Delhi High Court: The petition was filed by petitioner challenging the order dated 06-03-2023 passed by the Additional District Judge-06, South-East District, Saket Courts, New Delhi (‘the Additional District Judge’) wherein, the Court observed the dispute between the parties to be a commercial dispute and directed the file of the suit to be placed before the Court of the Principal District and Sessions Judge, South-East District, Saket Courts, New Delhi (‘the Principal District and Sessions Judge’) to pass appropriate order. Petitioner further challenged the order dated 14-03-2023 passed by the Principal District and Sessions Judge, wherein it was directed to withdraw the suit from the Court of the Additional District Judge, and the same was to be transferred to the Court of District Judge, Commercial Court-06, Saket Courts, New Delhi (‘the Commercial Court’) to proceed further in accordance with law. Navin Chawla, J.*, set aside the orders dated 06-03-2023 and 14-03-2023 and held that the Additional District Judge and the Principal District and Sessions Judge had erred in passing the respective orders and it further held that the High Court and not the District and Sessions Judge had the power to transfer the suit to the competent Court under Section 24 of Civil Procedure Code, 1908 (‘CPC’).
Background:
Respondent had initially filed a suit to recover Rs 1,07,37,545.07 along with interest from petitioner. Thereafter, etitioner filed an application under Order VII Rule 11 of CPC and contended that the suit raised a commercial dispute in accordance with Section 2(1)(c)(i) of Commercial Courts Act, 2015 (‘the Act’) and that the suit had been filed without resort to the Pre-Institution Mediation as mandated under Section 12-A of the Act, thus was liable to be rejected. The Additional District Judge passed the impugned order dated 06-03-2023 and directed the file of the suit to be placed before the Principal District and Sessions Judge, who later transferred the suit to the Commercial Court.
Petitioner submitted that the Additional District Judge and the Principal District and Sessions Judge did not have power to transfer the suit, which was filed as an ordinary suit to a Commercial Court. It was submitted that under the Act, there were special requirements for a suit to be filed before a Commercial Court in accordance with Section 12-A of the Act, which were not met in the present case. Petitioner further submitted that the only provision for transfer of the suit, which was filed as an ordinary suit to a Commercial Court was provided in Section 15(2) of the Act, which was only applicable to civil suits related to commercial disputes of a specified value, which were pending before the Civil Courts in any district or area in respect of which a Commercial Court had been constituted. It was submitted that where a suit was filed as an ordinary suit after constitution of Commercial Courts, the only power available with the Court was to return the plaint under Order VII Rule 10 of CPC for the presentation of the plaint before Commercial Court, the Court of appropriate jurisdiction. It was also submitted that the Act was a special and subsequent statute, which would override the general provisions of CPC and specially Section 24 of CPC.
Respondent submitted that Section 15 of the Act provided for the transfer of the cases that were pending on the date of the constitution of the commercial division in the High Court or Commercial Courts at the district level and the provision was in addition to the general power vested in the District Judge and High Court, under Section 24 of CPC. It was further submitted that after admission of plaint filed before the ordinary Civil Court, it could be returned to be filed before a Commercial Court and the provisions of Section 24 of CPC would equally apply.
Analysis, Law, and Decision
The issues for consideration before the Court were as follows:
1. Whether the Act excluded the application of Section 24 of the CPC to the commercial disputes of a specified value?
The Court opined that the Act provided for constitution of Commercial Courts and Commercial Appellate Courts at the District Courts, and Commercial Division and Commercial Appellate Division in the High Courts, for adjudicating the commercial disputes of a specified value and for matters connected therewith or incidental thereof and provisions of the Act provided a separate and distinct hierarchy and distinguished from ordinary Civil Courts. The Court further opined that the implementation of the provisions of the Act and overall administrative control over Commercial Courts was vested in High Courts, thus, Commercial Courts would be a court subordinate to the High Courts. The Court further opined that Section 24 of CPC was not amended by the Act, thus there was no reason for it to be not applied to a suit relating to a commercial dispute of a specified value.
The Court analysed Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP, (2020) 15 SCC 585; Satyanarain Khandelwal v. Prem Arora, 2022 SCC OnLine Del 2142, and observed that the Act provided 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 required mandatory compliance with the provisions under Section 12-A of the Act in the form of a Pre-Institution Mediation. The Court further observed that if a suit raised a commercial dispute of a specified value, the ordinary Civil Court should have no jurisdiction to entertain the same and the plaint must be returned in exercise of its power under Order VII Rule 10 of the CPC and after return of the plaint, it might be presented before the court of competent jurisdiction.
The Court opined that Order VII Rule 10 of CPC provided that a plaint be returned to be presented to the Court in which the suit should have been instituted at any stage of the suit. Further, Order VII Rule 10-A of CPC mandated that plaintiff should be intimated before the decision to return the plaint was made. The Court further opined that once it was accepted that the suit instituted was related to commercial dispute of a specified amount was filed as an ordinary suit before Civil Court then it could be returned to be presented before the Commercial Court of appropriate jurisdiction and either of the parties might invoke the provisions of Section 24 of CPC to seek transfer of such suit.
The Court took note of the submission made by petitioner that the plaint was not in compliance with the provisions of Section 12-A of the Act and opined that the High Court could not be denuded of the power which it had been provided under Section 24 of CPC merely because it might lead to amendments in the plaint in accordance with the Act before it to be transferred. The Court relied on LIC v. Nandini J. Shah, (2018) 15 SCC 356, and opined that a Commercial Court, constituted under Section 3 of the Act would be a court subordinate to the High Court. The Court further held that Section 24 of CPC would be applicable to a Suit in relation to a commercial dispute of specified value.
2. If the answer to the above issue was in the negative, whether the power under Section 24 of CPC to transfer the suit was also available to the District and Sessions Judge?
The Court considered Section 3 of the Act which provided for establishment of Commercial Courts and Section 3-A of the Act which provided for the provisions of appeal and opined that a separate hierarchy of Courts was provided under the Act. The Court further opined that because of certain powers delegated by the High Court to the District and Sessions Judge to transfer certain suits from one Commercial Court to another, it could not be said that the Courts were subordinate to the District Court. Thus, the Court held that power under Section 24 of CPC to transfer suit was not available to the District and Sessions Judge.
The Court set aside the impugned orders and held that the Additional District Judge had no power to place the file of the suit before the Principal District and Sessions Judge for it to be transferred to the Court of competent jurisdiction. The Court further held that the Principal District and Sessions Judge had erred in transferring the suit from the Court of the Additional District Judge to the Commercial Court. The Court further held that Section 24 of CPC had provided power to the Court to transfer the suit to the Court of competent jurisdiction. The Court further opined that in the interest of justice, the suit should be transferred by the Court from the Court of the Additional District Judge to the Commercial Court under Section 24 of CPC and should be tried from the present stage.
[Namita Gupta v. Suraj Holdings Ltd., 2024 SCC OnLine Del 143, decided on: 09-01-2024]
*Judgment Authored by: Justice Navin Chawla
Advocates who appeared in this case :
For the Petitioner: Bhuvan Gugnani and Rupender Sharma, Advocates
For the Respondent: Ashish Mohan, Hemant Manjani and Sagrika Tanwar, Advocates
Buy Code of Criminal Procedure, 1973 HERE
