Section 3 of the Commercial Courts Act, 2015: Constitution of Commercial Courts
Section 3 of the Commercial Courts Act, 2015 empowers the State Government, after consultation with the concerned High Court, to constitute Commercial Courts and define the pecuniary and territorial limits within which they exercise jurisdiction. It also deals with the appointment of judges having experience in commercial disputes.
- Commercial Courts may be constituted at the district level by State Government notification after consultation with the High Court.
- In territories where a High Court exercises ordinary original civil jurisdiction, Commercial Courts may be constituted at the District Judge level.
- The pecuniary value notified under Section 3 cannot be less than Rs. 3,00,000.
- The State Government may define or alter the local territorial limits of a Commercial Court.
- Judges of Commercial Courts are appointed with the concurrence of the Chief Justice of the High Court and should have experience in dealing with commercial disputes.
Text and meaning of Section 3
Section 3 - Constitution of Commercial Courts.
(1) The State Government may, after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level as it may deem necessary for exercising the jurisdiction and powers conferred on those Courts under the Act.
First proviso: Where a High Court has ordinary original civil jurisdiction, the State Government may, after consultation with that High Court, constitute Commercial Courts at the District Judge level.
Second proviso: For a territory over which the High Court exercises ordinary original civil jurisdiction, the State Government may specify a pecuniary value that is not less than Rs. 3,00,000 and does not exceed the pecuniary jurisdiction exercisable by the District Courts.
(1A) Notwithstanding anything contained in the Act, the State Government may, after consultation with the concerned High Court, specify by notification a pecuniary value of not less than Rs. 3,00,000, or such higher value as it considers necessary, for the whole or any part of the State.
(2) The State Government shall, after consultation with the concerned High Court, specify by notification the local limits of the area to which the jurisdiction of a Commercial Court extends. Those limits may later be increased, reduced or altered.
(3) The State Government may, with the concurrence of the Chief Justice of the High Court, appoint one or more persons having experience in dealing with commercial disputes as Judge or Judges of a Commercial Court, either at the level of District Judge or at a level below District Judge.
What does Section 3 do?
Section 3 is the enabling provision for establishing Commercial Courts. A Commercial Court does not arise merely because a dispute is commercial in nature. The Court must be constituted by the competent State Government through a notification issued after consultation with the concerned High Court.
Pecuniary value under Section 3
The Act fixes Rs. 3,00,000 as the statutory minimum pecuniary value that may be notified under Section 3. The actual threshold applicable in a State or a particular territory may be higher if the State Government has issued an appropriate notification after consultation with the High Court. For determination of the specified value of a commercial dispute, see Section 12 of the Commercial Courts Act, 2015.
Territorial jurisdiction of Commercial Courts
Under sub-section (2), the State Government specifies the local limits of each Commercial Court after consultation with the High Court. These territorial limits may subsequently be increased, reduced or otherwise altered by notification. Parties should therefore check the latest State notification along with the general jurisdiction provisions of the Act.
Appointment of judges
Sub-section (3) permits the State Government, with the concurrence of the Chief Justice of the High Court, to appoint one or more judges having experience in commercial disputes. Following the 2018 amendment, a Commercial Court may be at the level of District Judge or at a level below District Judge, depending on the relevant notification and court structure.
Related provisions
Section 3 should be read with Section 2 (definitions), Section 3A (Commercial Appellate Courts), Section 6 (jurisdiction of Commercial Courts) and Section 12 (determination of specified value).
Amendment notes
- The provisos to sub-section (1) were substituted by Section 6 of the 2018 Amendment Act with effect from 3 May 2018.
- Sub-section (1A) was inserted by Section 6 of the 2018 Amendment Act with effect from 3 May 2018.
- In sub-section (3), the words requiring the State Government to act mandatorily were changed to permit appointment, and the description of the level of the Commercial Court was widened by the 2018 amendment.
Official legal source
For the authoritative current text of the Act, refer to the Government of India source: