Saturday, April 27, 2024

SCOPE OF APPEALS UNDER SECTION 13 (1A) OF COMMERCIAL COURTS ACT APPEAL

 


Scope of APPEALS UNDER Section 13 (1A)  OF COMMERCIAL COURTS ACT  APPEAL

The Commercial Courts Act (CCA) 2015 is enacted with a view to accord expediency in cases related to commercial transactions. The need of a separate and comprehensive Act was felt in view of delay in disposal of ordinary suits and hence, in the Commercial Act, the tiers related to appeals impugning judgments on adjudication on interlocutory application are dispensed with. The commercial courts are constituted at the District level for a specified sum and Commercial Divisions are also constituted in High Courts. The High Court also has appellate Commercial Division qua the appeals that could be filed against the judgment/decree of a single bench of high Court. Similarly, the judgment/decree passed by District Judge could be challenged before the High Court under the said Act. It is worthwhile in the context to refer that Section 115 of Code of Civil Procedure relating to revisionary jurisdiction appears to have been completely dispensed with in the Commercial Courts Act and thereby a substantive rights of parties to the lis is absent as per the CCA. For instance, in cases which is not of commercial nature under the CCA, once, application under Order VII Rule 11 (a) (b) (c) or (d) of Code of Civil Procedure are dismissed by a District Court, the revisionary jurisdiction of High Court could be invoked u/s 115 of Code of Civil Procedure. Similarly, if application under Order 12 Rule 6 of Code of Civil Procedure is dismissed by a District Court, , in a general suit, the revisionary jurisdiction of High Court shall continue to exist. However, if such orders are passed by a District Court under CCA, then, revisionary jurisdiction of high court cannot be invoked. Gracefully, though, it is now settled that one can, nevertheless, approach high court under Article 226 under the supervisory jurisdiction of the high court and therefore, those who wished to challenge such orders passed by Commercial District Courts are not rendered remediless, irrespective of fetter of Order XLIII of CPC. However, what is not understood is the fact that if a High Court has Commercial Division and Commercial Appellate Division, then, why the orders rejecting the application under Order 7 Rule 11 of CPC or order for refusing to return the plaint under  Order VII Rule 10 of CPC or decisions Order XXXVII when leave to defend was allowed conditionally or unconditionally, and/or other such interlocutory application by a single judge bench of high court cannot be impugned before the appellate division of high court? If commercial appellate division of high court can adjudicate in appeal from orders passed by a single judge bench of high court which finds mention under Order XLIII of CPC, then, why no substantive orders such as above should be heard by the appellate division of a high court. The object of expediency cannot be allowed to circumvent the basic rights of parties. The Section 13 (1A) of CCA no doubt, clearly carved out details as regards appeals against orders could be impugned before commercial division or commercial appellate division of high court as the case may be , provided, the appeals are provided for under Order 43 of Code of Civil Procedure and in no other cases. The additions however are made as regards the appeals that could be filed under Section 37 of Arbitration & Conciliation Act 1996 ( as amended and up to date).

SECTION 13 & SECTION 13 (1A) of CCA

In the light of above, it is therefore, endeavored herein to discuss Chapter IV and provisions for appeal under Section of CCA Section 13 (1A) of CCA and while so doing judicial precedents shall also be analysed. Before doing so, the provision of Section 13 (1A) may be reproduced:

13. Appeals from decrees of Commercial Courts and Commercial Divisions—

(1) [Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of sixty days from the date of judgment or order.

(1A) Any person aggrieved by the judgment or order of a Commercial Court at the level of District Judge exercising original civil jurisdiction or, as the case may be, Commercial Division of a High Court may appeal to the Commercial Appellate Division of that High Court within a period of sixty days from the date of the judgment or order:

Provided that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation Act, 1996

(2) Notwithstanding anything contained in any other law for the time being in force or Letters Patent of a High Court, no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act.

The perusal of above recitations makes it clear that no appeals are contemplated under CCA from any interlocutory or intermediate orders, before high court, unless, stipulated under Order XLIII of Code of Civil Procedure. However, the difficulty is removed in a great deal since, it is now settled that under CCA, through, revisionary power under Section 115 of CPC is no longer available to high court, but, still, aggrieved party may approach high court under article 226 of Constitution of India. However, if orders are passed by a high court on applications in respect whereof appeals are not provided for under Order 43 of CPC and unless, the appeal is preferred under section 37 of Arbitration & Conciliation Act. It is therefore not understood as to, if appellate division is provided for even in the high court against the orders of single judge, then why should that be circumvented by putting fetter that appeals against order could be filed only as per Order XLIII or not otherwise?

