in its application as the application of law is very rarely based on the customs or habits of a particular area or individual.

There are so many kinds of laws applicable in India, however in order to enhance our understanding in a simple manner, we can classify them primarily into four categories, viz Common Law, Criminal Law, Civil Law & Statutory Law:

Common Law:

It has its roots or origin in England and travelled to India with the infiltration of the East India Company. The uniform consent and practice of the people for these laws since ages formed the basis of Common Law. This form of law mainly flowed from judicial precedents and case laws.

Criminal Law:

Criminal Laws are mainly dealt by Indian Penal Code, 1860, Code of Criminal Procedure, 1973 and Indian Evidence Act, 1872. The State police have a very vital role to play in this category of law.

Civil Law:

These laws deal with those actions which are not crimes, Civil Procedure Code regulates the functioning of the Civil courts which hear and deal with civil matters.

Civil Procedure Code as its name signifies in the literal sense, lays down the procedure for filing of the Civil cases and deciding of the same, also provides for the procedure and remedies of filing appeal and revisions, reviews and references and also for execution of the Civil decrees passed by the Civil courts.

Civil laws can be further divided into Contract Laws, Family Laws, Property Laws and Law of Torts, which are further subdivided into various subcategories.

Statutory Law:

As the name itself signifies in its literal sense connotes “a law flowing through a statute”, which is the creation of the legislation declaring its will and also known as Legislative Law. The Statutory Law comes into existence by codification. The latest example is the Insolvency and Bankruptcy Code, 2016, a modern day codified law, made in sync with the present day scenario.

Views are personal only :-

(The author of this article is a practising lawyer at Punjab & Haryana High Court, Chandigarh)

The Hon’ble Supreme Court while dealing with the case of Justice K.S. Puttaswami and another v. Union of India, wherein a nine Judge Constitutional Bench, while delivering its Judgment on 24th August, 2017, declared “privacy” as a fundamental right under Article 21 of the Constitution of India. Subsequently, on 26th September, 2018, a five Judge Constitutional Bench of the Hon’ble Supreme Court while delivering its final judgment in the above case impressed upon the government to bring out a robust data protection regime.

This paved the way for introduction of a Data Protection Bill in the Parliament, which is pending in both the houses. The Personal Data Protection Bill 2019 was tabled in the Parliament by the Minister of Electronics and Information Technology on 11th December 2019. The bill within its ambit tries to develop a mechanism for protection of personal data and for setting up an authority “Data Protection Authority of India” for the same.

This bill aims to provide for protection of the privacy of individuals relating to their personal data, specify the flow and usage of personal data, create a relationship of trust between persons and entities processing the personal data, protect the rights of individuals whose personal data are processed, to create a framework for organizational and technical measures in processing of data, laying down the norms for social media intermediary, cross-border transfer, accountability of entities processing personal data, remedies for unauthorized and harmful processing, and to establish a Data Protection Authority of India for the said purposes and for the matters connected therewith or incidental thereto. Among various facets of the bill, an interesting facet is Right to be forgotten.

The Right to be forgotten is distinct from the right to privacy, which constitutes information that is not publicly known, whereas the right to be forgotten involves removing information that was publicly known at a certain time and not allowing third parties to access the information. The Right to be Forgotten allows the individuals to have certain information or data about themselves in the form documents, photographs, videos etc to be deleted from the internet, so that it may not be accessed by internet search engines any further. The grey area lies in the potential undue influence that such results may exert upon a person’s online reputation almost indefinitely if not removed.

