Ordinary suit and its
transfer to commercial courts: Law DISCUSSED
The Commercial Courts Act 2015 (In
short “CCA”) is a new enactment and deals with commercial suit of specified
values. The procedure laid down in Commercial Court is quite rigorous and there
are specified pre-requisites before filing of a commercial suit and even thereafter
in the course of the proceedings. Section 12 A of the CCA for instance carve
out a necessity of pre-litigation mediation and only in the event of the said
pre-litigation mediation is failed and non
starter report is obtained from mediation, the commercial suit could be
filed. No doubt, if injunction or urgent relief is prayed for, in that event the
requirement of pre-mediation litigation could be dispensed with. However, right
now, the focus shall be on some other aspect i.e in case a suit for commercial
nature after the enactment of CCA is filed as an ordinary suit and the same for
obvious reason shall not be maintainable in a court which is not constituted
under the CCA, then, what will be the fate of such suit? Whether such suit
could be transferred by the concerned court, for instance, from a court of
Additional District Judge to concerned commercial court or in the alternative,
whether, such suit could be ordered to be placed before the principal District
Court for transfer to commercial court? Or still, neither of the same shall be
the proper procedure, and the only option will be the return of plaint for
filing before appropriate commercial courts. In case, the plaint is returned,
then, whether the suit itself shall have to be amended, in as much as,
statement of truth and all other requisites are also to be completed and thus,
amendments shall be necessary. Assuming that plaint is returned, what will be
the aspect of limitation, since by the time the plaint was returned, the suit itself
could be time barred. What shall be the fall out of above? In the present article
endeavour is made to address the issues as aforesaid.
The hon’ble Delhi High Court in a
recent judgment pronounced on 09.01.2024 captioned as Namita Gupta Vs Suraj Holdings
Limited bearing no. CM (M) 457/2023 has comprehensively dealt with the
issues.
The hon’ble Delhi High Court in Namita
Gupta (supra)
has framed the following issues for decision:
(i) Whether the Act excludes the application of
Section 24 of the CPC to the commercial disputes having a specified value?
(ii) If the
answer to the above issue is in the negative, whether the power under Section
24 of the CPC to transfer the Suit is also available to the District and
Session Judge?
It was urged that Additional District Judge,
and even the learned Principal District and Sessions Judge, do not have the
power to transfer the Suit, which is filed as an Ordinary Suit, to a Commercial
Court and the only power available to the Court is to return the plaint for the
plaintiff to file the same before the Court of appropriate jurisdiction. It was
further canvassed that under the CCA special requirements are stipulated for a Suit to be filed before a Commercial
Court, which are in the form of a prescribed Statement of Truth and affidavit
to be filed, as well as Pre-Institution Mediation to be initiated, as per the mandate
under Section 12-A of the CCA. Since, the plaint did not meet the above
requirements, the only option available to the learned Additional District
Judge shall have to reject/return the plaint.
It was further argued that the only provision
for transfer of the Suit, which is filed as an Ordinary Suit, to a Commercial
Court, is contained in Section 15(2) of the CCA and then too, the said
provision shall be applicable only to the Civil Suits relating to commercial disputes
of a specified value that were pending before the Civil Courts in any District
or area in respect of which a Commercial Court has been constituted, as on the
date of such constitution. It was further argued that it does not apply to
Suits that are filed after the constitution of the Commercial Courts in a
particular District and that where a Suit, though relating to a commercial
dispute of a specified value, is filed as an Ordinary Civil Suit after the constitution
of the Commercial Courts, the only power available with the Court shall be to
return the plaint under Order VII Rule 10 of the CPC for the presentation of
the plaint before the Commercial Courts, that is, the Court of appropriate jurisdiction.
RELIANCE
Supreme Court
(i)
Ambalal Sarabhai Enterprises Ltd. v. K.S.
Infraspace LLP & Anr. (2020) 15 SCC 585;
Delhi High Court
(i)
Satyanarain Khandelwal v. Prem Arora, 2022
SCC OnLine Del 2142;
(ii)
Narendra Kumar v. Om Daily Needs Retailing
Pvt. Ltd. and Anr., Neutral Citation no.2023:DHC:6474-DB;
(iii) M/s AV Industries v. M/s Neo Neon Electrical Pvt. Ltd., Neutral
Citation no.2023:DHC:6230-DB;
(iv) Virender Kumar v. Rekha Bhayana, 2022 SCC OnLine Del 2678;
Calcutta
High Court
(i)
Laxmi Plyfab Pvt. Ltd. and Ors. v. Eden
Realty Ventures Pvt. Ltd. and Ors., 2021 SCC OnLine Cal 1457,
(ii)
Maharshi Commerce Limited v. Rajiv R. Balani
and Ors. (Order dated 10.11.2022 in CS/3/2019 OD-13),
(iii)
ANE Industries Private Limited v. J.K.