LAW

Earlier, there were conflicting views in this regard from Delhi High Court , but now, it appears to have been settled to the effect that no appeal by the commercial court or commercial appellate division could be heard, unless, it is provided for under Order XLIII of CPC or under Section 37 of Arbitration & Conciliation act. The mandate emanates from Section 13 (1A) of CCA.

                          DELHI HIGH COURT        

(Division Bench)

(1)  D & H INDIA LTD Vs Superon Schweisstechnik India Ltd FA (OS) (COMM) 237/2019 reported as AIR Online 2020 Del 463

Para 21 of the above judgment is reproduced as:

21: On a plain reading, the proviso to section 13 (1A) of the Commercial Courts Act is an enabling, rather than a disabling, provision. There is nothing, in the said proviso, which would seem to indicate that it dilutes the effect  of sub-section 13(1A) of section 13. If we were to read the said proviso as excluding, from the jurisdiction of the appellate court, all orders , passed by a Commercial Court, save and except those which finds specific enumeration in Order XLIII of the Code of Civil Procedure,1908, as amended by this Act under section 37 of the Arbitration & Conciliation act 1996. “ we are not convinced that the province of our jurisdiction, in the present case, allows us to legislate. To our mind, therefore, sub- section (1A) of section 13 of the Commercial Courts Act allows appeals to be preferred against all judgments and orders of Commercial Division of the High Court, to the Commercial Appellate Division thereof, and the proviso, to the said sub-section merely clarifies that, in the case of orders specifically enumerated in Order XLIII of CPC, such appeals shall lie.”

(2)  Arindam Chaudhuri Vs Zest Systems Pvt Ltd & Anr AIR ONLINE 2021 DEL1677

Para 8 of the above judgment reads as:

“8. We had doubts about the correctness of the view taken in D & H India Ltd (Supra). We felt that the said view went against the very purpose for which the Commercial Courts Act was enacted i.e to provide for speedy disposal of high value commercial disputes, as is evident from the statement of objects and reasons for the said Act. The effect of judgment ion D & H India Ltd (Supra) was that all orders passed by the Commercial Courts or the Commercial Divisions of the High Court, would be appealable when, before the enactment of the Commercial Courts Act, only such orders were appealable, which were either specifically made appealable, such as, under section 104, or within XLIII of CPC, or qualified as “judgments” within the meaning of that expression, as explained by the Supreme Court in Shah Babulal Khimji Vs jayaben D.Kania & Anr AIR 1981 SC1786.. Thus, right to prefer an appeal-if D& H India Ltd (Supra) were to be accepted as the correct view, stood expanded by the Section 13 of the Commercial Courts Act, when compared to the rights of appeal available prior to its enactment. We were of the prima facie view that this would go contrary to the purpose and object of the Commercial Courts Act, as creation of rights and appeal against all and sundry orders passed in original commercial cases would impede the progress of the causes. Every appeal at the interlocutory stage of the proceedings acts as a speed breaker in the progress of the cause. Moreover, if the proviso to Section 13 (1A) were to be read as not limiting or qualifying the rights of appeal contained in section 13 (1) and the first part of section 13 (1A), then, there was no need to enact the proviso.The view taken in D&H India Ltd (Supra) rendered the proviso to section 13 (1A) a surplusage-which is not to be presumed in respect of any part of a legislation. Thirdly, the view taken by the division bench in D & H India ltd (Supra) neither took into account Section 13 (2), nor the interpretation adopted by the division bench could be reconciled with the clear plain meaning of Section 13 (2). A party aggrieved by an order passed at an interlocutory stage of the proceedings is not entirely remediless, in as much as section 105 CPC entitles the party aggrieved by any such interlocutory order, to assail the same which appealing against the decree by raising a ground in Memorandum of Appeal. Moreover, the option to assail the interlocutory order before the Supreme Court, by preferring a Special Leave Petition, is also available. Since, we were finding it difficult to persuade ourselves to accept the view expressed in D & H India Ltd (Supra), we decided to hear the submissions of learned counsels, and directed them to place on record copies of the judgments that they wished to rely upon”.      