This concept has already been put into practice in the European Union and Argentina since 2006. Since in India this will be a relatively new concept therefore I will try to explain its merits and demerits quoting the European Union’s process. To exercise the right to be forgotten and request removal from a search engine, a person requires to complete a form through the search engine’s web sites. Google’s removal request process requires the individual to identify their country of residence, personal information, a list of the URLs to be removed along with the short description of each one, and attachment of legal documents regarding identification. The applicant receives an email from Google confirming the request but the request must be assessed before it is approved for removal. If the request is approved, searches using the individual’s name will no longer result in the content appearing in search results. The content remains online and is not erased. After a request is filed, their removal team reviews the request, weighing “the individual’s right to privacy against the public’s right to know”, deciding if the website is “inadequate, irrelevant or no longer relevant, or excessive in relation for the purposes for which they were processed”. Google has formed an Advisory Council constituting of various professors, lawyers, governments officials from around Europe to provide guidelines for these decisions. However, the review process is still a mystery to the general public. Google began to take action on this much sooner than that, which allowed them “to shape interpretation to their own ends”.

Google form asks people to select one of the twenty-eight counties that make up the European Union, as well as Iceland, Liechtenstein, Norway and Switzerland. The form allows an individual to put in a request for the removal of any URLs believed to be a violation of the individual’s privacy. Regardless of who is submitting the form, he is required to submit photo identification of the person for whom the form is being submitted. The purpose of this is to verify the identity of the person for whom the request is being made, and in fact that person approves of the same.

If Google refuses a request to unlink material, individuals can appeal to their local data protection agency. If Google fails to comply with a Data Protection Agency decision, it can face legal action. Google has applied the right to be forgotten since May 2014, when the European Court of Justice first determined that under some circumstances European citizens could force search engines to delist web pages containing sensitive information about them from queries made using their names.

Indian Perspective:

As per the data available on google since 2009 out of approximately 8400 requests of data removal, Items broken down by decision taken in requests involving a court order or originating from various government agencies. Prior to 2019, Google published removal percentages based on action taken on requests and not found items, is as under:

Removed Legal 45.6%, Removed owing to Policy 5.1%, Not enough information 27.8%, No action taken 15.4%, Content already removed 4.5%, Content not found 1.6%.

Indian Courts have been alive to this concept, as there have been few instances such as:

In January, 2017 the Hon’ble Karnataka High Court upheld the right to be forgotten, in a case involving a woman who originally went to Court in order to get marriage certificate annulled, claiming to have never been married to the man named in the certificate. After the two parties came to an agreement, the woman’s father wanted her name to be removed from search engines regarding criminal cases in the High Court. The Karnataka High Court approved the father’s request, stating that she had a right to be forgotten. According to the Court, its ruling would align with western countries’ decisions, which typically approve of the right to be forgotten when dealing with cases “involving women in general and highly sensitive cases involving rape or affecting the modesty and reputation of the person concerned.” The woman in this specific case was worried that the search results would affect her standing with her husband, as well as her reputation in society. There is another case of similar consequences, which is pending before the Hon’ble Delhi High Court.

The Hon’ble Karnataka High Court considered as follows: “The `right to be forgotten’ or `the right to be erased’ allows an individual to request for removal of his/her personal information/data online. The origin of this right can be traced back to the French jurisprudence on the `right to oblivion’ or droit a l’oubli. The rationale behind it was to allow offenders who had served their sentence to object to the publication of information regarding their crime and conviction in order to ease their process of social integration. It was along these lines that the European Union Data Protection Directive, 1995 acknowledged the right to be forgotten, wherein it was stipulated that the member states should give people a right to obtain from the `controller’ the rectification, erasure or blocking of data relating to them, the processing of which did not comply with the provisions of the Directive.”

There are certain limitations, regarding its application in a particular jurisdiction, which may have practical difficulties, including the inability requiring removal of information held by companies, entities, individuals outside the jurisdiction, because of their being no global legal framework to allow individuals control over their online images, documents, videos etc.

There are industry apprehensions that the bill gives a blanket power to the Government to access citizen data and further that the Central Government can exempt any Government agency from the purview of this bill.

