Law Commission of India 253rd Report: Recommendations and Implications

Law Commission of India 253rd Report: Recommendations and Implications

Q. “Law Commission of India’s 253rd Report has made recommendations for reforms to support economic growth from a legal viewpoint.” Discuss and analyse.

A. Law Commission of India 253rd Report: Background

• Law Commission headed by Justice A. P. Shah, providing much needed reforms from a legal perspective
• Changes are a product of seminal report by Master of Rolls, Lord Woolf
• Woolf Report also referred to as the Access to Justice Report 1996
• Report submitted to the Union Government on 29th January 2015

Statistics regarding need for reforms

• 32,656 civil suits pending in 5 High Courts
• Increase of 6.27 percent in pendency over the earlier year
• Overload of judges (Madras HC only 4 judges were allocated to 41,702 cases pending on the original side in the year 2013)
• Pending commercial cases in 5 HC of Delhi, Bombay, Calcutta, HP and Madras was at 16884 which constitutes 51.7% of the civil cases pending in the court

I. Recommendations of the LCI Report

1. Commercial disputes of high complexity and value to be disposed effectively within short time spans

2. Proposal of a bill entitled “The Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill 2015”

3. Bill will seek definition of commercial disputes to include ordinary transactions of merchants, joint ventures, bankers, financiers, partnership, insurance firms and so on

4. Commercial appellate division will hear appeals on orders and decrees of commercial courts

5. Courts will hear appeals on orders and decrees of commercial courts valued at INR 1 crore or more

6. Chief Justice will nominate judges who are experienced in commercial matters with regard to commercial and appellate courts

7. Pending commercial disputes beyond the specified value can be transferred to the commercial division

8. Recommendations are aimed to settle cases in a fair and reasonable manner

9. LCI has also recommended in the 188th Report for setting up specialised commercial courts though it was not passed in RS

11. Provisions of the Commercial Courts Bill 2015

• Commercial dispute is arising from agreements include those of shareholders, joint venture agreements, franchising, subscription and investment agreements in service industry to intellectual property, insurance and technology

• Disputes arising from such agreements with the Centre and State governments and bodies performing public functions will constitute a commercial dispute

• Creation of specialised commercial courts across the country based on London and Singapore commercial courts to cut down on time spent in court for litigation companies

• Time limit of around 90 days for delivery of judgements following the conclusion of arguments aside from powers for the court to impose exemplary costs against parties which are defaulting for purposeful failure to disclose documents

• Proposal was established to set up 60 commercial courts across the nation totaling to about 2 to 3 courts in each state

• Improving the commercial dispute resolution mechanism system through separation from other civil disputes will ensure effective disposal of high value commercial cases

• Courts will gain the discretion to ensure companies involved in litigation pay court fees and other expenses associated with court hours it uses

• Appeals from the commercial courts will go into commercial appellate division of 2 judges and there shall be a bar against appeals pertaining to interim orders

• Commercial courts will comprise judges with expertise and experience in commercial disputes and obtain a fixed tenure of 2 years for ensuring the maintenance of continuity

• Training and continuous education of judges in national and state judicial academies was also emphasised

• The Commission has also suggested substantiative procedural changes through amendments to the Civil Procedure Code 1908.

• Suggestions are aimed at expeditious fair and reasonable disposal of cases to litigants

B. Implications

1. LCI recommendations – will reduce the pendency rates and achieve quick decision.

2. LCI recommendations highlight the need for internal reforms and not just foreign investment from abroad

3. Commercial courts will ensure effective disposal of important cases where delays can discourage foreign investors; This will serve as a boost for the Make in Indian campaign

4. Following in-depth study of commercial courts abroad, Law Commission indicated these courts will revamp the judicial system

5. New approach to civil litigation which will change the procedures for the resolution of commercial disputes

6. Focus will be on shift from party driven to judge driven cases; power to constitute commercial division of the HC or Commercial Court now to be with the Central Government

7. This is the first time a case management conference has been introduced in India with different connotations and different jurisdictions

8. To establish commercial courts and commercial divisions within the HC will set new norms of practice in commercial litigation which can be expanded to civil litigation in India

9. Commercial courts will be made e-courts; online operations perfect for maintenance of voluminous accounts and efficacy of functioning

10. Judges of the commercial courts will undergo training in special programmes for 6 months at the National Judicial Academy or relevant State Judicial Academy; this will improve the level of exposure legal professionals will have to knowledge and expertise

11. Better maintenance of records; proceedings of the commercial courts will be digitised and e-filing as well as facilities for audio visual recording will be present

12. Pleadings and filings of the documents to follow the procedure under the CPC will stick to stricter timelines and this will strike out pleadings that are vexatious and irrelevant for ensuring trial takes place on relevant issues

13. Disclosure and inspection norms will enable parties to complete discovery of documents in an efficient manner; this will increase the professionalism

14. New, separate procedure of summary judgement - Parties can seek judgement of courts summarily at any time period before the commencement of the trial namely at the time of framing of the issue

15. Court will have necessary powers to ensure proper conduct of trial within specified time frame; court will also be empowered to impose penalties for failure to follow directions established in case management hearing

16. New regime of costs will be introduced except when court provides reasons as to why costs should not follow; Court fees will be related to time consumed by litigants in conduct of cases akin to Singapore;

17. State Government will consider reexamining the court fee regime in light of legislative domain under Entry 3, List II of the Seventh Schedule of the Constitution of India

18. Time bound oral arguments shall be supplemented with written submissions for mandatory filing and there will be time bound delivery of judgements within 90 days from conclusion of the argument; this will improve the efficiency of the courts

20. No appeals shall be permitted from a Commercial Court or Commercial Division finding indicating the dispute is commercial one;

21. As far as domestic arbitrations are concerned, appeals will lie either in HC or Civil Court based on pecuniary jurisdiction

22. Applications or appeals arising from such arbitrations that have been filed from the original side of the HC shall be heard by the Commercial Division of the HC whereby such Commercial Division is constituted in the HC; thereby speedy disposal of cases

23. Commercial disputes appealed to the HC from a tribunal under statutes such as the Copyright Act 1957 or Trade Marks Act 1999 can be heard and mediated by the Commercial Appellate Division

24. Special court for commercial suites at HC is a laudable proposition; LCI has come up with a new Act which will reduce the burden of cases in HC regarding all pending matters

25. Commercial benches will facilitate adjudication akin to consumer courts, family courts and Lok Adalats

26. Expanding the mandate for disputes through the definition of commercial disputes


The 253rd report of the Law Commission of India has created an environment for expeditious and efficient dispensation of legal cases. Its recommendations have enhanced the effectiveness of the Indian judiciary system.

From increasing the commercial dispute definition to speedy disposal of cases and effective training of the judiciary, the Law Commission of India has made a lot of changes, which if implemented, can enhance the professionalism and functioning of the Indian legal system.
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