Bom HC | S. 16 of Commercial Courts Act to be interpreted literally; amendments brought in CPC  applicable only to Commercial Disputes of a ‘Specified Value’

Bombay High Court: S.J. Kathawalla, J., addressed the review petition against its own Judgment passed in the case of Axis Bank Ltd. v. Mira Gehani2019 SCC OnLine Bom 358 and held that,

Amendments introduced to CPC by the Commercial Courts Act are only applicable to Commercial Disputes of a Specified Value and not Commercial Disputes not of a Specified Value such as the present suit.”

“Amendment to CPC mandating that a Written Statement in a Commercial Suit has to be filed within 120 days, will not apply to Commercial Disputes of a Specified Value.”

According to the petitioner, the Court in the judgment of Axis Bank Ltd. v. Mira Gehani2019 SCC OnLine Bom 358, did not decide a limited contention of the petitioner, viz. that the amendments introduced to the Code of Civil Procedure, 1908 by the Commercial Courts Act, 2015 are only applicable to a Commercial Dispute of a Specified Value and not commercial disputes not of a Specified Value.

Hence for the understanding of the issue, the question of law in the present case is:

“Whether amendments introduced to CPC by the Commercial Courts Act apply to Commercial Disputes not of a Specified Value but nonetheless heard by a Commercial Division in view of the proviso to Section 7 of the Commercial Courts Act?”

The legislative background, which leads to the enactment of the Commercial Courts Act, was briefly set out in order to adjudicate the above-stated question of law. The Sections which were concentrated upon for the understanding were as follows:

  • Section 4 of the Commercial Courts Act – Constitution of Commercial Division of High Court ; [Specified Value, as defined by the Commercial Courts Act, stood earlier at Rupees One Crore, However, the Commercial Courts Act came to be amended in 2018 by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018. Amongst other amendments, the Specified Value stood reduced to Rs 3 lakhs as against the earlier Rs 1 Crore.]
  • Section 7 of the Commercial Courts Act – Jurisdiction of Commercial Division of High Courts; [Whilst Section 7 mandates that all suits and applications relating to commercial diputes of a Specified Value filed in a High Court having ordinary original civil jurisdiction shall be heard and disposed of by the Commercial Division of that High Court.]
  • Section 16 of the Commercial Courts Act – Amendments to the Code of Civil Procedure, 1908 in its application to commercial disputes; [Amongst other amendments introduced, an amendment was introduced mandating that a Written Statement in a Commercial Courts Act cannot be filed after 120 days from the service of a writ of summons. For the said cases relied on – SCG Contracts India (P) Ltd. v. K.S. Chamankar Infrastructure (P) Ltd. and Axis Bank Ltd. v. Mira Gehani2019 SCC OnLine Bom 358]

Petitioner’s Side

Advocate, Rashmin Khandekar, appeared for the Petitioner and submitted that, Section 16(1) of the Commercial Courts Act makes it clear that the provisions of CPC stood amended only in respect of Commercial Disputes of a Specified Value. He concluded his argument while stating that, the question of law be answered to exclude the applicability of CPC as amended by the Commercial Courts Act in respect of Commercial Disputes, not of a Specified Value and that the un-amended CPC be applicable to matters which pertain to Commercial Disputes but not of a Specified Value.

Plaintiff’s side

Advocate Nausher Kohli appeared for the plaintiff and put forth his argument that the amendments to CPC as introduced by the Commercial Courts Act apply only to ‘commercial disputes’ of a ‘Specified Value’and not merely ‘commercial disputes’ is a converse to the mandate, purpose and legislative intent behind the Commercial Courts Act. He further relied upon the Preamble, Section 4, Section 7, the marginal note/heading to Section 16 and Schedule to Commercial Courts Act.

Conclusion

The High Court on considering the arguments placed by Mr Khandekar and Kohli elaborated on its decision and held that,

Section 16 of the Commercial Courts Act begs the interpretation that the provisions of CPC shall, in their application to any suit in respect of a commercial dispute of a Specified Value, stand amended in the manner as specified in the Schedule to the Commercial Courts Act and that this Commercial Division, shall follow the provisions of the CPC as amended by the Commercial Courts Act, in the trial of a suit in respect of a commercial dispute of a Specified Value.

Therefore, after going through the cited judgments by the parties, the Court concluded its decision and stated that, literally interpreting Section 16, the interpretation that follows is that the amendments introduced by Section 16 apply only to the Commercial Disputes of a Specified Value and not Commercial Disputes, not of a Specified Value. This is the letter of law. Section 16, as it reads currently ought to be interpreted literally.

Thus, the question of law was decided as held by the High Court. [Bharat Bhogilal Patel v. Leitz Tooling Systems India (P) Ltd., 2019 SCC OnLine Bom 890, decided on 01-06-2019]


Bom HC | Commercial suits — Defendant cannot file written statement beyond the expiry of 120 days from service of summon — Law on Or. 8 R. 1 CPCreiterated and clarified; Axis Bank Ltd. v. Mira Gehani2019 SCC OnLine Bom 358, dated 27-2-2019]

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