Engineering Private Limited, 2023 SCC OnLine Cal 3331;
Andhra Pradesh & Telengana High Court
(i)
Andhra Pradesh Industrial Infrastructure
Corporation (APIIC) v. Meghavaram Power Pvt. Ltd., 2023 SCC OnLine AP 794; and
(ii)
Life Shine Medical Services Pvt. Ltd. v.
Dr.Alety Jeevan Reddy & Anr. (Order Dated 13.04.2023 in Civil Revision
Petition No.689 of 2023);
Bombay High Court
(i)
Gaurang Manguesh Suctancar v. Sonia Gaurang
Suctancar (in LD-VC-CW-88/2020 decided
on 20.07.2020).
On behalf of the respondent the plea
canvassed was that the learned District Judge and the High Court not denuded of
the powers under Section 24 of the CPC. Section 15 of the CCA Act provides for
the transfer of the cases that are pending adjudication as on the date of the
constitution of the Commercial Division in the High Court or the Commercial
Courts at the District Level. The said provision, however, is in addition to the
general power which is vested in the District Judge, as also the High Court,
under Section 24 of the CPC to transfer any proceedings pending in a Court
subordinate to any other subordinate Court.
As
the Suit was pending before the Court of the learned Additional District Judge,
which, in terms of the provisions of the Punjab Courts Act, 1918, is a Court
subordinate to the Court of the learned Principal District and Session Judge,
the learned Principal District and Sessions Judge had the power to transfer the
Suit to a Commercial Court. He submits that the Commercial Court, though
constituted under the Act, is manned by the Officers from the District
Judiciary, as is evident from the Delhi Higher Judicial Services Rules. He
submits that the learned District Judge has been passing administrative orders
transferring the Commercial Suits from one Court to another in the District. Reliance
was placed on Office Order No.2719/87297-332 dated 08.12.2019, and Office Order
No. 576/14058-104 dated 18.02.2020.It was further submitted that once it is
admitted that the plaint filed before a Ordinary Civil Court can be returned to
be filed before a Commercial Court, the provisions of Section 24 of the CPC
would equally apply. In terms of Section 24(5) of the CPC, a power is vested in
the High Court and the District Court to transfer a Suit or proceedings from a
Court which has no jurisdiction to try it. Exercising such power, the learned Principal
District and Sessions Judge and even this Court can transfer the Suits which
are filed as
Ordinary
Suits, though raising a commercial dispute of a specified value, to a
Commercial Court and on such transfer, the plaintiff in the Suit would have to
make necessary amendments in the Suit so as to comply with the other
requirements of a Commercial Suit as prescribed under the Act. However, this
cannot be a reason to deny the transfer of the Suit.
Reliance
(i)
Suraj Prakash v. Neeraj Kumar and Others,
2023 SCC OnLine Del 4563 and
(ii)
Mahesh Gupta v. Ranjit Singh and Ors., 2009
SCC OnLine Del 1418.
The
Hon'ble Division Bench of Delhi High Court in Virender Kumar (Supra) has held that Order VII Rule 10 of the CPC would
have been the appropriate power to be exercised by the learned District &
Sessions Judge rather than transferring the suit to the learned District Judge
(Commercial Court).
In Maharshi Commerce Limited (supra), the
High Court of Calcutta, held that the Suit therein raised a Commercial Dispute
of a specified value and, therefore, the ordinary Civil Suit was not maintainable.
As the Court did not have the jurisdiction to proceed with the same, it, under
Order VII Rule 10 of the CPC, returned the plaint to the plaintiff therein to
present it before a Court having competent jurisdiction.
In Narendra Kumar (supra), another
Division Bench of Delhi High Court has held that returning the plaint of a Suit
which, though originally filed before ordinary Civil Court, was transferred by
the learned District and Sessions Judge to a Commercial Court. The learned
District Judge (Commercial Court) had held that as there was no such power
vested with the learned District and Sessions Judge to transfer the Suit to the
Commercial Court, returned the plaint to be filed in the appropriate format
before the competent Commercial Court. The Division Bench held that Section 15
of the Act would not apply to the Suits filed after the coming into force of
the Act. The Court upheld the order returning the plaint, by observing in para
11 and 16, as under:-
"11. This implies that Section 15(2) of
the CCA, 2015 was not to be effective in future but was an enabling provision
for transfer of all the pending suits of commercial nature from the regular Civil Courts to the
Commercial Courts. The present Suit has been instituted on 16.03.2019 i.e. post
2015 and thus, the provisions of Commercial Courts Act, 2015 as amended on
03.05.2018 would become applicable”.
“16. Order VII Rule 10 CPC, 1908 envisages
Return of a Plaint instituted before a court other than the court before it
should be instituted. In Ambalal Sarabhai Enterprises (supra) it had been held that
where a court case is filed before a Court which is not the appropriate Court,
the suit may be returned to be presented before the Court of competent
jurisdiction”.
The hon’ble
Delhi High Court in Namita Gupta
(Supra) has thus held as under:
50.
From an analysis of the above judgments, it would be evident that: -
(a)
The Commercial Courts Act provides for a special format and specific requirements
in relation to the pleadings and affidavits, in the form of a Statement of Truth,
verification, among others. It further requires mandatory compliance with provisions
under Section 12-A of the Act in the form of a Pre- Institution Mediation;
(b)
If a Suit raises a Commercial Dispute of a Specified Value, the Ordinary Civil Court
shall have no jurisdiction to entertain the same, and it must, therefore,
return the plaint in exercise of its power under Order VII Rule 10 of the CPC;
(c) On return of the plaint, the plaintiff
may, after making necessary corrections in the pleadings, present the plaint
before the Court of competent jurisdiction.
However,
the hon’ble Delhi High Court in Namita
Gupta (Supra) was to deliberate on yet another aspect i.e the question that
if the Court has the power and a duty to return the plaint under Order VII Rule
10 of the CPC, would the power of the High Court under Section 24 of the CPC
get denuded, thereby. In other words, does the Commercial Courts Act exclude
the applicability of Section 24 of the CPC altogether.
In Namita Gupta (Supra) the Delhi High
Court in the light of above has further held as under:
“65. As held
hereinabove, a Commercial Court, constituted under Section 3 of the Act, would
be a Court subordinate to the High Court. Reference in this regard may also be
made to the judgment of the Supreme Court in Life Insurance Corporation of India v. Nandini J. Shah & Ors.,
(2018) 15 SCC 356. Therefore, there is no reason to exclude the
applicability of Section 24 of the CPC to a Suit in relation to a Commercial
dispute of a specified value”.
The
first issue is answered accordingly.
The power under Section 24 of the CPC could
be exercised by the Court even in respect to a commercial suit.
As regards
issue no.2, however, the Delhi High Court has held that District & Sessions
Judge shall have no power to transfer the Commercial suit and while setting
aside the order passed by ld District & Sessions Judge in Namita
Gupta (Supra) the Delhi High Court has held as under:
“72. Similarly,
the learned Principal District and Sessions Judge erred in transferring the
Suit from the Court of the learned Additional District Judge to the Court of
the learned District Judge, Commercial Court. As held hereinabove, the
Commercial Court even at the level below the learned District Judge is not a
Court subordinate to the District Judge. Therefore, the learned Principal District
and Sessions Judge had no power to pass the Impugned Order dated 14.03.2023”.
Thus,
it is held that The District & Sessions Court shall have no such power of
transfer. Though, the High Court shall have power of transfer of commercial
suit even within a District. It is thus held in Namita Gupta (Supra):
74. At the same
time, as held herein above, this Court, under Section 24 of the CPC, has the power
to transfer the Suit to the court of competent jurisdiction. In the present
case, as it is not disputed that the Suit relates to a Commercial Dispute of a
Specified Value and is to be tried by the learned District Judge (Commercial),
South-East District, Saket District Court, and as it is also not disputed that
the petitioner herein, who is the defendant in the Suit, has not only filed her
Written Statement but also a Counter-Claim, in my opinion, the interest of
justice would demand that in exercise of power vested in this Court under Section
24 of the CPC, the Suit be transferred from the Court of the learned Additional
District Judge to the Court of the District Judge (Commercial), South-East District,
Saket District Court, to be tried from the stage it is at present”.
The parties were thus directed to appear
before the Transferee Court on the date that must have already been fixed by
the Transferee Court
-------
Anil K Khaware
Founder &
Senior Associate
Societylawandjustice.com
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