Commercial Disputes Current Affairs - 2019
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Union Cabinet has approved strengthening commercial disputes resolution mechanism of Central Public Sector Enterprises (CPSEs) inter se and also between CPSEs and other Government Departments and Organizations. The Cabinet decision is based on recommendations of Committee of Secretaries (CoS).
The new strengthened mechanism puts in place institutionalized mechanism within Government for speedy resolution of commercial disputes of CPSEs without matter being referred to the Courts of law. It consists of new two-tier mechanism to resolve commercial disputes between CPSEs outside Courts of law.
It replaces existing Permanent Machinery of Arbitration (PMA) mechanism and excludes disputes concerning Railways, Income Tax, Custom and Excise Departments from its ambit. It will promote equity through mutual and collective efforts to resolve commercial disputes thereby reducing number of litigations regarding commercial disputes in Court of Law and also avoid wastage of public money.
New two-tier mechanism
First level (tier): Such commercial disputes will be referred to a committee comprising secretaries of the administrative ministries to which the disputing parties belong and Law Secretary. The financial advisors of two ministries concerned will represent issues related to dispute in question before the committee.
In case the two disputing parties belong to same ministry, then committee will comprise secretary of administrative ministries concerned, Law Secretary and Secretary, Department of Public Enterprises. In such case, the matter will be represented by financial advisor and one joint secretary of that ministry. For the prompt disposal of disputes, 3 months’ time schedule at this level has been prescribed.
Second level (tier): In case dispute remains unresolved, even after consideration by above Committee in first tier, it will be referred to Cabinet Secretary, whose decision will be final and binding on all concerned.
The Union Cabinet chaired by Prime Minister Narendra Modi has approved promulgation of Ordinance amend a law for speedy disposal of commercial disputes. This decision aims to improve India’s ranking in World Bank’s ease of doing business index. The index takes into consideration dispute resolution environment in country, which facilitates investors in deciding for setting up of and operation of a business.
The ordinance will replace Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill which is pending in Parliament. It will bring down specified value of commercial dispute to Rs 3 lakh from the present Rs 1 crore. It also aims to bring down time taken from the present 1,445 days in resolution of commercial disputes of lesser value.
The amendments through ordinance provides for establishment of commercial courts at district judge level for territories over which High Courts Chennai, Delhi, Kolkata, Mumbai and Himachal Pradesh have ordinary original civil jurisdiction. The ordinance will be given prospective effect so that authority of the judicial forum presently adjudicating commercial disputes is not affected.