The Data Protection Bill, 2019 is in tune with the modern times, and with the growth and boom of internet, social media, and other platforms, this Data Protection Bill, is a must, which should be implemented at the earliest, though with few changes and a little bit of fine tuning in sync with the present times and scenario.

Views Are Personal Only.

(The author is a practicing advocate in the Punjab and Haryana High Court at Chandigarh)

Objective:

The key objective of the IBC was to consolidate and amend the existing laws relating to re-organization and insolvency resolution of Corporate persons, partnership firms and individuals by creating an effective time bound mechanism for compliance of law and for creating ease of doing business, borrowing and lending in India. The idea behind the formation of the code was to keep the company under the insolvency process alive and running, but at the same time with a moto that the defaulting management of the company should bear in mind, that their irresponsible conduct in running of the company, they will loose their positions once the resolution process is initiated.

IBC bill was introduced in Lok Sabha in December 2015 and was passed by the Lok Sabha on 5th may, 2016 and was passed by Rajya Sabha on 11th May, 2016 and after the Presidential Assent, was published in the Gazette of India 28th May, 2016.

Section 243 of IBC, 2016 repealed Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920.

Section 238 provides that the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

IBC provides for a separate insolvency process for individuals, Companies, LLP’s and Partnership firms. The process may be initiated either by the debtor or the creditor.

Under IBC four major arms are carved out for the compliance of various provisions:

1. Insolvency and Bankruptcy Board of India: Established under Sub-section (1) of Section 188 of IBC, 2016, for the purpose of acting as the Insolvency regulator, to oversee the insolvency proceedings and to regulate the entities registered under it. This board constitutes of 10 members, which includes representatives of Ministries of Finance and Law and the RBI.

2. Adjudicatory Authority: for the purposes of this Code, means National Company Law Tribunal (NCLT) constituted under section 408 of the Companies Act, 2013 (18 of 2013). The role of Adjudicatory Authority is limited to the extent of overseeing that the applicant has rightly moved an application for initiating the insolvency resolution process and the applicant is competent to invoke the process and once the process is invoked, than to oversee that the provisions and the time lines provided in the code are being adhered to by the IRP.

3. Resolution Process: for the purpose of carrying out the resolution process, the Interim Resolution Professional are appointed by the adjudicatory authority, once the application under section 7,9, or 10 of IBC, 2016 is admitted and the moratorium is announced. IRP is enrolled under section 206 and registered under section 207 of the Code. IRP on appointment shall control the assets of the Corporate debtor during the resolution process (in terms of section 17) and shall make every endeavor to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern. IRP also issues a public notice calling upon all the financial and operational creditors of the corporate debtor to submit their claims before him in a stipulated period. The process is as under:

(1) The Adjudicating Authority, after admission of the application under section 7 or section 9 or section 10, shall, by an order-

(a) declare a moratorium for the purposes referred to in section 14;

(b) cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims under section 15; and

(c) appoint an interim resolution professional in the manner as laid down in section 16.

(2) The public announcement referred to in clause (b) of sub-section (1) shall be made immediately after the appointment of the interim resolution professional.

4. Committee of Creditors (CoC): Interim resolution professional, in terms of section 18 constitutes a CoC which acts in terms of section 21. The committee of creditors shall comprise all financial creditors of the corporate debtor:

Provided that a 1[financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the committee of creditors.

On 13th March, 2020 the Insolvency and Bankruptcy Code (Amendment) Act, 2020 [No. 1 of 2020] was accorded Presidential Assent and the amendments in Sections 5, 7, 11, 14, 16, 21, 23, 29A, 32A, 227, 239 and 240 of IBC were deemed to have come in force with effect from 28th December, 2019.

Owing to Covid-19 pandemic outbreak, the Government of India by bring an Ordinance inserting Section 10A, suspending filing of fresh applications by Financial Creditors, Operational Creditors and the company itself during the period of applicability of Section 10A for insolvency and bankruptcy proceedings. The amendments to IBC were promulgated by President Ramnath Kovind through the Insolvency and Bankruptcy Code Ordinance, 2020. The new rules come into effect immediately, as of June 5.