(3)   Delhi Chemical and Pharmaceutical Works Pvt Ltd Vs Himgiri Realtors Pvt Ltd & Anr 2021 SCC Online Del 3603

Para 25:

“Though, we, with due deference to the members of the Division bench in D & H India Ltd (Supra) entertain doubts as to the correctness of the view taken in D & H India Ltd, but do not in the facts of the present case, feel the need to make a reference of the question to a larger bench; the reason is that Bhandari Engineers & Builders Pvt Ltd (supra) on which the impugned orders are based, while laying down law therein, also directs all Courts to abide thereby, resulting in plethora of similar challenges as made herein and it is deemed expedient to settle the law in that regard and which would remain pending if the question of maintainability of the appeal were to be referred to a larger bench”. 

 

BOMBAY HIGH COURT

(Division Bench)

(1). Bank of India Vs M/s Maruti Civil Works & Ors (Appeal from Order no. 362 of 2021 in Commercial Suit No. 6 of 2019

The Bombay High Court has observed in para no. 15 as under:

“15. If we compare the unamended provision with the amended provision of section 13 of the act of 2015, what we find is that earlier an appeal was provided against a “decision” of a Commercial Courts or Commercial Divisions of a High Court to Commercial division of that high court, whereas after the amendment the expression “decision” has been substituted by the expression “:judgment or order”. It is also noticeable that the proviso appended to sub-section 1 of section 13 which earlier existed has been retained in the amended provision as well. To determine as to whether the instant appeal is maintainable, we may also refer to sub section (2) of section 13 of the Commercial Courts Act which begins with a non obstante clause and provides that notwithstanding anything contained in any other law for the tine being in force or Letters Patent of a High Court, no appeal shall lie from any order or decree under section 13 otherwise than in accordance with the provisions of the said Act.”

In the aforesaid case, the hon’ble Division Bench of Bombay High Court had dismissed the appeal that was preferred against the order passed by District Commercial Judge under Order VII Rule 10 and Rule 11 (d) of CPC, since that was not enumerated under Order XLIII of CPC.

The Bombay High Court has also held that in Delhi Chemical and Pharmaceutical Works Pvt Ltd Vs Himgiiri Realtors Pvt Ltd & Anr 2021 SCC Online Del 3603, that the division bench of Delhi High Court had itself  expressed doubts about correctness of the decision of D& H India Ltd(Supra).

(2)      Skil Himachal Infrastructure & Toursim Ltd & Ors Vs FS Financial Services Ltd 2022 SCC Online Bom3152

(3)   Shailendra Bhaduria Vs matrix partners India Investment Holdings LIC 2018 SCC Online Bom 13804

“44.Now the Commercial Courts (Amendment) Act 2018 amends the Act 4 of 2016 and deletes the word “decision” from section 13…..After the judgment of hon’ble Supreme Court delivered in the in the case of Fuerest day Lawson Limited Vs Jindal Exports Limited (2011) 8 SCC 33 and authoritative and binding pronouncements in the case of Kandla Export Corporation Vs OCI Corporation (2018) 14 SCC 715, the statute has to confer a right of appeal, that has to be conferred in clear words. We cannot as suggested by Mr Andhyaarjuna, by an interpretative process carve out a right of appeal, when the law is not creating it.

In para 27 of Bank of India (Supra) it is held by Bombay High Court that:

27. referring to the order which was under appeal in Skil Himachal (Supra), the Division bench in this case held that an order under Order XXXVII of CPC is not enumerated in Order XLIII and that it is only and order and not decree and therefore in view of law laid down in kandla Export (Supra) and Shailendra bhaudaria 9Supra), such an order is not appealable under the Act of 2015.”

The above discussion based on judicial precedents therefore makes it amply clear that the appeal in the Commercial Courts of High Court or Appellate Division of High Court shall not lie against such orders which are not featured under Order XLIII of CPC. Resultantly, any appeal against orders not rejecting plaint under Order VII Rule 11 of CPC or order of not returning of plaint under Order VII Rule 10 of CPC or, order passed under Order XXXVII of CPC thereby granting leave to defend either conditionally or unconditionally or order rejecting application under Order XII Rule 6 of CPC for instance shall not be appealable. In commercial division, clearly there is no provision for revision either. However, the order passed by the District Commercial Court can be entertained by high Court under Article 227 of Constitution of India under supervisory jurisdiction, but no corresponding remedy shall be available, if such orders are passed by the single bench of commercial division of High Court. Therefore, the only remedy, if a party is aggrieved by such orders passed by a single bench of commercial division of high court shall be to prefer Special leave Petition before the Supreme Court.

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                                        Anil K Khaware

Founder & Senior Associate

Soicietylawandjustice.com 

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