Pendency Of Commercial Cases: Supreme Court Expresses Dissatisfaction At Allahabad HC Report; Asks UP Govt To Consider Proposal For Additional Courts

The direction has been made considering submission made by the counsel appearing on behalf of the Allahabad High Court, under the instruction from the Registrar General, stating that now the proposal to create the additional commercial courts in the four Districts of Gautam Budh Nagar, Meerut, Agra and Lucknow has been made to the State Government.

A bench comprising Justice MR Shah and Justice BV Nagarathna was considering the matter where it had earlier directed the Chief Justice of the High Court of Allahabad to constitute a Special Arrears Committee of the Judges of the High Court to tackle with the problem of arrears insofar as the commercial matters are concerned.

The direction was issued after being apprised of the burgeoning pendency in the execution proceedings of arbitral awards and applications to set aside award under Section 34 of the Arbitration and Conciliation Act, 1996, in the State of Uttar Pradesh.

The bench has now observed that creation of additional commercial courts at these four districts where the pendency of such cases is comparatively larger ought to have been done earlier.

With regard to constitution of a committee to tackle the problem of arrears, the bench was informed that even though the court order was passed on 28th April 2022, the Special Arrears Committee has been constituted only on 18th May.

The court expressed displeasure at the delay in compliance of its 28th April order directing constitution of Special Arrears Committee, even when the order was very clear and without any no ambiguity.

The bench further expressed its dissatisfaction with the report submitted by the High Court and the road-map and the action proposed in tackling the arrears so far as the commercial matters are concerned.

While noting that all the Judges are from the Allahabad Bench and none of the Judges from the Lucknow Bench are part of the Committee, the bench has requested the Chief Justice to reconstitute the Committee so that they may have further suggestions from the Lucknow Bench also as there are large number of pending commercial matters within the jurisdiction of the Lucknow Bench also.

According to the bench, the Chief Justice ought to have taken the senior-most Judge at Lucknow Bench into confidence and invite suggestions from him also.

The High Court of Allahabad through its affidavit made the following suggestions:

The incentive scheme submitted for disposal of these cases will be correspondingly supplemented by an appropriate mechanism of entries in the ACR.

Once fully implemented, a judicial officer would have an average of 47 such cases before himself/herself, apart from other judicial work.

In terms of Section 20 of Commercial Courts Act 2015, the High Court of Allahabad has been carrying out training of judicial officers at regular interval. Better emphasis will be given in such training to sensitize the officer towards the mandate of expeditious disposal. This training shall also be conducted through virtual mode additionally, so as to increase its frequency and efficacy.

The Special Arrears Committee will have a periodic review by calling monthly data of disposal from each of the 74 district. The District Judge In-charge shall be the nodal officer who shall send this data by the 7th of each month.

The Special Arrears Committee shall meet at least once a month and shall concentrate on dealing with such Districts where disposal is less. Based on the data received, a virtual or physical meeting shall be conducted by the Special Arrears Committee to ensure speedy disposal of this category of cases.

The State Government shall be requested to create additional Commercial Courts in the four Districts of Gautam Budh Nagar, Meerut, Agra and Lucknow where the pendency of such cases is comparatively larger.

A one-time exercise shall be done under the aegis of each District Judge who would give a report as to how many and for what reasons, cases have become infructuous but are shown as pending. An endeavor shall be made to complete this exercise within a period of two months so these identified cases can be listed in one go for appropriate orders to be passed on the judicial side. For this purpose, all the concerned District Judges shall put a list of all pending cases (Execution Petition and section 34 of the Arbitration Act) on their respective websites. This will enable the lawyers appearing in those cases to inform the court if their matters have become infructuous.

The Advocates dealing with the pending petition shall be encouraged to file written note of argument by way of notice published on the website."

It may be noted that the bench had earlier expressed its displeasure at huge pendency of cases filed under two statutes i.e. the Arbitration and Conciliation Act, 1996 and the Commercial Courts Act, 2015 which envisages the speedy disposal of cases.

The Bench was of the view that arbitration, which was to serve as an alternative dispute resolution mechanism had fallen into the traps of traditional litigation in terms of delay.

It had further noted that the aim of the Commercial Courts Act and subsequent amendments to facilitate speedy disposal of commercial disputes have also not fructified.

The Bench was of the view that it would be more effective to take corrective measures rather than lamenting about the volume of cases pending before the Courts.

Case Title- M/S CHOPRA FABRICATORS AND MANUFACTURERS PVT. LTD. Vs BHARAT PUMPS AND COMPRESSORS LTD. & ANR., SLP (C) 4654/2022