These changes have been made by inserting Section 10A in the Code, which says,

“Notwithstanding anything contained in Sections 7, 9 an 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020, for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf.

Though this insertion of 10A is temporary in nature as of now as the language suggests but at the same time is very tricky in respect of certain categories of claims in which though default has occurred before 25th March, 2020 but the cause of action is in the nature of continuing one.”

Views Are Personal Only.

(The author is a practicing advocate in the Punjab and Haryana High Court at Chandigarh)

Commercial Courts Act, 2015 (“CC Act, 2015” for short)

This Act came into force with effect from 23rd Day of October, 2015, and further amended on 3rd May, 2018, with primary objective of adjudication of disputes falling under this Act in a swift time bound manner and lesser hassles to the litigating parties and by introducing minimal interference by the higher courts, when the dispute is pending before the Commercial Court constituted under this Act.

To generate confidence of the parties entering into commercial agreement/transactions in the rule of law, so as, to bring about ease of doing business in India and a step of legislature towards improving the ranking of India in the “Ease of Doing Business Index”. Not only does this benefit the litigant, other potential litigants (especially those engaged in trade and commerce) but also advantaged the courts, by the reduction in backlog caused by the quick resolution of commercial disputes. In turn, this will further economic growth, increase foreign investment, and make India an attractive place to do business. Further, it also benefits the economy as a whole given that a robust dispute resolution mechanism is a sine qua non for the all-round development of an economy.

Commercial Courts are constituted under section 3 of this Act, under section 3A Commercial Appellate Courts are designated, Commercial Division of High Court is Constituted under Section 4, Commercial Appellate Division is constituted under Section 5 of the Act.

This Act provides for adjudicating commercial disputes of specified value and matters connected therewith or incidental thereto.

The term “Commercial Dispute” is defined under Section 2(1) (c) and the “Specified Value” is defined under section 2(1)(i) of the Act and now the value of the subject-matter in respect of a suit shall not be less than Rs. 3,00,000/- (Rupees Three Lakh Only) [though earlier in 2015 Act it was “not less than Rs. 1,00,00,000/- (Rupees One Crore only)”]. The mode of determination of specified value has been provided under section 12.

In order to make this legislation more effective a bar has been provided under section 8 of the Act, against revision application or petition against an interlocutory order of a 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, only with an exception provided under section 13 of the Act, that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation Act, 1996.

Section 12A has been added in the amended Act, providing for Pre-institution Mediation in a suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation. The pre-institution mediation process is required to be completed within three months of the making of an application by the plaintiff under subsection 1 of section 12A. The period of mediation may be extended for a further period of two months with the consent of the parties. The period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963.

Section 10 also confers jurisdiction in Arbitration matters where the subject-matter of an arbitration is a commercial dispute of a Specified Value.

In case of an International Commercial Arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that have been filed in a High Court, shall be heard and disposed of by the Commercial Division where such Commercial Division has been constituted in such High Court.

In case arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that have been filed on the original side of the High Court, shall be heard and disposed of by the Commercial Division where such Commercial Division has been constituted in such High Court.

In case arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that would ordinarily lie before any principal civil court of original jurisdiction in a district (not being a High Court) shall be filed in, and heard and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Court has been constituted.

Appellate Authority:

Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of sixty days from the date of judgment or order under section 13 (1).

Any person aggrieved by the judgment or order of a Commercial Court at the level of District Judge exercising original civil jurisdiction or, as the case may be, Commercial Division of a High Court may appeal to the Commercial Appellate Division of that High Court within a period of sixty days from the date of the judgment or order under section 13(1A).

Section 14 contemplates that the Commercial Appellate Court and the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within a period of six months from the date of filing of such appeal.

