Ease of doing business: DIPP calls for fast-track commercial courts

The industry dept has asked the law ministry for fast-track commercial courts to improve India’s record in enforcing contracts


India ranks 172 out of 190 countries under the “enforcing contracts” indicator in World Bank’s latest Doing Business report. Photo: Ramesh Pathania/Mint
India ranks 172 out of 190 countries under the “enforcing contracts” indicator in World Bank’s latest Doing Business report. Photo: Ramesh Pathania/Mint

Mumbai: The industry department has asked the law ministry to bring an ordinance to allow the government to open fast-track commercial courts in Delhi and Mumbai to improve India’s record in enforcing contracts.

The move is aimed at improving India’s ranking in the World Bank’s Doing Business report. India ranks 172 out of 190 countries under the “enforcing contracts” indicator in the latest report.

Parliament enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act in December 2015 for speedy and time-bound disposal of commercial disputes.

The commercial courts are to be constituted at the district level by state governments after consultation with the high court concerned.

However, the law provided that no commercial court will be constituted for the territory over which high courts have exclusive civil jurisdiction to hear commercial matters, such as in Delhi, Mumbai, Kolkata and Chennai, which were presidencies or special administrative divisions during the British rule.

The department of industrial policy and promotion (DIPP) wants to introduce the ordinance to amend this provision so that district commercial courts could also be set up in Delhi and Mumbai, the two cities that are used as samples for ranking India under the World Bank’s Doing Business report.

“At present, commercial divisions have been set up in Delhi and Bombay high courts. We want commercial courts to be set up in district level in both these places. For this, the law needs to be amended. Nobody wants to go to the high courts paying high fees. Specialized district courts to adjudicate in a time-bound manner over matters up to Rs1 crore could significantly bring down commercial disputes at such places,” a DIPP official said, speaking on condition of anonymity.

After a disappointingly small imp­rovement in the 2017 Doing Business ranking, the National Democratic Alliance (NDA) government at the centre has plotted an eight-point strategy to make it to the top 50 of the list, as envisioned by Prime Minister Narendra Modi.

India’s ranking in the annual Doing Business survey improved by just one notch to 130 in the 2017 report from a revised rank of 131 last year, underscoring the gap between policy measures and their implementation.

In a meeting chaired by finance minister Arun Jaitley last month, an eight-point agenda was finalized to make it easier to do business.

Departments will now hold stakeholder consultations for feedback on reforms undertaken, and also engage with respondents to ensure the reforms are implemented at the ground level.

Each department will review progress every week for carrying out the necessary reforms.

To enter the top 50 in the World Bank ranking, India needs to set up fast-track commercial courts, dispose of cases quickly with minimum adjournments and establish e-courts for electronic filing of complaints, summons and payments, said the official cited earlier.

Though India carried out many reforms for the ease of doing business last year, it did not reach its target audience, the official added.

“Doing reform is one thing, but to see that the users have started using and benefiting from it is the real challenge,” the official said. “We have decided this year to carry out massive user outreach campaigns through traditional and social media.”

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