Case Law:

1. Civil Appeal No. 7843 of 2019 (Arising out of SLP (Civil) No.9391 of 2019) Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP & Anr.

The Hon’ble Supreme Court held “it is also necessary to carefully examine and entertain only disputes which actually answers the definition “commercial disputes” as provided under the Act. In the instant case, as already taken note neither the agreement between the parties refers to the nature of the immovable property being exclusively used for trade or commerce as on the date of the agreement nor is there any pleading to that effect in the plaint.”

“A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub-clause (vii) of Section 2(1)(c) of the Act viz. “the agreements relating to immovable property used exclusively in trade or commerce”. The words “used exclusively in trade or commerce” are to be interpreted purposefully. The word “used” denotes “actually used” and it cannot be either “ready for use” or “likely to be used” or “to be used”. It should be “actually used”. Such a wide interpretation would defeat the objects of the Act and the fast tracking procedure discussed above.”

2. Civil Appeal No. 9307 of 2019 (Arising Out of SLP (Civil) No. 25618 of 2018) in BGS SGS Soma JV v. NHPC Ltd., Hon’ble Supreme Court held:

The interplay between Section 37 of the Arbitration Act, 1996 and Section 13 of the Commercial Courts Act, 2015, has been laid down in some detail in the judgment in Kandla Export Corporation (supra). The precise question that arose in Kandla Export Corporation (supra) was as to whether an appeal, which was not maintainable under Section 50 of the Arbitration Act,1996, is nonetheless maintainable under Section 13(1) of the Commercial Courts Act, 2015. In this context, after setting out various provisions of the Commercial Courts Act, 2015 and the Arbitration Act, 1996, this Court held:

“13. Section 13(1) of the Commercial Courts Act, with which we are immediately concerned in these appeals, is in two parts. The main provision is, as has been correctly submitted by Shri Giri, a provision which provides for appeals from judgments, orders and decrees of the Commercial Division of the High Court. To this main provision, an exception is carved out by the proviso…”

The proviso goes on to state that an appeal shall lie from such orders passed by the Commercial Division of the High Court that are specifically enumerated under Order 43 of the Code of Civil Procedure Code, 1908, and Section 37 of the Arbitration Act. It will at once be noticed that orders that are not specifically enumerated under Order 43 CPC would, there- fore, not be appealable, and appeals that are mentioned in Section 37 of the Arbitration Act alone are appeals that can be made to the Commercial Appel- late Division of a High Court.

Thus, an order which refers parties to arbitration under Section 8, not being appealable under Section 37(1)(a), would not be appealable under Section 13(1) of the Commercial Courts Act. Similarly, an ap- peal rejecting a plea referred to in sub-sections (2) and (3) of Section 16 of the Arbitration Act would equally not be appealable under Section 37(2)(a) and, therefore, under Section 13(1) of the Commercial Courts Act.

3. Leitz Tooling Systems India Pvt. v. Bharat Bhogilal Patel Review Petition (L) No. 15 of 2019 in Commercial Suit No. 316 of 2018

Hon’ble Bombay High Court answered the following question:

“Whether in view of the amendment to the Code of Civil Procedure, 1908 by a Commercial Court, Commercial Division and Commercial Appellate Division of High Court’s Act, 2015 (4 of 2016), the Defendant can be allowed to file the Written Statement after 120 days from the date of service of Summons in a Commercial Suit”.

“30. I therefore hold that the amendments introduced to the CPC by the Commercial Courts Act are only applicable to Commercial Disputes of a Specified Value and not Commercial Disputes not of a Specified Value such as the present suit. Consequently, amongst other amendments introduced to the CPC by the Commercial Courts Act, the amendment to the CPC mandating that a Written Statement in a Commercial Suit has to be filed within 120 days, will not apply to Commercial Disputes not of a Specified Value.”

Views Are Personal Only.

(The author is a practising advocate in the Punjab and Haryana High Court at Chandigarh)